ECON 625 WEEK 2 QUIZ 2
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What are economies of density as referred to in the airline industry?
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Answers:
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A.
Economies of scale along a given route
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B.
Reducing the size of an aircraft used to increase load factor
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C.
Reductions in average cost as traffic volume decreases
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D.
Economies achieved by an airline flying from spoke to spoke in a hub-and-spoke network
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E.
Economies of scope along a given route
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Which of the following best describes economies of scope?
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Answers:
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A.
The average cost increases as output increases
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B.
Savings are achieved when a firm produces a decreased variety of goods
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C.
The average cost remains constant as output increases
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D.
The average cost declines as output increases
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E.
Savings are achieved when a firm produces a wider variety of goods
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Which of the following is a source of diseconomies of scale at a large firm?
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Answers:
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A.
Labor costs
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B.
Spreading specialized resources too thin
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C.
Conflicts of interest
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D.
Incentive processes
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E.
All of the above
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What measure, that depends on how much of a firm’s revenues are attributable to product market activities that have shared technological characteristics, production characteristics, or distribution channels, is used to determine how diversified a firm is at a given time?
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Answers:
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A.
Conglomerate level
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B.
Relatedness
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C.
Integration level
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D.
Activity share
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E.
Rumelt score
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Which of the following is not a way managers generally benefit from acquisitions?
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Answers:
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A.
Consolidation of other senior executives
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B.
Increased compensation
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C.
Political power
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D.
Social prominence
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E.
Shielding against risk
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Which of the following is a characteristic of economies of scale?
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Answers:
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A.
The average cost remains constant as output increases
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B.
The average costs are cheaper when a firm produces a wider variety of goods
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C.
The average cost declines as output increases
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D.
The average cost increases as output increases
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E.
The average cost curve takes the form of a U-shape
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What kind of economies come from reductions in cost due to adoption of technology that has high fixed costs, but lower variable costs?
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Selected Answer:
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B.
Long-run economies of scale
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Answers:
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A.
Long-run economies of scope
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B.
Long-run economies of scale
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C.
Short-run economies of scale
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D.
Short-run economies of scope
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E.
Partially automated economies
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Which of the following is not generally a potential benefit of diversification?
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Answers:
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A.
Diversifying shareholder portfolios
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B.
Economies of scale and scope
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C.
Economizing on transaction costs
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D.
Identifying undervalued firms
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E.
Control systems rewarding/penalizing division managers based on business unit objective
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How does umbrella branding aid economies of scale and scope?
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Answers:
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A.
Increased cost effectiveness through bulk purchasing
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B.
Increased cost effectiveness through purchasing as a cooperative
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C.
Increases effectiveness of advertising due to national advertising
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D.
Increases effectiveness of advertising due to offering a broad product line under one name
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E.
Increases effectiveness of advertising due to a greater presence
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Suppose the cost of producing a 30 second commercial for television is $100,000. If airtime on the evening news costs $200,000 and is viewed by 5 million people, what is the advertising cost per potential customer?
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Answers:
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A.
$.02 per potential customer, or $2.00 per 1000 customers
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B.
$.06 per potential customer, or $6.00 per 100 customers
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C.
$.04 per potential customer, or $4.00 per 1000 customers
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D.
none of the above
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E.
$.03 per potential customer, or $3.00 per 1000 customers
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Thursday, August 3, 2017 7:56:48 AM EDT
USA 
India