Q1 . Managers should not become complacent about efficiency-based cost advantages because:

a.

both learning effects and economics of scale go on forever.

b.

the experience curve will bottom out at some point.

c.

cost advantages gained from experience effects are not affected by the development of new technologies.

d.

unit costs keep reducing as output increases.

e.

the experience curve steadily rises after a certain threshold is reached, indicating an increase in unit costs.

Q2:

The marketing strategy that a company adopts:

a.

has little impact on the company's efficiency and cost structure.

b.

aims at attaining superior efficiency of the company's operations.

c.

should not consider the impact the strategy has on the company's cost structure.

d.

aims at automating much of the work in the production process.

e.

refers to the position that the company takes concerning a product's pricing and distribution.

Q3 . Cream Cups bakes cakes in several varieties dedicated to special occasions. It also allows its customers to personalize the cakes according to their personal preferences. This is an example of:

a.

learning effects.

b.

a just-in-time (JIT) inventory system.

c.

customer defection.

d.

mass customization.

e.

diseconomies of scale.

Q4:

Which of the following steps in the five-step chain reaction, as articulated by Deming with regard to the philosophy underlying total quality management (TQM), enables a company to achieve a higher market share and raise prices?

a.

Improvement in productivity

b.

Increase in a company's profitability

c.

Higher market shares due to superior quality of products

d.

Reduction of costs due to improved quality

e.

Creation of more jobs