Question 1

Southern Ontario farmers have found it difficult to go into olive farming because olives imported from Europe are priced so much cheaper.Canadian farmers have to meet various climate challenges to grow olives and thus have higher expenses.Consumers prefer to buy the lower-priced imported olives rather than locally grown olives.The problems that make it unprofitable for an Ontario farmer to profitably become an olive farmer would be considered which of the following?

Accepted Answer

The difficulties faced by Ontario farmers in entering the olive farming industry due to the challenges of climate and competition from cheaper imported olives indicate a barrier to entry.

Question 2

A market economy is also known as capitalism.

Accepted Answer

A market economy is a system where the production and distribution of goods and services are determined by the supply and demand of consumers, with little to no government intervention. This is also commonly known as capitalism.

Question 3

An analyst at Merrill Lynch who is evaluating Home Depot as an investment for her clients is taking a microeconomics approach.

Accepted Answer

Evaluating a specific company like Home Depot falls under the domain of microeconomics, which focuses on individual markets, firms, and consumers.

Question 4

Mexico requires all foreign firms operating there to have a local business partner.This is an example of which of the following?

Accepted Answer

The requirement for foreign firms to have a local business partner in Mexico is an example of a strategic alliance, where two companies form a partnership with a specific strategic goal. This is different from an economic partnership, which refers to a general situation where two or more parties come together to engage in business activities. An economic merger involves two companies joining together to form a new entity, and a transactional partnership refers to a specific transaction or project between two companies.

Question 5

There is a large capital requirement needed to set up a tire manufacturing operation.What type of market structure do tire manufacturers operate in?

Accepted Answer

Tire manufacturing requires a large amount of capital, which creates a barrier to entry for new firms. This results in a small number of dominant firms in the market, which is characteristic of an oligopoly market structure.

Question 6

If NBPower supplies all of the electricity to New Brunswick,NBPower is an example of which of the following?

Accepted Answer

NBPower is the sole provider of electricity in New Brunswick, which means they have complete control over the market and there are no close substitutes for their product. This is a characteristic of a pure monopoly.

Question 7

For a time,only Xerox could produce dry-paper copiers because Xerox held all the patents on the process.Until the patent expires,Xerox could be said to operate in which type of market structure?

Accepted Answer

This is because Xerox held all the patents on the process, meaning that they were the only ones who could produce dry-paper copiers. This is a characteristic of a monopolistic market structure.

Question 8

Which of the following strategies involves building,maintaining,and enhancing interactions with customers and other parties so as to develop long-term satisfaction through mutually beneficial partnerships?

Accepted Answer

Building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships is called relationship management.  This strategy focuses on creating and maintaining strong relationships with customers and other stakeholders to increase customer loyalty and retention, as well as increase business performance through repeat business and referrals. Customer maximization and profit maximization may be short-term strategies that do not necessarily prioritize building long-term relationships. Developing strategic alliances may involve relationship management, but it is a specific type of partnership focused on achieving specific goals or objectives.

Question 9

Which of the following statements describes an oligopoly?

Accepted Answer

An oligopoly is a market dominated by a small number of firms, typically three to four major players who control a significant portion of the market share.

Question 10

When Mary Robb purchased a dozen cupcakes for her son's birthday party,she was pleasant surprised to find the box contained 13 cupcakes instead of the 12 she had paid for.The bakery used this technique to accomplish which of the following?

Accepted Answer

The bakery used the technique of giving an extra cupcake to Mary Robb to build, maintain, and enhance the relationship with its customers. This gesture shows that the bakery values its customers and is willing to go above and beyond to satisfy them, which can lead to increased customer loyalty and positive word-of-mouth recommendations.

Question 11

In the middle of the mountains in ,northern BC,there are five service stations competing for all the business that exists in this isolated location.When one service station lowers its price on gas,all must follow suit.These service stations are operating in which type of market structure?

Accepted Answer

An oligopoly exists when there are only a few large firms in the market, each with a significant degree of market power. In this scenario, there are only five service stations in this isolated location, and they all follow each other when one lowers prices. This suggests that they are engaged in oligopolistic competition, which is characterized by interdependence among firms and collusion, as they all follow each other's pricing strategies.

Question 12

The factors of production are the goods produced by a manufacturing facility.

Accepted Answer

The factors of production are the resources used to produce goods and services. They include land, labor, capital, and entrepreneurship.

Question 13

Which of the following statements about strategic alliances is most accurate?

Accepted Answer

A strategic alliance is sometimes called a strategic partnership. Option A is incorrect as strategic alliances are based on establishing relationships with other companies. Option B is incorrect as strategic alliances have become more common in recent years. Option C is incorrect as strategic alliances are usually entered into to improve product and service quality.

Question 14

A strategic alliance is sometimes called which of the following?

Accepted Answer

A strategic alliance is also known as a strategic partnership. It is a collaboration between two or more organizations, where they agree to work together to achieve a common goal. This partnership can involve sharing resources, expertise, and risk. It is a way to leverage each other's strengths and opportunities while minimizing weaknesses and threats.

Question 15

When an analyst is evaluating the construction industry in terms of interest rates,employment cycles,and the rate of new home building nationwide,he is looking at microeconomics.

Accepted Answer

The analyst is actually looking at macroeconomics, as he is examining the broader trends and factors affecting the construction industry as a whole, rather than specific individual firms within the industry.

Question 16

In which type of market structure can few sellers exert substantial control over prices?

Accepted Answer

In an oligopoly market structure, a few large firms control a significant portion of the market, giving them the ability to influence prices. In monopolistic competition, there are many small firms, making it challenging for any one firm to have a significant impact on prices. In perfect and pure monopoly, there is only one seller, giving them complete control over prices.

Question 17

Canada,Great Britain,and Sweden are market economies.

Accepted Answer

The answer of Canada,Great Britain,and Sweden are market economies....

Question 18

Every time Tom buys a litre of milk he gets a stamp,which he sticks on a card he carries in his wallet.When he has 10 stamps,he gets a free litre of milk.This sort of program to encourage repeat business exemplifies which of the following?

Accepted Answer

The program described in the scenario is an example of relationship management, which involves creating and maintaining long-term relationships with customers. The goal is to foster loyalty and encourage repeat business, which is exactly what the milk program is trying to do by offering a reward for frequent purchases. This approach is different from other strategies like profit maximization, which prioritize short-term gains over customer loyalty, and developing strategic alliances, which typically involve partnerships between companies rather than individual customers. While the milk program could be considered a form of customer maximization, this term is not commonly used in business and doesn't accurately capture the focus on building relationships.

Question 19

When a single firm accounts for 100 percent of industry sales,it is an example of which type of market structure?

Accepted Answer

A pure monopoly exists when a single firm accounts for 100 percent of industry sales. This is a situation where there is no competition and the firm has significant market power. The other market structures (oligopoly, monopolistic competition, and imperfect competition) involve multiple firms competing to some degree in the market.

Question 20

A retailer of computer games can focus on relationship management by engaging in which of the following practices?

Accepted Answer

Giving customers more than they expected, such as a reward for repeat purchases, shows that the retailer values their business and establishes a relationship based on trust and loyalty. This can encourage customers to return to the store and recommend it to others. The other options do not necessarily focus on building relationships with customers, and may instead prioritize short-term gains or unreliable products.

Quiz 1: understanding Evolving Economic Systems and Competition