Professor Robert AtkinManaging in Complex EnvironmentsProfessor Robert AtkinFINAL EXAM1. In this course, we assume that firms are corporations with at least someconcern with the creation of wealth. Ba. true b. false2. In the notes, I provide detailed examples of change in the domestic airlinesand banking industries. Both of these are examples of the long run effectof… Ba. diversification and focus b. deregulationc. both of the above d. none of the above3. Leapfrogging is commonly observed among providers of cell phones,leading to the conclusion that some environments change more quicklythan others. bada. true b. false 4. In market economies, prices, product mix, and distribution decisions can beregulated by governments. Aa. true b. false 5. Extremely complex environments… Da. increase the likelihood that existing firms failb. increase the likelihood that existing firms find new growth opportunitiesc. increase the likelihood that new firms find new growth opportunitiesd. all of the above6. Sole proprietorships… Ba. are publicly traded b. convey unlimited liability totheir ownersc. have unlimited life d. none of the above7. Positions in the firm… Ca. are deliberately structured sets of activitiesb. are all charged with some type of responsibilityc. both of the above d. none of the above8. Using target return as a profitability objective is an example of… Ca. a governance rule b. solving an agency problemc. satisficing d. all of the above9. Bureaucracies are effective in relatively unchanging environments Aa. true b. false10. The Balanced Scorecard is method to respond to… Ba. new accounting obligations under the Sarbanes-Oxley Actb. the existence of multiple performance criteriac. excessive executive compensation d. all of the above11. Over time money tends to grows in value. B2a. true b. false12. The multiple goals of a firm in a given industry tend to… Ca. be similar to other firms in the same industryb. be responsive to the interest of all stakeholdersc. change over time d. all of the above13. An exchange among parties, freely entered and of benefit to each, requiresa high level of interpersonal trust among the parties. Ba. true b. false14. One implication of the open system hypothesis is that a firm, in order toassure long term survival and growth, must engage in future transactions.Ba. true b. false15. To start a firm, the entrepreneur may require a loan. In this situation, thelender and the entrepreneur usually share transaction costs more or lessequally Ba. true b. false16. Although accounting profit and economic profit are generally different, thisis usually not true for sole proprietorships because they are very small. Ba. true b. false17. In this course we assume that the goals of the firm… Da. reflect the best interests of the stockholdersb. reflect the best interests of the senior managers of the firmc. both of the above d. none of the above18. Stakeholders have incentives to influence the governance structures offirms because governance affects… Ca. the choice and relative importance of the goals of the firmb. how the profit stream of the firm is allocatedc. both of the above d. none of the above19. The dominant coalition in a sole proprietorship consists only of the owner ofthe firm.a. true b. false B20. In raw material markets, firms can be ____________. Da. buyers b. sellersc. third parties d. all of the above2. Purchase transactions always increase the firm’s revenue. Ba. true b. false21. The price system assumes that sellers have unique private information which gives them advantages over buyers. B3a. true b. false422. Since most markets in advanced economies are relatively stable most of the time, … Da. firms generally have no incentive to product differentiateb. firms generally have no incentive to increase productivityc. both of the above d. none of the above23. Mature industries tend to become… Ba. perfect competitions b. oligopoliesc. monopolies d. insufficient information to determine 24. The cost of striking a contract… Da. is typically borne by the buyer b. is zero if both parties trust each otherc. both of the above d. none of the above25. Regulatory mechanisms may… Ca. increase cost to the seller b. increase price to the buyerc. both of the above d. none of the above26. Early adopters tend to be the first firms to… D a. process enhance b. product differentiate c. diversify d. none of the above 27. Focused firms are typically vertically integrated. Ba. true b. false28. In class we considered the issue of the boundaries on an industry, concluding that… Aa. industries can be nested within industries b. backwards integration by rivals has no effect on competitive advantagec. both of the above d. none of the above29. Assume two industries: In X, costs to enter are low, while in Y, costs to exit are low. Other things equal, we can conclude… Da. X and Y are equally attractive b. X is probably a perfect competition c. Y is probably a perfect competition d. none of the above2. Assume we conduct a Porter-type analysis on two industries, A and B. Both are in the early stages of the growth phase of the product life cycle. In A, we observe many fast second movers, while in B we see none. All other things equal, the likely results of this analysis is that… Da. A is more attractive since second movers would not enter if it were not attractiveb. A is more attractive since demand is likely to be growing fasterc. B is more attractive since there is no evidence of branding effectsd. B is more attractive since there are apparently barriers to entry530. If switching costs are high, rivals have strong incentive to vertically integrate. Ba. true b. false31. Assume you have the following information about an industry: Demand is falling, there is excess capacity, exit costs are high, customers are not brand loyal, entry barriers are low, supplier power is high, and there is an abundance of attractively priced substitutes. Given just this information, our best guess is that… Aa. the industry is currently unattractiveb. the industry has always been unattractivec. both of the above d. none of the above 32. The Porter model is particularly useful for analyzing… Ca. stable oligopolies b. mature marketsc. both of the above d. none of the above33. A firm’s potential economic performance is dependent on… Ca. its