Q&A Hero

Q: Jane purchases snickle-dees only because her friends do. This isA) price-leadership. B) negative-sum game.C) positive market feedback. D) negative market feedback.

Q: E-commerce is more developed in ________ than the rest of the world, partly because of the lower cost of access to the Internet than found elsewhere. A) China B) Brazil C) Switzerland D) Japan E) the United States

Q: The savings rate of individuals in the U.S. has trended higher since the 1980s and it is now higher than the savings rate of most other developed countries. a. True b. False

Q: If a firm that produces an information product uses marginal cost pricing, then the firmA) will earn negative profits.B) will earn profits equal to zero.C) will earn positive profits but could earn a higher profit by using a different method. D) will maximize profits.

Q: Parallel importing is also known as A) secondary wholesaling. B) black marketing. C) backwashing. D) industrial piracy. E) smuggling.

Q: The future value of a cash flow is positively related to interest rate and negatively related to the amount of time until maturity. a. True b. False

Q: In general, the demand for the product of a monopolistic competitor isA) unitary elastic. B) relatively inelastic.C) relatively elastic. D) perfectly elastic.

Q: Abel Corp. is a wholesaler for Global Electric in the French market. Global Electric discovered that Abel Corp. was diverting some of its goods to the English market. Abel could get a greater profit in the English market because the goods were bought by the firm at a cheaper price in France. What is Abel engaged in? A) black marketing B) parallel importing C) backwashing D) industrial piracy E) smuggling

Q: The effective annual rate of 5% compounded monthly is approximately 5.12%. a. True b. False

Q: Suppose a monopolistʹs costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm shouldA) increase output and decrease price. B) decrease output and increase price.C) not change output or price. D) shut down.

Q: The closer the company wants to get to the customer in its channel contact, A) the larger the sales force required. B) the more routine the channel-building process becomes. C) the more likely the company will use middlemen. D) the more important it is to consult with trade organizations. E) the more effective use of the Internet will be.

Q: The post-audit is a simple process in which actual results are compared to forecasted results and any discrepancy indicates a change factors that are completely under management's control. a. True b. False

Q: Signals areA) used by economic decision -makers to inform others about their plans.B) the method by which government planners inform economic decision -makers about the types of decisions they should make.C) the method by which firms determine their profit maximizing quantity.D) compact ways of conveying to economic decision makers information needed to identify industries where more resources are needed.

Q: According to experienced exporters, what is the only effective way to select a middleman? A) Conduct a background check on all the distributors available in the target market. B) Issue a request-for-proposal to all distributors in the target market and evaluate their responses. C) Consult other manufacturers of similar products and select the distributor recommended by them. D) Consult trade organizations and select the distributor recommended by them. E) Talk personally to ultimate consumers to find whom they consider to be the best distributors.

Q: The post-audit two main purposes are to improve forecasts and to improve operations. a. True b. False

Q: TotalOutputTotalCostsTotalOutputTotalCosts100$500106$528101501107540102503108555103506109580104510110615105518111660Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10/unit. What is true when the firm produces 103 units?A) Total revenue equals $5,060.B) Total costs exceed total revenue by $403.C) Marginal revenue is less than marginal cost. D) Its total profit is $524.

Q: Sixty percent of the Japanese population lives in the ________ market area, which essentially functions as one massive city. A) TokyoNagoyaOsaka B) KomakiTokonameKariya C) NagoyaHandaSeto D) NishioOkazakiInazawa E) InuyamaNisshinTakahama

Q: There exists an IRR solution for each time the direction of cash flows associated with a project is interrupted. a. True b. False

Q: Refer to the above figure. Marginal costs are represented by curveA) 1. B) 2. C) 3. D) 4.

Q: Which action should be taken when beginning the search for prospective middlemen? A) short-listing the middlemen B) studying the target market C) evaluating the available financial resources D) designing the sales force required E) understanding the mission of the manufacturing firm

Q: The NPV method implicitly assumes that the rate at which cash flows can be reinvested is the required rate of return, whereas the IRR method implies that the firm has the opportunity to reinvest at the project's IRR. a. True b. False

Q: A long-term loan that is given to a firm is known as aA) share of stock. B) bond. C) dividend. D) random walk.

Q: What subject area should be on the checklist of criteria for evaluating middlemen servicing a market? A) flexibility B) sensitivity C) cultural empathy D) productivity E) breadth of knowledge

Q: NPV and IRR will always lead to the same accept/reject decision for mutually exclusive projects. a. True b. False

Q: The economyʹs current rate of interest is 10 percent and a firm has $10,000 of owner -invested capital. Its total revenue is $5000 and the firmʹs explicit costs are $3500. From this we know that this firmʹsA) accounting profit is $500. B) economic profit is $1,500.C) accounting profit is $1,500. D) economic profit is $5,000.

