Global Business 3rd Edition Mike Peng – Test Bank

Chapter 11—Managing Global Competitive Dynamics

TRUE/FALSE

1. Competitive dynamics are the actions and responses undertaken by competing firms.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

2. Tacit collusions typically lead to a cartel or trust.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

3. Firms engage in explicit collusion when they indirectly coordinate actions by signaling their intention to reduce output and maintain pricing above competitive levels.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

4. Cartels are often labeled as anticompetitive and outlawed by antitrust laws.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

5. Cartel is an output- and price-fixing entity involving multiple competitors.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

6. Prisoners’ dilemma is a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

7. Low barriers to entry into an industry make collusion between firms difficult.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

8. An industry with heterogeneous products, in which rivals are forced to compete on price, is likely to lead to collusion.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

9. Collusion is more difficult between firms with high market commonality than firms with low market commonality.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

10. An industry without a price leader makes it easier for firms in that industry to form collusions.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

11. Price leader is a firm that sets the highest price in the industry.

ANS: F PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge

12. The price leader in a market possesses the capacity to punish.

ANS: T PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 11-1 NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge