Deck 16: Combining Micro and Macro Analysis for Managerial Decision Making

Question 1

McDonald's current expansion plans into China include:

A) expansion of drive-throughs only.
B) both seat down restaurants and drive throughs.
C) seat down restaurants only.
D) none of the above.

Answer 1

B

Question 2

China's investment is largely financed out of:

A) profits.
B) equity financing.
C) debt financing.
D) none of the above.

Answer 2

A

Question 3

NAFTA created a environment for companies to expand globally due to the:

A) relaxing of restrictions on foreign business ownership.
B) lower trade barriers.
C) both in relaxing of restrictions on foreign business ownership and lower trade barriers.
D) none of the above.

Answer 3

A

Question 4

led to consolidation, the development of national supermarket chains, and partnerships with international retailers in Mexico?

A) GATT.
B) FATT.
C) NAFTA.
D) None of the above.

Question 5

The amount of cost cutting technical innovation introduced into a production process is a function of:

A) technology only.
B) technology and consumer acceptance.
C) consumer acceptance only.
D) none of the above.

Question 6

McDonald's partnership with Beijing's Department of Agriculture provided:

A) McDonald's with subsidies , suppliers, and distributional channels.
B) McDonald's with just subsidies.
C) McDonald's with just distributional channels.
D) all of the above.

Question 7

Mexico's system of regional supermarket remained intact until the 1980s.

A) oligopolies.
B) monopolies.
C) monopolistic competitors.
D) none of the above.

Question 8

To avoid import duties:

A) foreign firms built plants in the NAFTA zone.
B) domestic firms built plants in the NAFTA zone.
C) foreign firms did nothing.
D) none of the above.

Question 9

The Chinese policy of one child per family provided McDonald's the opportunity to actively market to:

A) children.
B) senior citizens.
C) parents.
D) none of the above.

Question 10

Increases in both labor and capital productivity will result in:

A) downward shift of the average and marginal product curves and upward shift of the average cost curves.
B) downward shift of the average and marginal product curves and downward shift of the average cost curves.
C) upward shift of the average and marginal product curves and downward shift of the average cost curves.
D) upward shift of the average and marginal product curves and upward shift of the average cost curves.

Question 11

Wal-Mart's advantages in the U.S. :

A) worked in Mexico.
B) did not work in Mexico.
C) were the same in Mexico.
D) none of the above.

Question 12

The collapse of the commodity prices:

A) increased China's consumer price inflation.
B) decreased China's consumer price inflation.
C) increased China's real GDP.
D) none of the above.

Question 13

The World Bank estimates that China's air and water pollution costs about:

A) 5.8 percent of its GDP.
B) 2 percent of its GDP.
C) 20 percent of its GDP.
D) none of the above.

Question 14

Managers in firms with market power can:

A) not influence price.
B) develop strategies that involve both the demand and supply sides of the market.
C) only focus on the demand side of the market.
D) none of the above.

Question 15

In 2008, Chinese authorities were concerned with raising interest rates to combat inflation because:

A) of the fear of large capital inflows into China fueling inflation.
B) of the fear of large capital outflows from China fueling inflation.
C) of the fear of a contraction.
D) none of the above.

Question 16

Managers can increase firm profits by:

A) increasing revenue only.
B) decreasing costs only.
C) increasing revenue and decreasing costs.
D) none of the above.

Question 17

In China, beef is considered a:

A) luxury.
B) necessity.
C) close substitute for chicken.
D) none of the above.

Question 18

In Fall 2008, China announced an:

A) $568 billion stimulus package aimed at increasing domestic demand and averting a global recession.
B) $10 billion stimulus package aimed at increasing domestic demand and averting a global recession.
C) a laissez-faire strategy.
D) none of the above.

Question 19

Mexico's 1994 economic crisis led to the:

A) revaluation of the peso.
B) appreciation of the peso.
C) devaluation of the peso.
D) none of the above.

Question 20

In addition to the presence of NAFTA, Mexico was attractive for foreign direct investment due in part to:

A) ruralization of the Mexican economy.
B) urbanization of the Mexican economy.
C) decreasing population growth.
D) none of the above.

Question 21

The Pacto plan reduced inflation; however, the nominal exchange rate-based stabilization resulted in:

A) real depreciation of the peso.
B) nominal depreciation of the peso.
C) real appreciation of the peso.
D) nominal appreciation of the peso.

Question 22

The decrease in demand faced by McDonalds can be attributed to:

A) decrease in consumer preference for high-fat content food.
B) increase in lawsuits.
C) increase in competitive pressures.
D) all of the above.

