Business Economics (BE) 301 Comprehensive
Final Assessment -Solved 100% Correct
B
Marginal Analysis - ANSWER-The analysis of the benefits and costs of the next unit
of a good or service is known in economics as:
a) Venture analysis
b) Marginal analysis
c) Cost-benefit analysis
d) Break-even analysis.
A
Barriers to Entry - ANSWER-Obstacles, or costs that would have to be incurred by a
firm joining industry incumbents in the battle for customers and profits are known
as:
a) Barriers to entry
b) Sunk cost
c) The opportunity cost of captial
d) A fixed cost of production.
A
Less Valuable, and no longer strategic - ANSWER-The value of a given resource or
capability must be reassessed periodically to ascertain if the firm's business model
and strategy are still relevant. If not reassessed periodically, a once- valuable
resource or capability may become:
a) less valuable, and no longer strategic
b) more valuable, but remain strategic
c) less valuable but remain strategic
d) more value and more strategic.
D
Second Law of Demand - ANSWER-In the long run, elasticity, |e|, increases since,
all else equal, products attract imitators and customers may get bored. Economists
call this:
a) The first law of demand.
b) Substitution effect
,c) Time elasticity of demand
d) Second law of demand.
C
Third Law of Demand - ANSWER-All else equal, as price increases, demand curves
become more price elastic as purchase becomes larger share of budget. Economists
call this:
a) The budget constraint effect
b) The second law of demand
c) The third law of demand
d) the equimarginal rule.
A
Above normal returns on the investments in companies they own, over time -
ANSWER-A capitalist firm's residual claimants bear risk and uncertainty since they
have a legal claim to economic profit, but that profit can be zero or negative.
Residual claimants can diversify their portfolios, but expect:
a) Above normal returns on the investments in companies they own, over time
b) At least normal returns on the investments they have made, in the short run
c) Positive accounting profits in both the short and long run
d) Returns equal to the sum of explicit and implicit costs.
B
Relevant - ANSWER-The text states that only costs and benefits that vary with the
consequences of a decision, and labeled these costs and benefits as being:
a) Sunk
b) Relevant
c) Variable
d) Consequential.
B
Social Scientists - ANSWER-Managers' responses to problems are likely to depend
on their understanding of people's motives and their forecast of people's reactions--
their responses depend on their underlying model of behavior. Therefore, it is
appropriate to characterize managers as:
a) Members of the moral-cultural elite
b) Social scientists
c) Academic economists
d) Behavioral experts.
,B
The incentives to use that information productively - ANSWER-According to both
the text and lecture, a major management challenge is designing organizations that
maximize the likelihood that local decision makers have both the relevant
information to make good decisions, and:
a) The right to make decisions outside their authority boundary
b) The incentives to use that information productively
c) The vision, virtues and talents to merit trust
d) Ability to use algorithms to make better decisions.
D
The performance measurement and evaluation system - ANSWER-The
organizational architectural process that specifies the criteria that will be used to
judge the contribution of decision agents (employees or associates) within the
organization is known as:
a) The Authority Boundary
b) The Nike Zone
c) The reward system
d) The performance measurement and evaluation system.
C
The rule of law - ANSWER-The legal principle that law should govern a nation, as
opposed to arbitrary decisions by individual government officials, is known as:
a) The rule of Kings
b) Common law
c) The rule of law
d) Equal justice before the law.
D
Nike Zone - ANSWER-A situation where someone in the organization sees an
opportunity to create value, and are authorized to exploit that opportunity even
though it's not part of their "rolls and responsibilities," was discussed in class as:
a) Entrepreneurial discovery
b) Continuous improvement
c) Comparative advantages
d) The Nike Zone.
C
Tacit Knowledge - ANSWER-This knowledge is the valuable knowledge of the
, circumstances of time and place. It is idiosyncratic because only one or a few
people have it. This knowledge was defined in lecture as:
a) Explicit knowledge
b) Implicit knowledge
c) Tacit knowledge
d) General knowledge.
D
More info is needed - ANSWER-According to the text, a firm is earning negative
economic profits, it implies that:
a) The firm's accounting profits are zero
b) The firm's accounting profits are positive
c) The firm's accounting profits are negative
d) More information is needed to determine accounting profits.
B
False - ANSWER-Managers may be victimized by the sunk-cost problem when,
according to the text, they ignore relevant costs—those costs that vary with the
consequences of their decisions. This statement is:
a) True
b) False.
A
True - ANSWER-Colonel Chamberlain got the mutineer soldiers to pick of their
muskets and follow him into battle at Gettysburg by applying concepts familiar to
psychologists, sociologists, and economists. This statement is:
a) True
b) False.
C
Accounting Costs - ANSWER-According to the text, money paid to suppliers for
inputs, general operating expenses (e.g., salaries for factory managers),
depreciation expenses related to investments in building, and interest payments on
borrowed funds qualify as:
a) Marginal cost
b) Implicit costs
c) Accounting costs
d) Total fixed costs.
