BUSINESS

Unit 5 Quiz
1. Question : Firms such as Caribou Coffee and Diedrich Coffee operate hundreds of coffeehouses nationwide while firms such as Dunn Brothers Coffee operate only in four states. How would you characterize these stores?

Student Answer:    Caribou Coffee and Diedrich Coffee are oligopolists while Dunn Brothers is a monopolistic competitor.
Caribou Coffee and Diedrich Coffee are duopolists while Dunn Brothers is a monopolistic competitor.
Caribou Coffee and Diedrich Coffee are duopolists while Dunn Brothers is an oligopolist
They are all monopolistic competitor.

 

Points Received: 1 of 1
Comments:

 

2. Question : Which of the following is an example of a factor that a firm’s owners and managers can control in making the firm successful?

Student Answer:     the ability to produce the product at a lower cost

changing consumer tastes

a rise in the price of a key input for example, a rise in the price of oil leads to higher energy costs
the choice of technology used to produce the product

 

Points Received: 1 of 1
Comments:

 

3. Question : At the peak of its success in the mid-1980s to the early 1990s, Apple Computer commanded a 15 percent share of the personal computers market. Today, in 2007, its share of the growing personal computer market is estimated at 6 percent. Which of the following best accounts for its dwindling market share?

Student Answer:    Rivals engaged in predatory pricing but Apple was not willing to engage in a price war.
The entry of rivals revealed that Apples was producing sub-standard computers.
Apple was not able to keep up with technological advancements in the personal computers market.
The entry of rivals eliminated Apple’s product differentiation.

Points Received: 1 of 1
Comments:

 

4. Question : Figure 12-6

 

Refer to Figure 12-6. What is the amount of excess capacity?

Student Answer:    Q4 – Q3 units

Q4 – Q2 units

Q3 – Q2 units

Q3 – Q1 units

 

Points Received: 1 of 1
Comments:

 

5. Question : In what sense is a firm in monopolistically competition a monopoly in its market?

Student Answer:    It acts independently of other sellers.

It sells a unique product.

It is able to erect entry barriers by deliberately lowering its price.
It acts to maximize market share.

 

Points Received: 1 of 1
Comments:

 

6. Question : Table 13-1

 

Alistair Luggage and Baine Baggage are the only firms selling window treatments in the upscale town of Montecito. Each firm must decide on whether to increase its advertising spending to compete for customers. If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit. Table 13-1 shows the payoff matrix for this advertising game.

Refer to Table 13-1. Does Baine have a dominant strategy and if so, what is it?

Student Answer:     Yes, Baine should increase its advertising budget.

Yes, Baine should keep its advertising budget as is.

There are two dominant strategies: if Alistair increases its advertising budget, then Baine’s best bet is to keep its budget the same but if Alistair does not increase its spending then Baine should raise its advertising budget
No, there is no dominant strategy.

 

Points Received: 1 of 1
Comments:

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