Question 1

The Chinese policy of one child per family provided McDonald's the opportunity to actively market to:

Accepted Answer

The one-child policy led to families having more disposable income and a focus on the single child, making children a prime target for McDonald's marketing efforts.

Question 2

The decrease in demand faced by McDonalds during 2001-2002 can be attributed to:

Accepted Answer

McDonalds faced a decrease in demand due to multiple factors including a decrease in consumer preference for high-fat content food, an increase in lawsuits, and an increase in competitive pressures.

Question 3

An overvalued fixed exchange rate can be maintained only as long as:

Accepted Answer

An overvalued fixed exchange rate can only be maintained if a country's central bank reserves are available to support currency intervention in the foreign exchange market. When the exchange rate is fixed at a rate higher than its true market value, there will be a high demand for foreign currency and low demand for domestic currency. Without adequate reserves, the central bank cannot buy and sell foreign currencies to maintain the fixed exchange rate.

Question 4

McDonald's partnership with Beijing's Department of Agriculture provided:

Accepted Answer

The partnership provided McDonald's with subsidies, suppliers, and distributional channels.

Question 5

Although McDonalds operates in a market structure with many competitors and substitute foods,it often engages in ________ with its major fast food competitors.

Accepted Answer

McDonalds operates within an oligopoly market structure, meaning it competes with just a few major fast food chains. As such, McDonalds often engages in oligopoly behavior, such as price-fixing and advertising wars, with its competitors.

Question 6

Managers can increase firm profits by:

Accepted Answer

By increasing revenue and decreasing costs, managers can optimize the profitability of the firm. Increasing revenue alone may not lead to a significant increase in profits if costs are not managed effectively, and decreasing costs alone may not be sustainable if it negatively impacts revenue generation. Therefore, a combination of both strategies is the best approach.

Question 7

If a good is price elastic,a decrease in price will:

Accepted Answer

If a good is price elastic, a decrease in price will lead to a relatively larger increase in the quantity demanded. This increase in quantity demanded will compensate for the decrease in price, resulting in an overall increase in total revenue.

Question 8

In 2002,this company was estimated to hold the largest share of the U.S.burger market:

Accepted Answer

According to a report by Statista, in 2002, McDonald's was estimated to hold the largest share of the U.S. burger market with a 43.9% share, followed by Burger King with a 15.6% share and Wendy's with a 9.6% share. Therefore, the best choice is A) McDonald's.

Question 9

In China,beef is considered a:

Accepted Answer

In China, beef is considered a luxury item because it is expensive and not traditionally consumed in large quantities. Pork and chicken are the preferred protein sources in Chinese cuisine.

Question 10

In general,large current account deficits have to be financed by:

Accepted Answer

Large current account deficits mean that a country is spending more on imports than it is earning from exports. To finance this gap, a country must attract capital from abroad, in the form of foreign investment or borrowing. Therefore, the correct answer is capital inflows from abroad (choice B). Choice A is incorrect because capital outflows would worsen the deficit. Choice C is incorrect because trade barriers would restrict imports and exports, which would not address the issue of financing the deficit. Lastly, choice D is incorrect because some form of financing is necessary to sustain a large current account deficit.

Question 11

In 2002 - 2003,some McDonalds' franchise owners reported that profits were declining from selling the discounted items from the Dollar Menu.This suggests that:

Accepted Answer

The answer of In 2002 - 2003,some McDonalds' franchise owners...

Question 12

In 2012,all of fast-food chains expanded their hours of operation,with nearly 40% of all McDonald's restaurants being open 24 hours per day.This strategy was aimed at increasing sales because:

Accepted Answer

The expansion of hours was aimed at increasing sales due to the estimated demand for fast-food in late hours, particularly from the nearly one-fifth of employed Americans who work primarily in the evening. Option B may also be a contributing factor, but it is not mentioned specifically in the passage, and option C is not supported by any evidence. Option D is incorrect as the passage clearly states that fast-food chains expanded their hours of operation.

Question 13

For much of 2001 and 2002,McDonalds faced a(n):

Accepted Answer

During the period mentioned, McDonald's faced a decrease in demand due to concerns about the healthfulness of their food and a general shift towards healthier eating habits. This led to a decline in sales and profitability for the company.

Question 14

If a good is price inelastic,a decrease in price will:

Accepted Answer

When a good is price inelastic, it means that the quantity demanded does not significantly change with a change in price. Therefore, a decrease in price will lead to a decrease in total revenue because the increase in quantity sold is not enough to offset the loss from the lower price.

Question 15

When entering the Chinese market,McDonalds had to confront:

Accepted Answer

The answer of When entering the Chinese market,McDonalds had to...

Question 16

Increases in both labor and capital productivity will result in:

Accepted Answer

The increase in labor and capital productivity will lead to an increase in output for a given input. This increase in productivity will shift both the average and marginal product curves upward. As a result of the increased productivity, the firm can produce more output with the same amount of input, resulting in a downward shift of the average cost curves. Thus, (C) is the best choice.

Question 17

Managers in firms with market power can:

Accepted Answer

Managers in firms with market power can develop strategies that involve both the demand and supply sides of the market, such as setting prices or adjusting output levels to maximize profits while considering the impact on consumer demand and potential supply by competitors. They have the ability to influence prices to some extent, so they should consider both demand and supply factors in their decision-making process. Therefore, options A and C are not accurate, and option D is incorrect as well.

Question 18

If capital inflows decrease due to higher interest rates in other countries and large amounts of import spending,there will be:

Accepted Answer

Higher interest rates in other countries may attract capital away from the home country, leading to a decrease in capital inflows. This may also be compounded by large amounts of import spending which results in increased demand for foreign currencies. With decreased demand for the home currency, there will be downward pressure on the exchange rate.

Question 19

The amount of cost cutting technical innovation introduced into a production process is a function of:

Accepted Answer

The amount of cost cutting technical innovation introduced into a production process is affected by both technology as well as consumer acceptance. Technology can provide new ways of reducing costs, but ultimately it is the acceptance of consumers that determines whether a particular innovation will be profitable for the firm. Therefore, both technology and consumer acceptance are important factors in determining the amount of cost cutting technical innovation in a production process. Choice A is incorrect because technology alone cannot determine the extent of innovation. Choice C is incorrect because consumer acceptance alone cannot determine the extent of innovation. Choice D is incorrect because there are factors, such as technology and consumer acceptance, that do affect the amount of cost cutting technical innovation in a production process.

Question 20

McDonald's and its major competitors compete based:

Accepted Answer

McDonald's and its major competitors, such as Burger King and Wendy's, compete based on both the price and product characteristics. These fast-food chains offer similar products, but they differentiate themselves through various promotions, pricing strategies, and menu items. For example, McDonald's offers its famous Big Mac and Happy Meal, while Burger King offers its Whopper and a variety of chicken sandwiches. Additionally, these fast-food chains compete on price by offering various value meals and discounts to attract customers. Therefore, option C is the best choice.

Quiz 16: Combining Micro and Macro Analysis for Managerial Decision Making