Final Assessment -Solved 100% Correct
B
Marginal Analysis - ANSWER-The analysis of the benefits and costs of the next unit
of a good or service is known in economics as:
a) Venture analysis
b) Marginal analysis
c) Cost-benefit analysis
d) Break-even analysis.
A
Barriers to Entry - ANSWER-Obstacles, or costs that would have to be incurred by a
firm joining industry incumbents in the battle for customers and profits are known
as:
a) Barriers to entry
b) Sunk cost
c) The opportunity cost of captial
d) A fixed cost of production.
A
Less Valuable, and no longer strategic - ANSWER-The value of a given resource or
capability must be reassessed periodically to ascertain if the firm's business model
and strategy are still relevant. If not reassessed periodically, a once- valuable
resource or capability may become:
a) less valuable, and no longer strategic
b) more valuable, but remain strategic
c) less valuable but remain strategic
d) more value and more strategic.
D
Second Law of Demand - ANSWER-In the long run, elasticity, |e|, increases since,
all else equal, products attract imitators and customers may get bored. Economists
call this:
a) The first law of demand.
b) Substitution effect
,c) Time elasticity of demand
d) Second law of demand.
C
Third Law of Demand - ANSWER-All else equal, as price increases, demand curves
become more price elastic as purchase becomes larger share of budget. Economists
call this:
a) The budget constraint effect
b) The second law of demand
c) The third law of demand
d) the equimarginal rule.
A
Above normal returns on the investments in companies they own, over time -
ANSWER-A capitalist firm's residual claimants bear risk and uncertainty since they
have a legal claim to economic profit, but that profit can be zero or negative.
Residual claimants can diversify their portfolios, but expect:
a) Above normal returns on the investments in companies they own, over time
b) At least normal returns on the investments they have made, in the short run
c) Positive accounting profits in both the short and long run
d) Returns equal to the sum of explicit and implicit costs.
B
Relevant - ANSWER-The text states that only costs and benefits that vary with the
consequences of a decision, and labeled these costs and benefits as being:
a) Sunk
b) Relevant
c) Variable
d) Consequential.
B
Social Scientists - ANSWER-Managers' responses to problems are likely to depend
on their understanding of people's motives and their forecast of people's reactions--
their responses depend on their underlying model of behavior. Therefore, it is
appropriate to characterize managers as:
a) Members of the moral-cultural elite
b) Social scientists
c) Academic economists
d) Behavioral experts.
,B
The incentives to use that information productively - ANSWER-According to both
the text and lecture, a major management challenge is designing organizations that
maximize the likelihood that local decision makers have both the relevant
information to make good decisions, and:
a) The right to make decisions outside their authority boundary
b) The incentives to use that information productively
c) The vision, virtues and talents to merit trust
d) Ability to use algorithms to make better decisions.
D
The performance measurement and evaluation system - ANSWER-The
organizational architectural process that specifies the criteria that will be used to
judge the contribution of decision agents (employees or associates) within the
organization is known as:
a) The Authority Boundary
b) The Nike Zone
c) The reward system
d) The performance measurement and evaluation system.
C
The rule of law - ANSWER-The legal principle that law should govern a nation, as
opposed to arbitrary decisions by individual government officials, is known as:
a) The rule of Kings
b) Common law
c) The rule of law
d) Equal justice before the law.
D
Nike Zone - ANSWER-A situation where someone in the organization sees an
opportunity to create value, and are authorized to exploit that opportunity even
though it's not part of their "rolls and responsibilities," was discussed in class as:
a) Entrepreneurial discovery
b) Continuous improvement
c) Comparative advantages
d) The Nike Zone.
C
Tacit Knowledge - ANSWER-This knowledge is the valuable knowledge of the
, circumstances of time and place. It is idiosyncratic because only one or a few
people have it. This knowledge was defined in lecture as:
a) Explicit knowledge
b) Implicit knowledge
c) Tacit knowledge
d) General knowledge.
D
More info is needed - ANSWER-According to the text, a firm is earning negative
economic profits, it implies that:
a) The firm's accounting profits are zero
b) The firm's accounting profits are positive
c) The firm's accounting profits are negative
d) More information is needed to determine accounting profits.
B
False - ANSWER-Managers may be victimized by the sunk-cost problem when,
according to the text, they ignore relevant costs—those costs that vary with the
consequences of their decisions. This statement is:
a) True
b) False.
A
True - ANSWER-Colonel Chamberlain got the mutineer soldiers to pick of their
muskets and follow him into battle at Gettysburg by applying concepts familiar to
psychologists, sociologists, and economists. This statement is:
a) True
b) False.
C
Accounting Costs - ANSWER-According to the text, money paid to suppliers for
inputs, general operating expenses (e.g., salaries for factory managers),
depreciation expenses related to investments in building, and interest payments on
borrowed funds qualify as:
a) Marginal cost
b) Implicit costs
c) Accounting costs
d) Total fixed costs.