Question 23

If a good is price elastic, a decrease in price will:

A) decrease total revenue.
B) increase total revenue.
C) not affect revenue.
D) none of the above.

Question 24

In general, large current account deficits have to be financed by:

A) capital outflows abroad.
B) capital inflows from abroad.
C) trade barriers.
D) none of the above.

Question 25

Wal-Mart's market strategy in Mexico has been to segment the market by:

A) proximity to the U.S.
B) ethnic group.
C) income.
D) none of the above.

Question 26

Wal-Mart's distribution centers provide:

A) diseconomies of scale.
B) diseconomies of scope.
C) economies of scale.
D) none of the above.

Question 27

In 1994, a constitutional amendment was passed in Mexico to:

A) create trade barriers.
B) create a fully independent central bank.
C) create a partially independent central bank.
D) none of the above.

Question 28

A limitation for Wal-Mart's growth in Mexico is:

A) its focus on the middle income class.
B) its focus on the upper income class.
C) its focus on the lower income class.
D) none of the above.

Question 29

If capital inflows decrease due to higher interest rates in other countries and large amounts of import spending, there will be:

A) upward pressure on a country's exchange rate.
B) downward pressure on a country's exchange rate.
C) no pressure on a country's exchange rate.
D) none of the above.

Question 30

If a good is price inelastic, a decrease in price will:

A) decrease total revenue.
B) increase total revenue.
C) not affect income.
D) none of the above.

Question 31

For much of 2001 and 2002, McDonalds faced an):

A) decrease in demand.
B) increase in demand.
C) increase in profits.
D) none of the above.

Question 32

Worker's remittances from the U.S.:

A) comprise roughly 5 percent of consumer spending in Mexico.
B) comprise roughly 50 percent of consumer spending in Mexico.
C) do not have an impact on consumer spending in Mexico.
D) none of the above.

Question 33

Although McDonalds operates in a market structure with many competitors and substitute foods, it often engages in with its major fast food competitors.

A) monopoly behavior.
B) oligopoly behavior.
C) competitive behavior.
D) none of the above.

Question 34

Wal-Mart commands the lowest prices from its Mexican suppliers and has caused a number of suppliers:

A) to go bankrupt.
B) to flourish.
C) to expand their work force.
D) none of the above.

Question 35

The increase in capital inflows into Mexico due to the real appreciation of the peso resulted in:

A) an increase in current account deficits.
B) an increase in current account surpluses.
C) an increase in capital account deficits.
D) none of the above.

Question 36

McDonalds' franchise owners reported that profits were declining from selling the discounted items from the Dollar Menu. This suggests that:

A) those items are price elastic.
B) those items are price inelastic.
C) those items are price unitary elastic.
D) none of the above.

Question 37

An exchange rate can be maintained only as long as:

A) the country's central bank reserves are available to support currency intervention in the foreign exchange market.
B) the country's central bank can increase the domestic money supply.
C) the country's government increases debt financing.
D) none of the above.

Question 38

Mexico's largest trading partner is:

A) the U.S.
B) Canada.
C) Brazil.
D) none of the above.

Question 39

In 1988, the Mexican government passed an agreement called the which included commitments to reductions of the fiscal deficit, tightening of monetary policy, liberalization of trade, and an incomes policy that covered wages, prices, and exchange rates.

A) Real Plan.
B) Pacto.
C) NAFTA agreement.
D) none of the above.

Question 40

The increase in U.S. interest rates in 1994 resulted in:

A) capital outflows from Mexico.
B) capital inflows to Mexico.
C) capital outflows from the U.S.
D) all of the above.

Question 41

In the study of the demand for fast food, the income elasticity of demand was estimated to be:

A) statistically insignificant and elastic.
B) statistically insignificant and inelastic.
C) statistically insignificant and unitary elastic.
D) zero.

Question 42

When Wal-Mart arrived in Mexico, the food retailing sector was comprised of a handful of national supermarket chains.

Question 43

The lack of success of some Walt Disney movies had:

A) a negative impact on Happy Meal sales.
B) a positive impact on Happy Meal sales.
C) no impact on Happy Meal sales.
D) none of the above.

Question 44

McDonald's was able to avoid currency problems with respect to global operations through:

A) the options market.
B) the futures market.
C) currency hedges.
D) barter arrangements.

