Test Bank for Managerial Economics and Organizational Architecture 7e 7th Edition by James Brickley, Clifford Smith and Jerold Zimmerman. ISBN-13: 4748
Full Chapters test bank included
Part 1: Basic Concepts
Chapter 1 Introduction
Chapter 2 Economists’ View of Behavior
Chapter 3 Exchan...
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Chapter 01 7e
1) Volkswagen was clearly a company riddled with flawed organizational design and it suffered
from “bad management.” What were the problems with this corporation from an
organizational architecture point of view?
2) What are the three critical aspects of corporate organization? Which of the three components
is most important for the success of a firm?
3) What are some of the ways equilibrium constrains managerial decisions?
4) What would be an example of a poorly designed incentive system?
5) Is there a relationship between a CEO's retirement and the R&D expenses in a firm?
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,6) Pepsi, a soft drink company, is attempting to compete with Coca Cola. It wishes to
benchmark its organizational architecture. What should it do?
7) How can good management practices be useful in a global economy?
8) Explain why the top executives of Société Générale are more likely to be blamed than
Jérôme Kerviel.
9) Volkswagen’s problems were rooted in
A) poor R&D.
B) flawed organizational design.
C) too much debt.
D) risky projects in India and the oil price hikes.
10) Identify a critical aspect of corporate organization.
A) the assignment of decision rights within a company
B) the cost structure of the firm
C) the pricing strategies of the rival firms
D) the capita to labor ratio
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,11) The authors argue that successful corporations assign decision rights in ways that
A) effectively link decision-making authority with good information.
B) structure moneymaking tools for all employees.
C) completely eliminate the potential for fraud.
D) rely on monitoring and evaluation for all creativity.
12) According to the text, successful firms tend to set up
A) an organizational architecture that is complex and decisions are "top-down."
B) an organizational architecture that is least expensive and decisions are "top-down."
C) an organizational architecture that links decision making with decision rights.
D) an organizational architecture that keeps decision rights reserved for the senior
management.
13) The example of Volkswagen shows that
A) selection of people is the key to organizational success or failure.
B) large incentives play an important role in motivating people within a corporation.
C) the success of a business is possible in a regulatory environment.
D) organizational architecture is extremely important in business success.
14) Economics provides a theory to explain
A) how a successful business can be started.
B) how managers can cheat and get away with it.
C) how people make choices.
D) how businesses compete in the market.
15) Recent research on CEO behavior tells us that CEOs generally
A) increase their firm’s R&D expenditure so as to boost earnings long before they retire.
B) reduce their firm’s R&D expenditure so as to boost earnings long before they retire.
C) reduce their firm’s R&D expenditure so as to boost earnings just before they retire.
D) increase their firm's R&D expenditure so as to boost earnings just before they retire.
3
, 16) Which of the following is true of standard economic analysis?
A) It characterizes a firm as a black box that transforms inputs to outputs.
B) It focuses on the internal architecture of a firm.
C) It applies basic economic tools to examine the effects of managerial decisions.
D) It characterizes a firm as an organization that generates economic growth.
17) Which of the following is the critical management question that might have reduced the
likelihood of the collapse of Volkswagen?
A) How are individuals rewarded for supporting the success of the company?
B) How are decision rights assigned within the company?
C) How are potential problems identified and more productive organizations structured?
D) How can the performance of individuals and business units be evaluated and
structured so that the company is successful?
18) In the textbook, there is an example of a software firm in which the managers provided a
financial incentive to get rid of software bugs. The result was that software writers added
more bugs into the software. This example shows that
A) financial incentives should never be used.
B) most employees are corrupt.
C) incentives can create perverse effects.
D) high-tech firms are unique.
19) If the market demand and the market price for a product increase, then the reaction of
companies that manufacture this product
A) will be identical.
B) will be dependent on the prevailing tax system.
C) will depend on whether or not the organization is attuned to market incentives.
D) will be dependent on the government regulatory mission.
20) Economic Darwinism is seen when
A) organizational architecture is optimized by employing new technology.
B) competition weeds out ill-designed organizations that fail to adapt.
C) corporate mutations occur, like Enron.
D) market benchmarks are employed.
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