Managing in Complex Environments Name (LAST, FIRST):__Answers (at

end)___________________
Spring, 2013
Professor Atkin
Quiz #1
PeopleSoft # ______________________ My
lecture time is:_____
Questions in RED are relatively easy questions that many of us answered incorrectly.
This is a closed-book, closed-note quiz with 35 3-point questions. Answers go on optical
scanning sheets. The last page is a project peer evaluation. To earn a grade, you must return
(a) the quiz, (b) the answer sheet, and (c) the completed peer evaluation. All electronics of
and out-of-sight. Good luck!
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In this course, we assume that organizations

a. may have more than one goal
b. have a legal existence and identity
c. both of the above
d. none of the above
The open systems hypothesis implies that firms must engage in
a. market economies
b. purchase transactions
c. both of the above
d. none of the above
Since the environment of a firm contains all possible customers, firms in the same industry
have identical environments.
a. true
b. false
In the typical situation, third party infrastructure providers are monopolists.
a. true
b. false
Transactions that cross internal but not external boundaries
a. are usually priced below market price but above the cost of production
b. generate significant revenue and net income for the firm
c. both of the above
d. none of the above
As the number of drivers of environmental change increase, change becomes more rapid.
a. true
b. false
The open systems hypothesis implies that publicly-traded corporations must report net
income to the SEC.
a. true
b. false
The right to make certain decisions and to commit certain resources of the firm
a. are what we mean by authority
b. are how we distinguish managers from supervisors
c. both of the above
d. none of the above
Empowerment is the term used to refer to the process by which some stakeholders
become members of the dominant coalition.
a. true
b. false
In the intellectual property market, firms can be
a. sellers
b. buyers
c. brokers
d. all of the above
As the complexity of the environment increases, existing heuristics generally become more
effective.
a. true
b. false
A January 28, 2013 article by AP read in part Ford is joining with Daimler and RenaultNissan to speed development of cars that run on hydrogen, with hopes of bringing a
vehicle to market in as little as four years, implying that competitors in one market are
likely to be competitors in all markets.
a. true
b. false
Our discussion of the Starbucks case suggests that employees are not represented in the
firms dominant coalition.
a. true
b. false
Globalzation involves
a. trade between countries
b. investment by firms from one country in another country
c. both of the above d. none of the above

15. During the past decade or so, we have observed a shift from centrally planned to market
economies. This has resulted in a reduction of transfer transaction and an increase in
market transactions.
a. true
b. false
16. Future transactions are
a. generally less risky than spot b. a means to manage risk
c. both of the above
d. none of the above
17. Governance concerns
a. an inherently political process b. the distribution of the revenue of the firm
c. both of the above
d. none of the above
18. Since brokers are third parties who bring buyers and sellers together, brokers have no
rivals.
a. true
b. false
19. Accounting profit and economic profit are different in part because
a. net income is forward looking while rent is backward and forward looking
b. net income does not consider the time value of money while rent does
c. accounting profit can be maximized while economic profit cannot
d. all of the above
20. Sole proprietorships are required by law to publicly disclose their net income.
a. true
b. false
21. Over time, the interests of different stakeholder groups can
a. converge
b. diverge
c. both of the above
d. none of the above
22. A Wall Street Journal news brief yesterday was titled Yahoo profits drop; share prices
increases 4%, suggesting that investors believe that current net income is a good
predictor of economic profit
a.
true
b. false
23. We observed that most markets in developed economies were reasonably stable most of
the time. This implies that
a. prices cannot change faster than the rate of inflation
b. firms cannot escape perfect competition in the long run
c. both of the above
d. none of the above
24. The cost of striking a contract
a. is typically borne by the buyer
b. is zero if both parties trust each other
c. is typically borne by the seller d. none of the above
25. Contracts can increase the stability of markets because
a. they tend to place constraints on the behavior of parties to the contract
b. there is a means of redress if one or the other party violates the contract
c. both of the above
d. none of the above
26. Self-interest among parties to a transaction
a. is an incentive for sellers to acquire or build asymmetric information
b. can lead to the break-down of trust among parties
c. both of the above
d. none of the above
27. The existence of multiple performance criteria for the firm usually implies that increasing
the performance on one criterion reduces performance on a different criterion.
a. true
b. false
28. If market are not completely stable, then parties may have incentives to engage in future
transactions.
a. true
b. false
29. We learned from the case that Starbucks was vertically integrated roasting suggesting
transactions between the roasting and retail parts of the firm likely produce significant
revenue for the firm.
a. true
b. false
30. Investment in product differentiation or process enhancement is risky because
a. cost is certain and benefits may never happen

b.
c.
31. If a
a.

benefits and costs tend to occur at the same time

both of the above
d. none of the above
market is orderly, we can conclude that information is symmetric.
true
b. false

32. A first mover is

a. the first firm to differentiate
b. the first firm to process enhance
c. the first firm to pursue futures transactions
d. all of the above
33. Product differentiation is an attempt by the firm to shift the risk associated with perfect
competition to a new risk asociated with developing new products.
a. true
b. false
34. Firms prefer monopoly to perfect competition in all markets in which they participate.
a. true
b. false
35. What is your best guess about your performance on this quiz?
a. I think I got at least 90% correct b. I think I got at least 80% correct
c. I think I got at least 70% correct d. I think I got less than 70% correct

Q1
A

Q2
D

Q3
B

Q4
B

Q5
A

Q6
B

Q7
B

Q8
A

Q9
B

Q
10
D

Q
11
B

Q
12
B

Q
13
B

Q
14
C

Q
15
B

Q
16
B

Q
17
A

Q
18
B

Q
19
B

Q
20
B

Q
21
C

Q
22
B

Q
23
D

Q
24
D

Q
25
C

Q
26
C

Q
27
A

Q
28
A

Q
29
B

Q
30
A

Q
31
B

Q
32
A

Q
33
A

Q
34
B

Q
35
Any