Deck 5: Theoretical Considerations

Question 1

One of the world's largest region for producing computer software is

A) Research Triangle Park (NC).
B) Emilia-Romagna (Italy).
C) Silicon Valley (CA).
D) Route 128 (Boston).
E) Badden-Wurtenburg (Germany).

Answer 1

C

Question 2

The functions of management include all of the following EXCEPT

A) allocating resources.
B) raising capital.
C) keeping abreast of government rules and policies.
D) making investment decisions.
E) all of the above are functions of management.

Answer 2

E

Question 3

Which of the following is NOT TRUE about the process of capital intensification?

A) is essentially the substitution of capital for labor
B) is a long term trend under capitalism
C) when firms seek to reduce costs and raise productivity by using machines instead of workers
D) is most likely to be used when labor costs are low
E) is most likely to be used when labor costs are high

Answer 3

D

Question 4

Weber's location theory emphasized the role of which of the following in the locational decisions of firms?

A) capital
B) labor costs
C) transportation costs
D) human capital
E) managerial and technical skills

Question 5

Factors associated with the decline in innovation in the U.S.include all of the following EXCEPT

A) a decline in federal support for basic research.
B) a widespread lack of interest in the U.S. public for science.
C) many organizations in the U.S. focus on the short-term returns.
D) difficulties in obtaining venture capital.
E) foreign competition and high labor costs.

Question 6

The behavioral approach

A) focuses on the psychology of the decision making process.
B) focuses on people's behavior.
C) emphasizes historical context and social relations.
D) derives from neo-classical economics.
E) is the scientific method.

Question 7

Which of the following factors is the most important determinant of a firm's location in most industries?

A) land
B) labor
C) capital
D) technical skills
E) all of the above are equally important

Question 8

Those skills necessary for the continued invention of new products and processes are

A) technical skills.
B) research and development (R&D).
C) are usually beyond the reach of small firms.
D) all of the above.
E) only technical skills and (R&D).

Question 9

Which of the following factors shape a firm's location?

A) labor
B) land
C) capital
D) all of the above
E) only land a capital

Question 10

At the local scale,which factor of location is the most important?

A) the cost of labor
B) the availability and cost of land
C) capital
D) managerial skills
E) technical skills

Question 11

Which input to production is sentient and capable of changing the conditions of work?

A) labor
B) capital
C) land
D) management
E) cost

Question 12

Which of the following is NOT TRUE about theories?

A) They are a way of looking at the world.
B) They are a way of making sense of the relationships between variables.
C) They are what separates description from explanation.
D) They allow us to establish causality.
E) They are always provable.

Question 13

Industrial properties have expanded to the suburbs in recent decades.Which of the following is NOT a reason for this?

A) Computerization and just-in-time production systems have diminished and have made the cost of land more expensive.
B) There are locations that are easily accessible to motor freight and interstates.
C) There are locations with access to suburban services and infrastructure.
D) The attraction of residential areas and other amenities.
E) Suburban locations have minimized the journey to work.

Question 14

Several developments limit the applicability of Weber's model.They include all of the following EXCEPT

A) not all firms need to minimize transportation costs.
B) the production process is much more complex now.
C) transportation cost is best expressed as a linear function of distance.
D) transportation costs having been declining in the long-run.
E) brainpower has steadily been replacing muscle and machine power.

Question 15

Labor has a rather high level of inertia due to

A) people are reluctant to leave familiar places.
B) people will sit out short periods of unemployment or accept lower wages.
C) unemployment payments.
D) all of the above contribute to labor's inertia.
E) none of the above contribute to labor's inertia.

Question 16

The purchasing of raw material sources or distribution facilities is known as

A) horizontal integration.
B) diversification.
C) economies of scale.
D) diseconomies of scale.
E) vertical integration.

Question 17

Adjustments in scale include which of the following?

A) a division of labor
B) economies of scale
C) vertical integration
D) horizontal integration
E) all of the above are ways that scale can be adjusted

Question 18

Which region of the U.S.has the lowest percents of workers covered by labor unions?

A) the southeast
B) the northeast
C) the west
D) the Great Plains
E) New England

Question 19

Which of the following materials has the highest transport costs as a percentage of product prices?

A) lumber and wood
B) leather products
C) rubber and plastics
D) food
E) stone, clay and glass

Question 20

In the U.S.,the rate of new inventions and granted patents began to decline in which decade?

