BA 652 Midterm #2 With
Complete Solutions
A firm's added value is a measure of its competitive advantage.
True
False - ANSWER True
Economic value is generated when worthwhile things that did not exist before
are created.
True
False - ANSWER True
Input resources in a firm's transformation process can be any factor of
production, such as raw materials, labor, equity and debt capital, managerial
talent, support services like storage and transport, etc.
True
False - ANSWER True
Input resources of a firm undergo a transformation process to create value for
the customer.
True
False - ANSWER True
Jenny is a shift manager at a Starbucks in Lyon, France. She wants to pitch an
idea for bio-coffee to her boss and is working out the total value created from
each cup of bio-coffee. The eco-friendly coffee beans for a standard coffee cup
cost $1. The rest of the raw materials and expenses per cup are $0.85. Using a
survey, she has determined that the customers are willing to pay $5 per cup.
What is the Supplier Opportunity Cost for the bio coffee beans?
$ 0.85
,$ 1.00
$ 1.85
$ 5.00 - ANSWER $1.00
Jenny is a shift manager at a Starbucks in Lyon, France. She wants to pitch an
idea for bio-coffee to her boss and is working out the total value created from
each cup of bio-coffee. The eco-friendly coffee beans for a standard coffee cup
cost $1. The rest of the raw materials and expenses per cup are $0.85. Using a
survey, she has determined that the customers are willing to pay $5 per cup.
What is the total value created?
$ 0.85
$ 1.85
$ 3.15
$ 5.00 - ANSWER $3.15
Mary's upscale boutique in New York creates custom-made dresses for clients.
One of them is willing to pay extra to get the order completed urgently. Mary,
who was considering a vacation at this time, will stay to complete this project
first. This is creating new value for her business.
True
False - ANSWER True
Meg is an up-and-coming fashion designer who has created a unique dress
which will be exhibited in a fall fashion show in Paris. The dress is valued at
$2000. Just one day before her show, she finds out that an employee at her
business has sold the design to a competitor who has already begun to mass
produce the dress. What do you think is the added value of the dress at present?
$ 0.00
,$ 1000.00
$ 2000.00
$ 5000.00 - ANSWER $0.00
Peter is a retired gardener who supplies homegrown vegetables to the local
diner. The Firm cost for growing the pumpkins and bringing them to the diner is
$1.50 per unit. It is Halloween season, so the diner is willing to pay Peter $7 per
unit. What is the excess profit appropriated by Peter?
$ 1.50
$ 5.50
$ 7.00
$ 8.50 - ANSWER $5.50
Rotary International is an NGO that is currently working on Polio eradication in
Asia. They have just set up a makeshift office in a rural village in Pakistan. Their
head office in Illinois is hosting an event to generate donations for their project
and would like the event attendees to be able to talk to their field agents.
Unfortunately, their board room conferencing system is unable to connect to the
village office over Skype. (There are compatibility issues.) Polycom has offered
them a solution to purchase a single license to a cloud-based video
conferencing solution that could be used from the village office to connect to the
board room. Rotary will have to pay $15 per month for this license. What do you
think is the competitive advantage of Polycom over Skype in this scenario?
Polycom is offering to replace the board room conferencing system that does
not operate with Skype.
Polycom's cloud-based video co - ANSWER Polycom's cloud-based video
conferencing solution is fully compatible with the board room conferencing
system in Illinois.
, The analysis of added value allows managers and analysts to evaluate how
much of the value created the firm can appropriate in the form of profits.
True
False - ANSWER True
The analysis of added value can help you measure how much benefit your
competitor is drawing from an innovation and what benefits you can get by
choosing to replicate the initiative in your company.
True
False - ANSWER True
The analysis of added value is only useful when a company is innovating
(creating value in new ways and offering things no competitor is currently
offering).
True
False - ANSWER False
The difference between inventors and entrepreneurs is that entrepreneurs
focus on market opportunities and development of solutions to meet the
opportunities whereas inventors create new products and new technologies
that may or may not create value.
True
False - ANSWER True
Value appropriation is a process by which total value created in the transaction
is equally distributed among all partner entities.
True
False - ANSWER False
A small local coffee shop has two suppliers, A and B. Supplier A went bankrupt
and had to close its business. Assuming that both suppliers are able to provide
the coffee shop with all its needs in term of suppliers, which of the following is
likely to happen:
The bargaining power of supplier B will decrease
Complete Solutions
A firm's added value is a measure of its competitive advantage.
