Managing in Complex Environments Name (LAST, FIRST):_________ANSWERS (at end) ______Spring, 2013 Quiz #1 5 & 630 pm FormProfessor Atkin PeopleSoft # ______________________ My lecture time is:______

This is a closed-book, closed-note quiz with 35 3-point questions. Answers go on optical scanning sheets. The last page is a project peer evaluation. To earn a grade, you must return (a) the quiz, (b) the answer sheet, and (c) the completed peer evaluation. All electronics off and out-of-sight. Good luck!Questions in RED are relatively easy questions that many of us answered incorrectly. 1. In this course, we assume that firms…

a. may have more than one goal b. have a legal existence and identityc. both of the above d. none of the above

2. The open systems hypothesis implies that firms must engage in…a. market economies b. purchase transactionsc. both of the above d. none of the above

3. Since the environment of a firm contains all possible customers, firms in the same industry have identical environments. a. true b. false

4. In the typical situation, third party infrastructure providers are monopolists. a. true b. false

5. Transactions that cross internal but not external boundaries…a. are usually priced below market price but above the cost of productionb. generate significant revenue and net income for the firmc. both of the above d. none of the above

6. As the number of drivers of environmental change increase, change becomes more rapid. a. true b. false

7. The open systems hypothesis implies that publicly-traded corporations must report net income to the SEC.a. true b. false

8. The right to make decisions and to commit resources of the firm…a. is what we mean by responsibilityb. is how we distinguish managers from supervisorsc. both of the above d. none of the above

9. Empowerment is the term used to refer to the process by which some stakeholders become members of the dominant coalition. a. true b. false

10. In the intellectual property market, firms can be…a. sellers b. buyers c. brokers d. all of the above

11. As the complexity of the environment increases, existing heuristics are likely to change.a. true b. false

12. A January 28, 2013 article by AP read in part “Ford is joining with Daimler and Renault-Nissan to speed development of cars that run on hydrogen, with hopes of bringing a vehicle to market in as little as four years,” implying that competitors in one market are likely to be competitors in all markets.a. true b. false

13. Our discussion of the Starbucks case suggests that employees are not represented in the firm’s dominant coalition.a. true b. false

14. Globalzation involves…a. trade between countriesb. investment by governments to protect domestic jobsc. both of the above d. none of the above

15. During the past decade or so, we have observed a shift from centrally planned to market economies. This has resulted in a reduction of transfer transactions and an increase in market transactions. a. true b. false

16. Future transactions are…a. generally less risky than spot b. a means to manage riskc. both of the above d. none of the above

17. Governance concerns…a. an inherently political process b. the distribution of the revenue of the firmc. both of the above d. none of the above

18. Since brokers are third parties who bring buyers and sellers together, brokers have no rivals.a. true b. false

19. Accounting profit and economic profit are different in part because… a. net income is forward looking while rent is backward and forward lookingb. net income does not consider the time value of money while rent doesc. accounting profit can be maximized while economic profit cannotd. all of the above

20. Corporations are required by law to disclose their net income to the general public. a. true b. false

21. Over time, the interests of different stakeholder groups can…a. converge b. divergec. both of the above d. none of the above

22. A Wall Street Journal news brief yesterday was titled “Yahoo profits drop; share prices increases 4%,” suggesting that investors believe that current net income is a good predictor of economic profit.a. true b. false

23. We observed that most markets in developed economies were reasonably stable most of the time. This implies that…a. prices cannot change faster than the rate of inflationb. firms cannot escape perfect competition in the long runc. both of the above d. none of the above

24. The cost of striking a contract…a. is typically borne by the buyer b. is zero if both parties trust each otherc. is typically borne by the seller d. none of the above

25. Contracts can increase the stability of markets because…a. they tend to place constraints on the behavior of parties to the contractb. there is a means of redress if one or the other party violates the contractc. both of the above d. none of the above

26. Self-interest among parties to a transaction…a. is an incentive for sellers to acquire or build asymmetric informationb. can lead to the break-down of trust among partiesc. both of the above d. none of the above

27. The existence of multiple performance criteria for the firm usually implies that increasing the performance on one criterion reduces performance on a different criterion. a. true b. false

28. If market are not completely stable, then parties may have incentives to engage in future transactions.a. true b. false

29. We learned from the case that Starbucks was vertically integrated suggesting transactions between the roasting and retail parts of the firm likely produce significant revenue for the firm.a. true b. false

30. Investment in product differentiation or process enhancement is risky because…a. cost is certain and benefits may never happen

b. benefits and costs tend to occur at the same timec. both of the above d. none of the above

31. If a market is orderly, we can conclude that information is symmetric. a. true b. false

32. A first mover is…a. the first firm to differentiate b. the first firm to process enhancec. the first firm to pursue futures transactions d. all of the above

33. Product differentiation is an attempt by the firm to shift the risk associated with perfect competition to a new risk asociated with developing new products.a. true b. false

34. Firms prefer monopoly to perfect competition in all markets in which they participate.a. true b. false

35. What is your best guess about your performance on this quiz? a. I think I got at least 90% correct b. I think I got at least 80% correctc. I think I got at least 70% correct d. I think I got less than 70% correct

Q 1 Q 2 Q 3 Q 4 Q 5 Q 6 Q 7 Q 8 Q 9 Q 10C D B B A B B D B D

Q 11 Q 12 Q 13 Q 14 Q 15 Q 16 Q 17 Q 18 Q 19 Q 20 Q 21 Q 22A B B A B B A B B B C B

Q 23 Q 24 Q 25 Q 26 Q 27 Q 28 Q 29 Q 30 Q 31 Q 32 Q 33 Q 34 Q 35D D C C A A B A B A A B any