A) 1960
B) 1970
C) 1980
D) 1990
E) 2000

Question 21

Material-oriented industries emphasize

A) markets.
B) raw materials.
C) labor pools.
D) access to capital.
E) land prices.

Question 22

All of the following complicate locational decisions of firms EXCEPT

A) firms have only one site or situation factor.
B) more than one critical location may emerge.
C) because there are unknowns, firms cannot always precisely calculate the costs at various locations.
D) firms may select its location based on inertia.
E) amenities at a given location.

Question 23

Alfred Weber,a German economist,is noted for his work on

A) classical industrial location theory.
B) the Kondratiev Cycle.
C) the Demographic Transition.
D) the Spatial Product Cycle Curve.
E) Tragedy of the Commons.

Question 24

Which is FALSE about agglomerations?

A) They help firms that cluster reduce costs in ways they otherwise could not.
B) They arise from the numerous interconnections of people, goods, services and information provided by cities.
C) They arise because the creation of new knowledge and products takes place within a relatively small geographic area.
D) They generate synergies.
E) They never include government agencies or offices.

Question 25

Which of the following statement about the size of firms in a country's economy is most accurate?

A) The majority of firms remain small and peripheral.
B) Most small firms grow to become very large or they go out of business.
C) There is an even split between small and large firms.
D) Small firms are not profitable.
E) Large firms dominate the industrial base.

Question 26

What is the pattern of the three-stage sequence by which firms have grown in the U.S.?

A) vertical integration (1890s-1919), then horizontal integration (1920s-1940s), followed by diversification (since 1950s).
B) diversification (1890s-1919), then horizontal integration (1920s-1940s), followed by vertical integration (since 1950s).
C) diversification (1890s-1919), then vertical integration (1920s-1940s), followed by horizontal integration (since 1950s).
D) horizontal integration (1890s-1919), then vertical integration (1920s-1940s), followed by diversification (since 1950s).
E) vertical integration (1890s-1919), then diversification (1920s-1940s), followed by horizontal integration (since 1950s).

Question 27

What happens in forward integration?

A) The firm begins to control the outlets for its products.
B) The firm buys other non-related firms.
C) A firm takes over operations that were previously the responsibility of its suppliers.
D) The firm merges with similar firms from other countries.
E) The firm expands its geographical reach.

Question 28

What is the crucial social relation of production?

A) between corporations and financial institutions
B) between business and government
C) between owners of the means of production and the workers who operate those means
D) between producers and consumers
E) between competing firms

Question 29

When the cost of shipping raw materials is higher than the cost of of shipping the final product,where will the firm locate?

A) near a major city
B) near the market
C) near the raw materials
D) in the suburbs
E) in China

Question 30

Where would a footloose industry be most likely to locate?

A) in northern urban areas of the U.S.
B) in southern suburban areas of the U.S.
C) in the Core
D) in the Periphery
E) wherever it wishes

Question 31

Which of the following is an example of backward integration?

A) development of iron-ore deposits in Venezuela and Australia by U.S. and Japanese automotive companies
B) fast-food companies opening new outlets in Beijing
C) Germany's Daimler-Benz merging with the U.S. Chrysler Corporation
D) Starbucks opening retail outlets in a grocery store
E) all of the above

Question 32

When a firm controls the production and marketing of diverse products,this is known as

A) horizontal integration.
B) diversification.
C) economies of scale.
D) diseconomies of scale.
E) vertical integration.

Question 33

What happens in backward integration?

A) The firm begins to control the outlets for its products.
B) The firm buys other non-related firms.
C) A firm takes over operations that were previously the responsibility of its suppliers.
D) The firm merges with similar firms from other countries.
E) The firm expands its geographical reach.

Question 34

Agglomeration economies take several forms including EXCEPT

A) production linkages.
B) service linkages.
C) marketing linkages.
D) urbanization economies.
E) diseconomies of scale.

Question 35

Mass production includes the standardization of parts and

A) the outsourcing of labor.
B) the mechanization of manufacturing.
C) the fluidity of capital.
D) the division of labor.
E) power of management.

Question 36

Gaining an increasing market share of a given niche of a particular industry is known as

A) horizontal integration.
B) diversification.
C) economies of scale.
D) diseconomies of scale.
E) vertical integration.

Question 37

A vertically integrated oil company includes which of the following activities?

A) exploration
B) drilling
C) refining
D) retailing
E) all of the above

Question 38

Which of the following is NOT a major criticism of structural theorists concerning industrial location theory?