Question 45

In the study of the demand for fast food, the researchers based the study on the concept that consumers react to:

A) only the money price.
B) only the value of time spent in acquiring the food.
C) both the money price and the value of time spent in acquiring the food.
D) none of the above.

Question 46

In China, investment is largely financed through the equity markets.

Question 47

McDonalds has traditionally been popular among Chinese children.

Question 48

McDonalds kept its U.S.-based menu when entering the Chinese market.

Question 49

In the study of the demand for fast food, the price elasticity of demand was estimated to be:

A) statistically significant and elastic.
B) statistically significant and inelastic.
C) statistically significant and unitary elastic.
D) zero.

Question 50

McDonald's is unique in the fast food industry in that it:

A) is the oldest fast food chain.
B) owns much of its real estate or has it tied up in long-term leases.
C) only operates in the U.S.
D) none of the above.

Question 51

Multinational corporations always confront local legislation and institutions in terms of hiring and employment practices.

Question 52

In the study of the demand for fast food, the variables gasoline consumption per capita and population density were included as:

A) proxies for substitute goods.
B) proxies for travel distance and cost.
C) proxies for opportunity cost of time.
D) none of the above.

Question 53

In the study of the demand for fast food, the authors measure the targeting of fast food to children and differential consumption by other age groups by including what variables in the demand function?

A) Age variables.
B) Ethnic variables.
C) Regional indicator variables.
D) None of the above.

Question 54

In terms of location decisions, firms evaluate the infrastructure of the area in terms of access to transportation as well as the quality of life.

Question 55

To counter parents' concerns about fast foods and childhood obesity, McDonalds considered

A) a variety of menu items such as milk shakes and candy.
B) a variety of menu items such as apple slices, fruit juices, peanut butter and jelly sandwiches, and carrot sticks.
C) not changing the menu.
D) all of the above.

Question 56

To cut costs in the face of declining demand and increased competition, many fast food restaurants have focused on reducing:

A) labor costs.
B) utility costs.
C) paper napkin costs.
D) none of the above.

Question 57

As McDonald's expanded globally, it was able to achieve:

A) economies of scope.
B) economies of scale.
C) diseconomies of scale.
D) none of the above.

Question 58

An upward shift of the average product and marginal product curve means an upward shift of the average cost curves.

Question 59

In terms of location decisions, firms evaluate the extent to which the labor force is unionized.

Question 60

In the study of the demand for fast food, the female labor force participation rate was included as a measure of the:

A) travel distance and cost.
B) opportunity cost of time.
C) employment.
D) none of the above.

Question 61

Changing consumer taste and preferences, lawsuits, and competitive pressures adversely affect McDonald's sales.

Question 62

McDonald's can offset the decline in demand by influencing the different variables that affected the demand function for their products.

Question 63

In the study of the demand for fast food, the two price and income variables, fast food price and income per capita, are statistically significant.

Question 64

In 2001 and 2002, McDonald's tried to improve the quality of its service by hiring mystery shoppers to evaluate service, cleanliness, and food quality.

Question 65

The U.S., IMF, and the Bank of Settlements provided loans to Mexico in order to restore investor confidence and stabilize the peso by reducing capital outflows.

Question 66

The peso devaluation did not cause Wal-Mart to suspend its expansion plans in Mexico.

Question 67

In 2001-2002, the fast food industry underwent tremendous growth.

Question 68

In the study of the demand for fast food, the price elasticity is negative and statistically significant.

Question 69

In the U.S., Happy Meals accounted for 20 percent of McDonald's revenue.

Question 70

If a good is price inelastic, an increase in price will decrease total revenues.

Question 71

To cut costs in the face of declining demand and increased competition, many fast food restaurants have focused on reducing labor costs.

Question 72

In the study of the demand for fast food, the two market characteristic variables, fast food outlet density and population density, are statistically significant.

Question 73

Wal-mart commands the lowest prices from its Mexican suppliers and has caused some of them to go bankrupt.

Question 74

NAFTA which took effect in 1994, did not create a hospitable environment for companies seeking to expand globally.

Question 75

The peso devaluation allowed Wal-Mart to purchase a controlling interest in CIFRA.

Question 76

Among its major competitors, McDonald's behaves as an oligopoly.

Question 77

If a good is price elastic, an increase in price will increase total revenues.

Question 78

How did McDonalds address the drive-through innovation in China?

Question 79

When entering the Mexican market, Wal-Mart lacked the leverage with Mexican vendors that gave it an advantage in the U.S.

Question 80

Discuss the limiting factors to Wal-Mart's success in Mexico?