True
False - ANSWER True
Economic value is generated when worthwhile things that did not exist before
are created.
True
False - ANSWER True
Input resources in a firm's transformation process can be any factor of
production, such as raw materials, labor, equity and debt capital, managerial
talent, support services like storage and transport, etc.
True
False - ANSWER True
Input resources of a firm undergo a transformation process to create value for
the customer.
True
False - ANSWER True
Jenny is a shift manager at a Starbucks in Lyon, France. She wants to pitch an
idea for bio-coffee to her boss and is working out the total value created from
each cup of bio-coffee. The eco-friendly coffee beans for a standard coffee cup
cost $1. The rest of the raw materials and expenses per cup are $0.85. Using a
survey, she has determined that the customers are willing to pay $5 per cup.
What is the Supplier Opportunity Cost for the bio coffee beans?
$ 0.85
,$ 1.00
$ 1.85
$ 5.00 - ANSWER $1.00
Jenny is a shift manager at a Starbucks in Lyon, France. She wants to pitch an
idea for bio-coffee to her boss and is working out the total value created from
each cup of bio-coffee. The eco-friendly coffee beans for a standard coffee cup
cost $1. The rest of the raw materials and expenses per cup are $0.85. Using a
survey, she has determined that the customers are willing to pay $5 per cup.
What is the total value created?
$ 0.85
$ 1.85
$ 3.15
$ 5.00 - ANSWER $3.15
Mary's upscale boutique in New York creates custom-made dresses for clients.
One of them is willing to pay extra to get the order completed urgently. Mary,
who was considering a vacation at this time, will stay to complete this project
first. This is creating new value for her business.
True
False - ANSWER True
Meg is an up-and-coming fashion designer who has created a unique dress
which will be exhibited in a fall fashion show in Paris. The dress is valued at
$2000. Just one day before her show, she finds out that an employee at her
business has sold the design to a competitor who has already begun to mass
produce the dress. What do you think is the added value of the dress at present?
$ 0.00
,$ 1000.00
$ 2000.00
$ 5000.00 - ANSWER $0.00
Peter is a retired gardener who supplies homegrown vegetables to the local
diner. The Firm cost for growing the pumpkins and bringing them to the diner is
$1.50 per unit. It is Halloween season, so the diner is willing to pay Peter $7 per
unit. What is the excess profit appropriated by Peter?
$ 1.50
$ 5.50
$ 7.00
$ 8.50 - ANSWER $5.50
Rotary International is an NGO that is currently working on Polio eradication in
Asia. They have just set up a makeshift office in a rural village in Pakistan. Their
head office in Illinois is hosting an event to generate donations for their project
and would like the event attendees to be able to talk to their field agents.
Unfortunately, their board room conferencing system is unable to connect to the
village office over Skype. (There are compatibility issues.) Polycom has offered
them a solution to purchase a single license to a cloud-based video
conferencing solution that could be used from the village office to connect to the
board room. Rotary will have to pay $15 per month for this license. What do you
think is the competitive advantage of Polycom over Skype in this scenario?
Polycom is offering to replace the board room conferencing system that does
not operate with Skype.
Polycom's cloud-based video co - ANSWER Polycom's cloud-based video
conferencing solution is fully compatible with the board room conferencing
system in Illinois.
, The analysis of added value allows managers and analysts to evaluate how
much of the value created the firm can appropriate in the form of profits.
True
False - ANSWER True
The analysis of added value can help you measure how much benefit your
competitor is drawing from an innovation and what benefits you can get by
choosing to replicate the initiative in your company.
True
False - ANSWER True
The analysis of added value is only useful when a company is innovating
(creating value in new ways and offering things no competitor is currently
offering).
True
False - ANSWER False
The difference between inventors and entrepreneurs is that entrepreneurs
focus on market opportunities and development of solutions to meet the
opportunities whereas inventors create new products and new technologies
that may or may not create value.
True
False - ANSWER True
Value appropriation is a process by which total value created in the transaction
is equally distributed among all partner entities.
True
False - ANSWER False
A small local coffee shop has two suppliers, A and B. Supplier A went bankrupt
and had to close its business. Assuming that both suppliers are able to provide
the coffee shop with all its needs in term of suppliers, which of the following is
likely to happen:
The bargaining power of supplier B will decrease