Q: One reason channels of distribution often pose longevity problems is that most middlemen A) do not maintain sufficient inventory to serve customers. B) lack product knowledge resulting in low sales volume. C) have little loyalty to their vendors. D) tend to slow down distribution to extract higher commissions. E) do not have sufficient knowledge of the target market.

Q: Along an indifference curveA) every combination of goods the consumer can purchase with their income is given.B) the prices of goods will change.C) utility increases as you move to the right.D) every combination of the goods give the same level of satisfaction.

Q: A capital budgeting project is acceptable if the rate of return required for such a project is greater than the project's internal rate of return. a. True b. False

Q: Most middlemen handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. This is a problem associated with which of the six Cs of distribution channel strategy? A) character B) continuity C) control D) cost E) capital requirement

Q: Using the discounted payback method, a project should be accepted when the discounted payback is greater than the project's expected life. a. True b. False

Q: When total utility is falling,A) marginal utility is at a maximum.B) marginal utility is at zero. C) marginal utility is negative.D) marginal utility has decreased, but is now increasing.

Q: One way to get around the difficulty of full-market coverage in a country is to A) seek significant penetration in major population areas. B) avoid countries with multiple languages. C) assess countries in terms of market segments, not geographic segments. D) keep marketing efforts to highly developed areas. E) focus on the use of one channel.

Q: An increase in the discount rate used in computing the NPV of a project will lower the value of the NPV for that project. a. True b. False

Q: Transporting and storing goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations with middlemen most directly relate to which of the six Cs of the channel distribution strategy? A) cost B) control C) coverage D) character E) continuity

Q: Suppose that the absolute price elasticity of demand for hamburger is 1.15 and that the absolute price elasticity of demand for steak is 2.4. Then the absolute price elasticity of demand for beef will beA) less than 1.15. B) more than 2.4.C) between 1.15 and 2.4. D) equal to 1.15.

Q: Which mode of distribution affords the most control over the distribution channels but often at a cost that is not practical? A) complementary marketers B) direct sales force C) export associations D) trading companies E) export management companies

Q: Although the payback method ignores the time value of money, relying solely on this capital budgeting method will always lead to value maximizing decision. a. True b. False

Q: It is assumed that the marginal benefit of air cleanliness falls with the degree of cleanliness sinceA) the marginal cost of air cleanliness increases.B) air cleanliness is a public good and not a private good.C) the marginal utility of air cleanliness falls with the degree of cleanliness. D) the generation of pollution should be considered an externality.

Q: Effective capital budgeting can improve the timing of asset acquisition and the quality of assets purchased, thereby providing an opportunity to purchase and install assets before they are needed. a. True b. False

Q: Relative povertyA) has been eliminated in the United States. B) will always be with us.C) has never existed in the United States. D) can be eliminated in the next 20 years.

Q: What is one of the highest costs of doing business in China? A) money required for the transportation of goods B) money required for obtaining appropriate permits C) cost of local advertising D) capital required to maintain effective distribution E) cost of customizing products for the Chinese market

Q: Because we usually assume positive interest rates in time value analyses, the present value of a three year annuity will always be less than the future value of a single lump sum, if the annuity payment equals the original lump sum investment. a. True b. False

Q: The marginal factor cost of a monopsonist isA) upward sloping and the same as the supply curve.B) downward sloping when the supply curve of labor is upward sloping.C) upward sloping and rises faster than the supply curve.D) horizontal.

Q: Which mode of distribution in the foreign market will require a company to make the maximum financial investment? A) export management companies B) trading companies C) export associations D) direct sales force E) complementary marketers

Q: Financial calculator and tabular methods use different mathematical formulas to solve time value of money problems, and that is why they always lead to different results. a. True b. False

Q: What is a critical element associated with using a particular type of middleman? A) knowledge of the culture of the target market B) number of employees C) mode of transportation for moving goods D) influence over the target market E) cash-flow patterns

Q: A business enterprise in which employees must belong to the union before they can be hired is called a(n)A) craft union. B) industrial union. C) closed shop. D) union shop.

Q: If we calculate a periodic interest rate, say a monthly rate, in order to get the simple annual rate, we can multiply the periodic rate by the number of periods within a year. a. True b. False

Q: What is one of the key elements in distribution decisions when it comes to choosing channels? A) selection of optimum container sizes B) volume discounts and rebates C) functions performed by middlemen D) local advertising modes E) target market culture

Q: The cost of hiring one more worker, ceteris paribus, is known asA) marginal revenue product. B) marginal physical product.C) marginal factor cost. D) marginal wage.

Q: The effective annual rate is always greater than the simple rate as a result of compounding effects. a. True b. False

Q: What is one of the six Cs of distribution channel strategy? A) communication B) continuity C) capacity D) commission E) contribution

Q: Regulators often adopt policies that benefitA) consumers and injure producers.B) the firms regulated rather than consumers. C) only the government.D) no one.

Q: What is true of foreign sales corporations? A) They are commonly called piggybackers. B) They can only be related to a manufacturing parent and not an independent broker. C) They virtually control distribution through all levels of channels in Japan. D) They accumulate, transport, and distribute goods from many countries. E) They can function as a principal or a commissioned agent.

