Question 1

When multiple firms' price-quality positions line up along the same indifference curve offering a consumer the same amount of consumer surplus,what term describes the situation?

Accepted Answer

This situation is described as "consumer surplus parity," where different firms offer products that provide the same level of consumer surplus to the consumer.

Question 2

Select the letter corresponding to the best answer.For a given consumer,any price-quality combination along the indifference curve yields the _______________.

Accepted Answer

The indifference curve shows all the combinations of goods that yield the same level of satisfaction to the consumer. Therefore, any price-quality combination along the indifference curve will yield the same consumer surplus.

Question 3

What term describes the situation when a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market?

Accepted Answer

This term is known as a competitive advantage. It indicates that the firm is able to achieve above-average profits due to some unique characteristic such as a superior product or lower production costs.

Question 4

What term describes the process of using market prices of unfinished and semi-finished goods to estimate the incremental value-created by distinctive parts of the value chain?

Accepted Answer

Value-added analysis is the process of determining the incremental value created at each stage of the value chain. This is done by subtracting the cost of inputs from the market price of the output, and is a measure of the value added by each stage of production. This analysis is useful in identifying areas where costs can be reduced or value can be added, as well as in determining where to focus investments in the value chain to maximize returns. The other options, such as value creation analysis, market value analysis, value benefit drivers, and value cost drivers, are not specifically related to this process of estimating incremental value at different stages of the value chain.

Question 5

Which of the following represents total surplus in t he value creation equation,(B-P)+ (P-C)?

Accepted Answer

Total surplus is the difference between the buyer's willingness to pay (B) and seller's willingness to sell (C). Thus, the equation for total surplus is (B - C).

Question 6

Which of the following is a concept developed by Michael Porter that describes,in broad terms,how it positions itself to compete in the market it serves?

Accepted Answer

The concept developed by Michael Porter that describes how a company positions itself to compete in the market it serves is called a "generic strategy." This relates to the overall approach a company takes to achieve a competitive advantage, such as by focusing on cost leadership, differentiation, or a narrow market niche. The other options (value chain, benefit leadership, cost leadership, and focus) are all related to different aspects of a company's strategy, but do not encompass the broad approach described by Porter's generic strategy.

Question 7

The steepness (slope)of an indifference curve indicates which of the following?

Accepted Answer

The answer of The steepness (slope)of an indifference curve indicates...

Question 8

What type of curve can be used to describe the set of price-quality combinations that yields the same consumer surplus to an individual?

Accepted Answer

The curve that describes the set of price-quality combinations that yields the same consumer surplus to an individual is an indifference curve. Indifference curves show all the different combinations of goods or services that provide the same level of utility or satisfaction to a consumer. In this case, the curve shows the different combinations of price and quality that give the same level of consumer surplus, meaning that the consumer is equally satisfied or indifferent between these combinations.

Question 9

What term describes the price at which a consumer is indifferent between buying a product and going without it?

Accepted Answer

The term that describes the price at which a consumer is indifferent between buying a product and going without it is Maximum willingness-to-pay. This refers to the maximum amount a consumer is willing to pay for a product or service before deciding that it's not worth the cost.

Question 10

Which of the following is false with respect to the strategy of cost leadership?

Accepted Answer

A firm following a strategy of cost leadership is a generic strategy broad in scope, not narrow. The strategy is focused on producing and delivering products or services at a lower cost than competitors in the same industry, which requires a wide range of activities across the firm's value chain.

Question 11

What is one way to measure a firm's willingness-to-pay?

Accepted Answer

Value added analysis measures the value that a firm adds to a product or service as it goes through the production process. This can be used to determine a firm's willingness-to-pay for certain resources, as the value added may be used to estimate the extra revenue generated by using those resources.

Question 12

Which of the following represents consumer surplus in the value creation equation,(B-P)+ (P-C)?

Accepted Answer

Consumer surplus is represented by the difference between the benefit (B) and the price (P), which is B-P.

Question 13

Which of the following represents producer surplus in the value creation equation,(B-P)+ (P-C)?

Accepted Answer

The answer of Which of the following represents producer surplus...

Question 14

What is the perceived benefit of a product per unit consumed minus the product's monetary price?

Accepted Answer

Perceived benefit minus monetary price refers to the consumer surplus. It represents the additional value a consumer derives from a product compared to the amount they paid for it.

Question 15

Which of the following is a resource?

Accepted Answer

Workers with firm-specific expertise or know-how are a resource, as they provide valuable knowledge and skills that are specific to the company.

Answer: A, B, C, E
 All of these options are also resources for a company. Brand promotion skills, yield management capabilities, ability to manage sourcing and procurement functions, and ability to integrate various functions are all valuable resources that can contribute to a company's success.

Question 16

What is another term for a "win-win" business opportunity?

Accepted Answer

"Gains from trade" is the best choice because it refers to the mutual benefits both parties receive from an exchange, which is the basis of a win-win business opportunity. The other options are not synonymous with "win-win" and do not accurately describe the situation.

Question 17

Benefit proximity refers to which of the following?

Accepted Answer

Benefit proximity refers to situations where competing firms offer products that are very similar in terms of benefits but differ in price. Cost leading firms offer products with slightly less benefit to undercut their competitors and gain a price advantage.

Question 18

Which of the following terms is a concept,developed by Michael Porter,which describes the activities within firms and across firms that add value along the way to the ultimate transacted good or service?

Accepted Answer

Value chain is a concept developed by Michael Porter which describes the activities within firms and across firms that add value along the way to the ultimate transacted good or service. The other options (A) Five forces, (B) Value creation, (D) Consumer surplus, and (E) Producer surplus are unrelated to the concept of value chain.

Question 19

Which of the following is a capability?

Accepted Answer

Sourcing skills are an ability or capacity acquired through practice, training, and experience, which can be considered a capability.

Patents and trademarks are legal rights to protect intellectual property, not a capability.

Brand-name reputation and installed base are measures of a company's market position, not necessarily a capability.

Organizational culture refers to the shared values, beliefs, and practices within a company, which can affect its performance but is not a capability in itself.

Question 20

Which of the following is not a common characteristic of capabilities?

Accepted Answer

Capabilities are typically not easy to reduce to simple algorithms or procedure guides. Capabilities are often tacit knowledge, deeply ingrained in organizational routines, and not easily codified into explicit procedures.

Quiz 9: Strategic Positioning for Competitive Advantage