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ECO 550 Week 9 QuizClick this link to get the tutorial:http://homeworkfox.com/tutorials/economics/4290/eco-550-week-9-quiz/Question 11. The following is an organization chart depicting a single row of individuals A, B, and C.Figure 13-1Identify the statement which is true of the organization depicted in this figure? AnswerThere is a strong linkage between the individuals represented in the chart.It is a sole proprietorship firm.The above organization chart depicts a U-form firm.Team production is unimportant in this organization.Question 21. In which of the following cases will centralization of decision making be appropriate?When different departments in an organization function separately without much interrelation.When information necessary for the decision making process originates from a variety ofsources.When the organization expands in size and its activities become more complex.When all the information comes from an external source.Question 31. Refer to Figure 13-2. Identify the structure of Z Corp.The following is the organization chart of Z Corp.Figure 13-2U-formM-form
Mixed organizationMatrix organizationQuestion 41. When each box in an organization chart contains individuals who specialize in some field,then the activities in the organization are categorized by _____.divisionalizationfunctionalizationdecentralizationde-integrationQuestion 51. One of the disadvantages of an organization which has a matrix structure is that:each individual reports to one boss, causing excess flow of information to one individual.flow of information is difficult when operations are so highly diversified.each individual has two bosses whose interests may not be aligned.there are limits to the information a firm’s headquarters can use effectively in making decisions.Question 61. Which of the following was a consequence of the financial revolution which drasticallychanged risk management in the 1970s?Managements created separate categories for handling different types of risks.A group of specialists were created who handled risk assessment for the entire organization andreported only to headquarters.Risk analysis was decentralized by concentrating on risks at the division-level.It became easier to assess market risk with the introduction of various new tools of financialmanagement.Question 7
1. The late business historian Alfred Chandler blamed Britain’s competitive difficulties in theearly twentieth century on:the structure of the firms.the removal of trade barriers.the lack of innovation.inefficient transfer of information within firms.Question 81. Orders can lose accuracy:if they are too complicated.as they are transmitted within the organization.in organizations where decision-making is decentralized.unless they are given to the right recipient.Question 91. Joanne can choose to selectively disclose information to her superiors in an attempt to elicitdecisions in her favor if:the information is easily available to all.she is the only source of the information concerned.the information is easily verifiable.there are other sources of the same information in the firm.Question 101. The information to be gathered for a decision depends on which of the following?The current market conditions and on the expected costs and benefits of acquiring theinformation.The model that underlies a decision and on the expected costs and benefits of acquiring theinformation.
The cost of the information and the current market conditions.The model that underlies a decision and the amount of information that is internally available.Question 111. Categorization of activities in an organization along product or geographic lines is called:globalization.decentralization.functionalization.divisionalization.Question 121. Axis Group has a publishing house, operates in the sports gear market, and owns a coffeeplantation. A board of directors is responsible for the overall performance of the group. Identifythe correct statement from the following.The board will be responsible for all decision-making process.The board will be in the best position to solve even a minor problem at the coffee plantation.The sports gear firm’s risk assessment team will also be responsible for assessing market risk forthe group’s other functional areas.Decisions for the publishing house are likely to be taken by the individuals who head it, ratherthan the board of directors heading the entire group.Question 131. _____ is the only type of firm where it is possible for a person to hold all of the informationthat matters for all types of decisions.CorporationA firm where decision-making is centralizedSole proprietorshipA firm where there is separation of ownership and managementQuestion 14
