BUSI 690 EXAMINATION TEST PRACTICE
SOLUTION EXAM QUESTIONS AND
SOLUTIONS 2026 GRADED A+.
⫸ Corporate Strategy determines the boundaries of the firm along
three dimensions:. Answer: Vertical integration: Along the industry
value chain.
Diversification: Of products and Services.
Geographic scope: Regional, national, or global markets.
⫸ Economies of Scale. Answer: occurs when a firm's average cost
per unit decreases as its output increases.
⫸ Economies of Scope. Answer: Are savings that come from
producing two or more outputs or providing different services at less
cost than producing each individually, though using the same
resources and technology.
⫸ Transaction costs. Answer: Are all costs associated with an
economic exchange.
⫸ Transaction cost economies. Answer: a theoretical framework in
strategic management to explain and predict the boundaries of the
, firm, which is central to formulating a corporate strategy that is more
likely to lead to competitive advantage
⫸ transaction costs. Answer: all internal and external costs
associated with an economic exchange, whether within a firm or in
markets
⫸ Transaction cost economies allows us to explain:. Answer: Which
activities a firm should pursue in-house "Make" versus which goods
and services to obtain externally "buy".
⫸ When should a firm vertically integrate?. Answer: When the costs
of pursuing an activity in-house are less than the costs of transacting
for that activity in the market
⫸ The advantages of firms include:. Answer: The ability to make
command-and-control decisions by fiat along clear hierarchical lines
of authority.
Coordination of highly complex tasks to allow for specialized division
of labor.
Transaction-specific investments, such as specialized robotics
equipment that is highly valuable with the firm, but of little to no use
in the external market.
SOLUTION EXAM QUESTIONS AND
SOLUTIONS 2026 GRADED A+.
⫸ Corporate Strategy determines the boundaries of the firm along
three dimensions:. Answer: Vertical integration: Along the industry
value chain.
Diversification: Of products and Services.
Geographic scope: Regional, national, or global markets.
⫸ Economies of Scale. Answer: occurs when a firm's average cost
per unit decreases as its output increases.
⫸ Economies of Scope. Answer: Are savings that come from
producing two or more outputs or providing different services at less
cost than producing each individually, though using the same
resources and technology.
⫸ Transaction costs. Answer: Are all costs associated with an
economic exchange.
⫸ Transaction cost economies. Answer: a theoretical framework in
strategic management to explain and predict the boundaries of the
, firm, which is central to formulating a corporate strategy that is more
likely to lead to competitive advantage
⫸ transaction costs. Answer: all internal and external costs
associated with an economic exchange, whether within a firm or in
markets
⫸ Transaction cost economies allows us to explain:. Answer: Which
activities a firm should pursue in-house "Make" versus which goods
and services to obtain externally "buy".
⫸ When should a firm vertically integrate?. Answer: When the costs
of pursuing an activity in-house are less than the costs of transacting
for that activity in the market
⫸ The advantages of firms include:. Answer: The ability to make
command-and-control decisions by fiat along clear hierarchical lines
of authority.
Coordination of highly complex tasks to allow for specialized division
of labor.
Transaction-specific investments, such as specialized robotics
equipment that is highly valuable with the firm, but of little to no use
in the external market.