A) Location theory focuses on individual firms as abstract entities.
B) Location theory all but ignores the context of the capitalist system.
C) Location theory is focused on the role of the capitalist system in the decision making process.
D) It is unrealistic.
E) It does not consider a model of the firm as a complex organizational structure.

Question 39

What organizational structure of the firm is a combination of at least two of the basic organizational formats?

A) Functional orientation
B) Product orientation
C) Geographic orientation
D) Customer orientation
E) Matrix structure

Question 40

Which of the following is an example of a functional organization structure for a firm?

A) cars, trucks, buses, farm equipment
B) Northeast region, Southeast region, West Coast region, Central region
C) industrial, commercial, consumer, government
D) manufacturing, marketing, finance, R&D
E) over $5 million, $3 million-$4.9 million, under $3 million

Question 41

Why does the manufacture of bottled and canned beverages tend to locate near its markets?

A) because of government regulations
B) because such beverages are a perishable good
C) because of industry tradition that dates back to the earliest days of Coca Cola
D) because water, a ubiquitous raw material, is the largest part of the weight of the finished product
E) all of the above

Question 42

Administrative hierarchies

A) are formed to perform nonproduction activities.
B) are formed due to the rise in capital intensification.
C) cluster in a relatively few large metropolitan areas.
D) all of the above
E) B and C only

Question 43

Dual sourcing is used by firms

A) to avoid the inevitable Kondratiev cycle.
B) to complete the product life cycle.
C) to minimize risk of labor disputes and their effects on production.
D) to decrease competition.
E) none of the above

Question 44

Firms organize themselves in all of the following ways EXCEPT

A) functional orientation.
B) product orientation.
C) geographic orientation.
D) amenity orientation.
E) matrix orientation.

Question 45

By far,the most mobile production factor is

A) labor.
B) capital.
C) land.
D) machinery.
E) technology.

Question 46

All of the following are ways that the government shapes economies under capitalism,EXCEPT

A) setting production quotas on consumer goods.
B) creation and enforcement of a legal system.
C) construction of infrastructure.
D) government expenditures.
E) control of the money supply.

Question 47

Which of the following occupations would have the largest labor shed?

A) fast-food worker
B) janitor
C) university professor
D) automobile factory worker
E) cashier

Question 48

The increasing globalization of production

A) was accompanied by an new international division of labor.
B) was possibly only because the largest corporations stayed put in the U.S.
C) had little effect on the deindustrialization process in the industrial nations.
D) strengthened the power of unions in advanced economies.
E) followed along the same trends as the old imperial system.

Question 49

What is the basis for profit in a capitalist economy?

A) land rents
B) surplus value
C) the quantity of products sold
D) reduction in tax rates and other government regulations
E) Kondratiev longwaves

Question 50

Which of the following organizational structure works best for companies that have diverse product lines?

A) functional orientation
B) product orientation
C) geographic orientation
D) customer orientation
E) matrix orientation

Question 51

Which of the following organizational structure works best for companies that wish to organize according to the types of customers they serve?

A) functional orientation
B) product orientation
C) geographic orientation
D) customer orientation
E) matrix orientation

Question 52

Which of the following organizational structure works best for companies that have a narrow range of products?

A) functional orientation
B) product orientation
C) geographic orientation
D) customer orientation
E) matrix orientation

Question 53

What is the correct ordering of the industrial activity as explained by Kondratiev longwaves of economic activity?

A) (1)Textiles; (2)Railroads & iron; (3)Automobiles, electricity & chemicals; (4)Petrochemicals and aerospace; and (5)Information
B) (1)Railroads & iron; (2)Textiles; (3)Automobiles, electricity & chemicals; (4)Petrochemicals and aerospace; and (5)Information
C) (1)Railroads & iron; (2)Textiles; (3)Petrochemicals and aerospace; (4)Automobiles, electricity & chemicals; and (5)Information
D) (1)Textiles; (2)Railroads & iron; (3)Petrochemicals and aerospace; (4)Automobiles, electricity & chemicals; and (5)Information
E) (1)Textiles; (2)Automobiles, electricity & chemicals; (3)Railroads & iron; (4)Petrochemicals and aerospace; and (5)Information

Question 54

Which of the following statements about capitalism is most accurate?

