SAMPLE MIDTERM

SAMPLE MIDTERM - BUSI 698 SAMPLE MIDTERM QUESTIONS Fall...

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BUSI 698 SAMPLE MIDTERM QUESTIONS – Fall 2008 DISCLAIMER: This sample is to give you an idea about the types of questions you may encounter. It is not representative of the test length, composition of topics, or the number/proportion of questions in each format. Short Essay Questions 1. a. Water is more critical to sustaining human life than are diamonds. Why then do firms that provide water to customers generally earn lower economic profits than firms that provide diamonds? b. What would you recommend to a firm that sells water if they want to achieve competitive advantage? 2. Apply a five forces analysis to the industry as described below: The pharmaceutical industry consists of firms that develop, patents, and distribute drugs. Although there are not significant production economies in this industry, there are important economies in research and development. Product differentiation exists as well because firms often sell branded products. Firms compete in research and development. However, once a product is developed and patented, competition is significantly reduced. Recently, the increased availability of generic, nonbranded drugs has threatened the profitability of some drug lines. Once an effective drug is developed, there are usually few, if any, alternatives to that drug. Drugs are manufactured from commodity chemicals usually available to numerous suppliers. Major customers include doctors and patients. Recently, the increased availability of generic, nonbranded drugs has threatened the profitability of some drug lines. Once an effective drug is developed, there are usually few, if any, alternatives to that drug. Drugs are manufactured from commodity chemicals available from numerous suppliers. Major customers include doctors and patients. Recently, increased costs have led the federal government and insurance companies to pressure drug companies to reduce their prices. a. The buyer power in this industry is: Low/High/Moderate (circle one). Why? b. The supplier power in this industry is: Low/High/Moderate (circle one). Why? 1
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c. The rivalry in this industry is: Low/High/Moderate (circle one). Why? d. The threat of substitution in this industry is: Low/High/Moderate (circle one). Why? e. The threat of entry in this industry is: Low/High/Moderate (circle one). Why? f. Overall, this industry is unfavorable/ambiguous/favorable (circle one). Why? g. I would expect industry average ROA to be below/equal to/above industry average (circle one). 3. a. Your former classmate calls you and asks to borrow $10,000 so that he can open a pizza restaurant in his hometown. In justifying his request, he argues that there must be significant demand for pizza and other fast food in his hometown because there are lots of such restaurants already there and three or four new ones are opening each month. He also argues that demand for
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This document was uploaded on 11/04/2011 for the course BUSI 471 at UNC.

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SAMPLE MIDTERM - BUSI 698 SAMPLE MIDTERM QUESTIONS Fall...

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