1.

In a competitive industry buffeted by demand and supply shocks, prices increase and
decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return
b Positive earnings
.
c. Mean reversion
d None of the above
.

1 points   
QUESTION 2
1.  Assuming that beer is a normal good, what will happen to the demand for beer near college
towns if student income increased?
a. Supply would rise
b. Demand will rise
c. Demand will fall because students love these beers
d. Demand will fall

1 points   
QUESTION 3
1. In the long-run, a perfectly competitive firm will achieve
a. Economic Profits
b An average rate of return
.
c. Above average profits
d Losses
.

1 points   
QUESTION 4
1.  Rivalry among firms would tend to be high if
a. Firms are located further from each other
b. Firms are located close to one another
c. There is only one firm in the market
d. None of the above

1 points   
QUESTION 5
1.  People like consuming peanut butter and jelly together. The price of peanuts increases. At the
same time, we see the price for Jelly rise. How does this affect the market for peanut butter?
a. The demand curve will shift to the right; the supply curve will shift to the left
b. The demand curve will shift to the right; the supply curve will shift to the
right
c. The demand curve will shift to the left; the supply curve will shift to the right
d. The demand curve will shift to the left; the supply curve will shift to the left

1 points   
QUESTION 6
1.  Rivalry among firms would tend to be high if
a. Customers are locked into the competitors technology
b. Customers can easily switch between competitor’s technologies
c. All of the above
d. None of the above
 1 points   
QUESTION 7
1.  Which firm in an industry is likely to have higher profits?
a. Sellers with higher costs than their competitors
b Sellers with lower costs than their competitors
.
c. Sellers with the same costs as their competitors
d All of the above
.

1 points   
QUESTION 8
1.  A recent medical study shows that peanuts are one of the leading causes of high cholesterol.
This would cause the demand for peanuts to
a. go down the demand curve
b not change
.
c. Shift to the left
d Shift to the right
.

1 points   
QUESTION 9
1.  Which of the following makes a firm’s resources hard to imitate?
a. They flow from the firm’s unique history
b. The link between resources and advantages is difficult to discern
c. Resources emanate from a socially complex organizational structure
d. All of the above

1 points   
QUESTION 10
1.  Rivalry among firms would tend to be high if
a. There is a small number of firms in the market
b There is a large number of firms in the market
.
c. There is only one firm in the market
d None of the above
.

1 points   
QUESTION 11
1. A sudden rise in the market demand in a competitive industry leads to 
a. A short run market equilibrium price higher than the original
equilibrium
b A market equilibrium lower than the short run price
.
c. Entry of new firms into the market
d All of the above
.

1 points   
QUESTION 12
1.  If movie theatres decided to increase the price for the movie tickets, holding other factors
constant, what would happen to the demand for popcorn in the theatres?
a. the demand for popcorn would shift to the left because popcorn and movies are complementary
 goods.
b the demand for popcorn would shift to the right because popcorn and movies are complementary
. goods.
c. the demand for popcorn would shift to the left because popcorn and movies are substitute goods.
d the demand for popcorn would shift to the right because popcorn and movies are substitute goods.
.

1 points   
QUESTION 13
1. If a firm in a perfectly competitive industry is experiencing higher than normal returns, in the
long-run
a. Some firms will enter the industry and price will fall
b. Some firms will leave the industry and price will fall
c. Some firms will leave the industry and price will
rise
d. Some firms will enter the industry and price will rise

1 points   
QUESTION 14
1.  Rivalry among firms would tend to be highest if
a. the industry is growing quickly
b the industry is growing slowly
.
c. the industry is shrinking
d None of the above
.

1 points   
QUESTION 15
1.  The RBV perspective locates the source of competitive advantage for a firm at the
a. Industry level
b. None of the above
c. Customer Level
d. Individual firm
level
1 points   
QUESTION 16
1.  To decrease buyer power, the firm can
a. Differentiate its product
b. Decrease dependency on a single buyer
c. Sell its products in locations with multiple buyers
d. All of the above

1 points   
QUESTION 17
1.  How does an increase in income affect the market for bus rides (inferior good)?
a. The supply curve for bus rides to shift to the right
b. The demand curve for bus rides to shift to the left
c. The supply curve for bus rides to shift to the left
d. The demand curve for bus rides to shift to the right

1 points   
 QUESTION 18
1.  Which of the following makes a firm’s resources hard to imitate?
a. Do not use resources that flow from the firm’s unique history
b. Keep the link between resources and advantage simple
c. Resources emanate from a socially complex organizational structure
d. All of the above

1 points   
QUESTION 19
1. A sudden decrease in the market demand in a competitive industry leads to 
a. A market equilibrium price higher than the original equilibrium in the short-
run
b A market equilibrium price equal to the original equilibrium in the long-run
.
c. Both a and b
d None of the above
.

1 points   
QUESTION 20
1. Which of the following makes a firm’s resources hard to imitate?
a. They flow from the firm’s unique history
b The link between resources and advantage is simple
.
c. They aren’t socially complex
d All of the above
.

1 points   
QUESTION 21
1.  Two cities face identical prices for their housing. City A decided to be a pollution free city
“Clean town” and all the factories would locate in city B “Smogville”, in equilibrium, we expect to
see
a. a compensating differential between the prices of housing between the two
cities
b. the prices of housing in both the cities to be identical
c. The prices of housing in B to be higher
d. All of the above

1 points   
QUESTION 22
1.  Which of the following is the foundation for success for a company facing competition
a. Create an advantage over the competition
b Protect the advantage created over the competition
.
c. Create and protect advantages over the competition
d None of the above
.

1 points   
QUESTION 23
1.  Which of the following statements is true?
a. A company cannot manipulate controllable factors to increase the demand for its product
b. A company cannot manipulate uncontrollable factors to increase the demand for its
 product
c. A company can manipulate uncontrollable factors to increase the demand for its product
d. A company can manipulate uncontrollable factors to increase the supply of its product

1 points   
QUESTION 24
1.  The change in any factor other than ________ would shift the demand curve
a. Weather
b. interest rate
c. Price
d. all of the above

1 points   
QUESTION 25
1.  Which of the following is true according to the IO perspective?
a. Industry performance determines firm conduct which in turn determines firms’
structure
b Industry structure determines firm conduct which in turn determines firms’
. performance
c. Industry structure determines firm performance which in turn determines firms’
conduct
d Industry conduct determines firm structure which in turn determines firms’
. performance

1 points   
QUESTION 26
1. Industries with high barriers to entry
a. Increases the likelihood of firms entering the industry
b Increases the number of competitors
.
c. Help firms sustain long term profits
d Pushes profits to normal returns
.

1 points   
QUESTION 27
1.  The industrial organization or (IO) perspective predicts
a. firm’s profitability differs only if they are in different
industries
b. firms within an industry are equally profitable
c. firm’s profitability within industries varies widely
d. Only A&B

1 points   
QUESTION 28
1. If a firm can create important complements to its original product, it has
a. Created a controllable factor that cannot change the demand for its product
b. Created an uncontrollable factor that cannot change the demand for its product
c. Created a controllable factor that can change the demand for its product
d. Created an uncontrollable factor that can change the demand for its product

1 points   
QUESTION 29
1. In the IO perspective, it is important to enter an industry with
a. High barriers to entry
b Low buyer power
.
c. Low supplier power
d All of the above
.

1 points   
QUESTION 30
1.  According to the indifference principle, housing prices
a. tend to converge over time
b tend to leave individuals indifferent about where they live
.
c. only tend to be different to compensate individuals for differences in living conditions
d only B&C
.

1 points   

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