1. General Motors was able to gain advantage over Ford in the 1920s primarily because:the latter failed to adapt its product policy and organization structure to meet the demands of thechanging market.the former had always been an M-form and better managed organization.the latter charged higher prices for its cars than General Motors.the former was vertically integrated with better control over its input production than Ford.Question 151. The method of payment that a principal can use to elicit effort from an agent is called:a contract.an order.an incentive.garbling.Question 162. _____, uncertainty, and risk of opportunism are the three major reasons due to which U.S.Steel prefers to own its mines, enrichment facilities, and ore carriers.Involuntary transactionsTransaction costsNonspecificity of assetsTrademark and credibilityQuestion 172. If there is a low degree of uncertainty combined with a low degree of asset specificity, _____will be efficient.long-term contractsshort-term contractsmarket transactions
vertical integrationQuestion 182. Which of the following exemplifies an opportunistic behavior by a franchisor arising out ofincompleteness or ambiguity in a contract?Providing inferior service in an attempt to cut operating costs.Terminating a well-operated franchisee and converting the establishment into a profitablecompany-owned outlet.Fixing exorbitant prices for products having relatively elastic demand.Terminating a franchisee who had been using the company brand name to endorse products thatthe agreement says it cannot.Question 192. Firms generally prefer not to outsource product design and manufacturing because:these activities are common and standardized.these operations are more or less static.these operations involve a low investment.these operations require investment in highly specific assets.Question 202. _____ increases with the variability of outcomes and the underlying degree of randomness inthe environment that can affect a business relationship.The problem of double marginalizationAsset specificityUncertaintyVolumetric interdependenceQuestion 212. The invention of the Bessemer converter in 1856:
increased the cost of continuous and coordinated operations of a steel industry.motivated downstream integration of the steel industry into coal mining.increased the efficient scale of steel production.increased volumetric interdependence between different stages of steel production.Question 222. _____ improves exchangeability, and reduces the cost of obtaining information about a goodand about the parties involved in the transaction.De-integrationOutsourcingVertical integrationStandardizationQuestion 232. During the peak season, when demand for pipeline transport of natural gas at the maximumlegally allowable price exceeds the available capacity:buy-sell transactions take place.pipeline owners vertically integrate into gas production.price discrimination becomes prominent.pipeline owners use discretionary powers to ration capacity to shippers.Question 242. Which of the following is an advantage of mini-mills over vertically integrated giant mills?The small size of mini-mills ensures economies of scale in steel production.The small furnaces used in mini-mills depend less on coal and more on electricity.The mini-mills do not require integration of casting and milling activities.The small furnaces used by mini-mills can be operated as per the producer’s will.
Question 252. Identify the reason why U.S. Steel prefers to own iron ore mines.It helps them to coordinate iron ore transport and furnace operations.It reduces the company’s raw material costs.It helps them to inspect the quality of the ore.It reduces the competition the company faces in the world steel market.Question 262. Which of the following transactions can be categorized as outsourcing?A U.S. furniture manufacturer buying a lumber facility.A U.S. firm transferring some of its operations to its new subsidiary in India.Nike selling its sportswear to customers through its franchisees across the world.A U.S. cosmetics firm using an advertising agency to market its products.Question 272. In order to lessen the monitoring problems and opportunistic behavior of a franchisor and afranchisee, franchise contracts:create provisions for high liquidated damages.are complete in all respect.have similar fixed charge and royalty arrangements.include certain flexible clauses.Question 282. The arrival of inexpensive information technology, such as personal computers andinexpensive telecommunications:discouraged de-integration.increased the optimal size of firms.
shifted the long-run average cost (LRAC) curve of firms downward.shifted the marginal cost of firms upward.Question 292. Although U.S. Steel is integrated into iron ore mining, it currently does not own any of themines that supply its coking coal because:the company has a high requirement of coking coal which cannot be supplied by a single mine.the coal prices are highly unpredictable and volatile.there are a limited number of coal suppliers.futures and options markets are available for coal.Question 302. Which of the following exemplifies a vertical restraint imposed by a franchisor in a contract?A clause prohibiting a franchisee from using the company trademark to support a politicalcandidate.A clause prohibiting a franchisee from announcing special offers during Christmas to attractcustomers.A clause prohibiting a franchisee from bundling two products of the same company.A clause stating the target sales to be achieved by the company during an accounting year.