Q: When a loan is amortized, the largest portion of the periodic payment goes to reduce principal in the early years of the loan such that the accumulated interest can be spread out over the life of the loan. a. True b. False

Q: A tendency for a good to come into favor with consumers because other consumers have chosen to buy the item isA) price-leadership. B) negative-sum game.C) positive market feedback. D) negative market feedback.

Q: In the context of the types of domestic middlemen, the WTO in 2003 ruled ________ to be in violation of international trade rules, thus starting a major trade dispute with the European Union. A) foreign sales corporations B) direct marketing partnerships C) trading companies D) export promotion companies E) Webb-Pomerene export associations

Q: In an amortization problem where a debt is completely amortized, if we are given the values for PV, I, and N, then we can solve the problem despite having been given only three of the five time value variables involved. a. True b. False

Q: Firms that produce an information product experience short -run economies of operation becauseA) the firm will always produce in the decreasing portion of the marginal cost curve. B) of the U-shaped nature of the average total cost curve.C) of the U-shaped nature of the average variable cost curve.D) the average total cost of producing and selling the product declines as output increases.

Q: ________ are a type of domestic middleman. A) Sole proprietors B) Export management companies C) Foreign distributors D) Lessors E) Joint ventures

Q: Solving for the interest rate associated with a stream of uneven cash flows, without the use of a calculator, usually involves a trial and error process. a. True b. False

Q: The major similarity between monopolistic competition and perfect competition isA) the shape of the demand curve.B) that both assume many buyers and sellers. C) price equals marginal revenue in each.D) both assume products are differentiated.

Q: A(n) ________ is a middleman in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property. A) Webb-Pomerene export association B) manufacturer's export agent C) export management company D) complementary marketer E) foreign sales corporation

Q: We can think of inflation occurring over time as a type of discounting process where the present value of a sum today is diminished by reverse compounding over time. a. True b. False

Q: The monopolist will choose the price and output combination at which A) MC equals AR. B) MC equals MR. C) MC equals price. D) MR equals AR.

Q: The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export activities without being subject to the A) Sherman Antitrust Act. B) Federal Communications Act. C) Trade Commission Act. D) Food, Drug, and Cosmetics Act. E) Robinson-Patman Act.

Q: The opportunity cost rate is only applicable if you as an investor actually have an alternative investment to compare. If you are making a decision about a single investment, the opportunity rate concept does not apply. a. True b. False

Q: In a perfectly competitive industry, any restrictions that prevent new firms from entering A) lead to negative profits. B) guarantee that all existing firms will earn exactly a zero profit. C) hinder economic efficiency. D) reduce the average cost of production.

Q: A ________ provides a selling service for a manufacturer, has a short-term relationship with the manufacturer, and operates on a straight commission basis. A) manufacturers' retail store B) trading company C) global retailer D) manufacturer's export agent E) complementary marketer

Q: Suppose an investor can earn a steady 5% annually with investment A, while investment B will yield a constant 12% annually. Within 11 years' time, the compounded value of investment B will be more than twice the compounded value of investment A (ignore risk). a. True b. False

Q: TotalOutputTotalCostsTotalOutputTotalCosts100$500106$528101501107540102503108555103506109580104510110615105518111660Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10 per unit. What is its profit -maximizing rate of production?A) 104 units B) 106 units C) 108 units D) 110 units

Q: A(n) ________ is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers that cover only one or two markets. A) manufacturer's retail store B) export management company C) Webb-Pomerene export association D) global retailer E) manufacturer's export agent

Q: The greater the number of compounding periods within a year, the greater the future value of a lump sum invested initially, and the greater the present value of a given lump sum to be received at maturity. a. True b. False

Q: Refer to the above figure. Average total costs are represented by curveA) 1. B) 2. C) 3. D) 4.

Q: Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution. The formal name for such activities is A) skimming. B) backhauling. C) complementary marketing. D) export marketing. E) demand shifting.

Q: All other factors held constant, the present value of a given annual annuity decreases as the number of discounting periods per year increases. a. True b. False

Q: A legal claim to a percentage of a companyʹs future profits and assets is known as aA) share of stock. B) bond. C) dividend. D) random walk.

Q: IGP owned a large warehouse in England where it stored and distributed books. It was approached by a greeting card company in the U.S. to distribute those as well. Since the products would go into similar markets and IGP could make a profit on the distribution of the greeting card line, it decided to participate in A) backhauling. B) demand shifting. C) piggybacking. D) shape shifting. E) skimming.

Q: One of the potential benefits of investing early for retirement is that an investor can receive greater benefits from the compounding of interest. a. True b. False

Q: If your business earns $10,000 in revenues, has explicit costs of $7,000, and implicit costs of $5,000, your accounting profit isA) $2,000. B) -$2,000. C) $5,000. D) $3,000.