A) Markets are the only means through which firms make decisions.
B) Markets are the primary means through which firms make decisions.
C) Markets and governments share equally in decision-making by firms.
D) Government is the primary means through which firms make decisions.
E) Governments are the only means through which firms make decisions.

Question 55

Which is FALSE about the product life cycle?

A) Products at different stages of production tend to be manufactured at different places within corporate systems.
B) Innovation begins in advanced countries.
C) Less developed countries increasingly specialize in the task of transforming raw materials into commodities.
D) It occurs in 3 stages.
E) In Stage 1 competitors steal ideas.

Question 56

Each business cycle leaves a geographic imprint based on investment and disinvestment at the local level.These local landscapes are imprinted in which of the following ways?

A) Local labor forces are constructed.
B) Local economies, landscapes and social structures are changed.
C) These local imprints are generally short-lived.
D) Each wave or cycle imprints the local landscape completely separately from previous or subsequent waves.
E) Local labor forces are constructed and local economies, landscapes, and social structures are change.

Question 57

Capitalism

A) generates many contradictions.
B) is an unstable system.
C) must expand to survive.
D) all of the above
E) A and C only

Question 58

What does the Kondratiev Cycle illustrate?

A) the importance of geography in the location firms since 1900
B) alternative strategies for the organization of firms since the Great Depression
C) the rise and fall of labor unions in U.S. industry
D) the shift from reliance on animate energy, through fossil fuels, leading to the coming shift to renewable energy
E) the successive waves of growth and decline in industrial activity since the beginning of the Industrial Revolution

Question 59

On what is the proposed Fifth Wave of the Kondratiev cycle based?

A) solar energy
B) outsourcing
C) expansion of free trade agreements
D) information technology
E) decline of labor unions

Question 60

Which of the following organizational structure works best for companies that have a narrow range of products,markets and distribution channels?

A) functional orientation
B) product orientation
C) geographic orientation
D) customer orientation
E) matrix orientation

Question 61

The rise of "Silicon Valley" is best explained by tax benefits given to the industry by the State of California.

Question 62

Governing that is based on the premise that the market is the optimal way of allocating public as well as private resources is called

A) democratic.
B) "free market."
C) a welfare state.
D) neoliberal.
E) postindustrial.

Question 63

The locational decision-making of firms is an irrational process.

Question 64

When the cost of shipping raw materials is higher than the cost of of shipping the final product,firms tend to locate near the raw materials.

Question 65

All of the following are ways in which states shape economies EXCEPT

A) creation and enforcement of laws.
B) setting fiscal and monetary policy.
C) through its uneven expenditures across the landscape.
D) construction of infrastructure.
E) through military intervention.

Question 66

What entity is the largest single employer in the United States?

A) Walmart
B) General Motors
C) McDonald's
D) U.S. federal government
E) CitiBank

Question 67

Which of the following was the largest project ever undertaken my the U.S.government?

A) the welfare state
B) the Federal Interstate Highway System
C) Hoover Dam
D) the system of airports in the U.S.
E) public transportation

Question 68

Development of iron-ore deposits in Venezuela and Australia by U.S.and Japanese automotive companies is an example of backward integration.

Question 69

Mass production includes the standardization of parts and the division of labor.

Question 70

The clustering of the advertising industry in New York City on and around Madison Avenue is an example of service linkages.

Question 71

When firms within related industries cluster together in order to lower unit costs for all firms,this refers to industrial inertia.

Question 72

Increasing scale generally raises the unit cost of inputs.

Question 73

Capital is the most important determinant of a firm's location in most industries.

Question 74

According to Alfred Weber,the major factor influencing location of industries is labor.

Question 75

How much of the total U.S.land area does the federal government own and what is it primarily used for?

A) 2% used for public housing
B) 7% used for housing government offices
C) 20% used for the Interstate Highway system
D) 40% used for national parks and military facilities
E) 55% used for national parks, military facilities, Interstate Highways, government offices, and public housing

Question 76

A theory is a simplification of the world.

Question 77

When a firm becomes horizontally integrated it outsources its manufacturing.

Question 78

When a firm pursues a strategy of diversification,it controls production and marketing of many different products.

Question 79

The manufacture of bottled and canned beverages tends to locate near its markets because of industry tradition that dates back to the earliest days of Coca Cola.

Question 80

The largest proportion of U.S.federal government tax revenues come from

A) social insurance payroll tax.
B) individual income tax.
C) excise taxes.
D) corporate income tax.
E) other taxes.