AGEC 440 Exam 2 MC and Fill in the Blank

Industrial organization economics was a response to which of the following market conditions?

a. Markets are increasingly competitive

b. Markets are increasingly concentrated

c. Markets are increasingly dynamic

d. Markets are increasingly differentiated

e. Markets are increasingly mature

b. Markets are increasingly concentrated

The Industrial organizational economics approach explains the performance of

a. A subset of firms in an industry

b. An industry

c. A firm

d. A vertical or value chain of interconnected industries (i.e. farm to fork)

e. Firms that produce different products in an industry

b. An industry

According to Porter, an industry is best defined by which of the following?

a. An industry as the group of firms producing products that are close substitutes for each other

b. An industry as the group of firms producing products that are close complements for each other

c. An industry consisting of different firms who utilize different inputs or resources

d. B and C

e. All of the above

a. An industry as the group of firms producing products that are close substitutes for each other

A firm that decides to implement a price, but yet has not been implemented in the industry, is an example of which component of the S-C-P paradigm

a. Basic conditions of the market

b. Conduct

c. Structured

d. Performance

e. B and D

b. Conduct

If there are increasing barriers to entry, the number of players in the market will

a. Increase and thus driving up market prices

b. Increase and thus reducing concentration

c. Decrease and thus increasing concentration

d. Performance of the incumbent firm will decrease

e. A and D

c. Decrease and thus increasing concentration

The meat packing industry (pork and cattle) has experienced a trend of

a. Decreasing concentration due to health concerns

b. Increasing concentration due to opportunities to exploit scale economies

c. Concentration remained unchanged due to immature markets

d. Increasing concentration due to opportunities to exploit scope economies by synergies

e. None of the above

b. Increasing concentration due to opportunities to exploit scale economies

The high concentration in the life science or input seed industry was due to the following reason(s):

a. A contraction in the seed market which led to an exit of input sector firms

b. Scale economies in the production of new seed varieties

c. M&A resulting from scope economics between biotechnology seed and chemical research

d. Consumers resistance to genetically modified grain products

e. All of the above

c. M&A resulting from scope economics between biotechnology seed and chemical research

In the notes titled, "IO approach to Ag", which of the following best describes the "Conduct" of farmers?

a. Increasing reliance on markets prices for the coordination of production activities

b. Increasing use of contracts

c. Increasing use of contracts by smaller farmers to meet the needs of niche markets

d. Increasing use of contracts by larger farmers

e. Increasing ability to set higher prices

d. Increasing use of contracts by larger farmers

In the case of Walmart (2005), which one of the following is not considered a competitive advantage?

a. Number of stores

b. Low cost culture

c. Radio frequency Identification (RFID)

d. International experience

e. Low prices

e. Low prices

In the case of Walmart (2005). Walmart's entrance into Germany was not successful for which of the following reasons:

a. Incompatible culture

b. Strength of trade unions

c. German consumers were unfamiliar with the Walmart brand

d. Real estate in Germany was too high and thus incompatible to the Walmart business model

e. A and B

e. A and B

In the case of Walmart (2005), one of the key challenges facing Walmart's entry to Japan is:

a. Japanese consumers equate low prices with cheap products

b. Implementation of Walmart's business model in to this foreign market

c. Incompatible corporate cultures between Walmart and Seiyu

d. Seiyu already has an efficient retail distribution system

e. None of the above

a. Japanese consumers equate low prices with cheap products

In the cases of Hardee Shake and BK breakfast sandwich, which of the following market structures best describes the fast food industry

a. Perfect competition

b. Monopolistic competition

c. Oligopoly

d. Monopoly

e. None of the above

b. Monopolistic competition

Porter 5 forces explains which part of the market environment

a. Remote environment

b. Task environment

c. Social environment

d. B and C

e. None of the above

b. Task environment

In SCP framework, an example of a Monopoly's Conduct is best explained by the following:

a. Competitive advantage

b. Single buyer

c. Single seller

d. Price setter

e. low performance

d. Price setter

For a highly competitive market, the Structure of the industry is described by

a. the market demand elasticity

b. a large demand elasticity facing a group of firms

c. a large supply elasticity for a given firm

d. a large number of players

e. price taking behaviors

d. a large number of players

Industry performance is defined by:

a. the assets and resources of a firm

b. Industry Price

c. a firm's competitive advantage

d. the success of an industry in producing benefits to consumers (and producers)

e. B and D

e. B and D

As mergers and acquisitions lead to greater concentration, M&A, must therefore be anti-competitive. (True or False)

false

Low barriers to entry directly ____________ (increases / decrease) the threat of entry and thus ___________ (increasing / decreasing) industry performance.

increases; decreases

Structure determines _____________ and thus ______________.

conduct; performance

Anti-trust is based on the following philosophy, Anti-trust protects the ______________ process and not the _____________.

competitive; competitors

______ measures performance

Price spread

the larger _____ the more performance moves to ____

n, 0

Lerner Index

Conduct: (P-MC)/P = 1/mi

residual demand equation

market demand-supply of marketStructure: -Mi = -Md*n+-E0(n-1)E0: Elasticity of supply of others