MGMT 478 Test 3 Questions and Answers Already Passed Latest Update 2025-2026
Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus"
is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such
as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of
A.
geographic diversification.
B.
product diversification.
C.
vertical integration.
D.
horizontal integration. - Answers B.
product diversification.
Decisions relating to "what stages of the industry value chain to participate in" determine a
firm's
A.
level of diversification.
B.
geographic scope.
,C.
vertical integration.
D.
absorptive capacity. - Answers C.
vertical integration.
Which of the following stakeholders of a company would most likely be responsible for
formulating a corporate strategy?
A.
the first-line employees
B.
the creditors
C.
the chief executive officer
D.
the middle manager - Answers C.
the chief executive officer
Which of the following statements is true of transaction costs?
,A.
When the costs of pursuing an activity in-house are more than the costs of transacting for that
activity in the market, then the concerned firm should vertically integrate.
B.
When companies transact in the open market, they incur internal transaction costs.
C.
Transaction costs exclusively consist of external costs associated with economic exchanges.
D.
Transaction costs are necessary to explain and predict the boundaries of a firm. - Answers D.
Transaction costs are necessary to explain and predict the boundaries of a firm
Which of the following is an example of an external transaction cost?
A.
the cost of setting up a production unit
B.
the cost of searching for a contract manufacturer
C.
the cost of recruiting and retaining employees
D.
, the cost of maintaining plant and machinery - Answers B.
the cost of searching for a contract manufacturer
Which of the following is an example of an internal transaction cost?
A.
the cost of searching for a contract manufacturer
B.
the cost of signing a contract with a supplier
C.
the cost of buying raw materials
D.
the cost of maintaining a production unit - Answers D.
the cost of maintaining a production unit
Which of the following statements is true of internal transaction costs?
A.
Internal transaction costs arise when companies transact in the open market.
B.
When the internal costs involved in pursuing an activity in-house are more than the costs of
transacting, then the concerned firm should vertically integrate.
Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus"
is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such
as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of
A.
geographic diversification.
B.
product diversification.
C.
vertical integration.
D.
horizontal integration. - Answers B.
product diversification.
Decisions relating to "what stages of the industry value chain to participate in" determine a
firm's
A.
level of diversification.
B.
geographic scope.
,C.
vertical integration.
D.
absorptive capacity. - Answers C.
vertical integration.
Which of the following stakeholders of a company would most likely be responsible for
formulating a corporate strategy?
A.
the first-line employees
B.
the creditors
C.
the chief executive officer
D.
the middle manager - Answers C.
the chief executive officer
Which of the following statements is true of transaction costs?
,A.
When the costs of pursuing an activity in-house are more than the costs of transacting for that
activity in the market, then the concerned firm should vertically integrate.
B.
When companies transact in the open market, they incur internal transaction costs.
C.
Transaction costs exclusively consist of external costs associated with economic exchanges.
D.
Transaction costs are necessary to explain and predict the boundaries of a firm. - Answers D.
Transaction costs are necessary to explain and predict the boundaries of a firm
Which of the following is an example of an external transaction cost?
A.
the cost of setting up a production unit
B.
the cost of searching for a contract manufacturer
C.
the cost of recruiting and retaining employees
D.
, the cost of maintaining plant and machinery - Answers B.
the cost of searching for a contract manufacturer
Which of the following is an example of an internal transaction cost?
A.
the cost of searching for a contract manufacturer
B.
the cost of signing a contract with a supplier
C.
the cost of buying raw materials
D.
the cost of maintaining a production unit - Answers D.
the cost of maintaining a production unit
Which of the following statements is true of internal transaction costs?
A.
Internal transaction costs arise when companies transact in the open market.
B.
When the internal costs involved in pursuing an activity in-house are more than the costs of
transacting, then the concerned firm should vertically integrate.
