(Solution Manual) BUSN Canadian Edition

Kelly, McGowen, MacKenzie, Snow, 3

Social Science

Solution Manual

3rd Edition

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Solution Manual for BUSN Canadian Edition, The downloadable file consists of 581 pages, and the total size of the file is 2.76 MB. Purchase now only for highly discounted price.

Author(s): Kelly, McGowen, MacKenzie, Snow

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BUSN 3CE MindTap Solutions Manual 1–1 Copyright © 201 7 by Nelson Education Ltd. Chapter 1 Business Now: Change Is the Only Constant Homework Multiple Choice Questions 1. What must successful firms deliver to their customers in order to ensure their long -term profitability ? a. Quality products b. Value c. Outstanding service d. Competitively priced products ANS: b 2. Which of the following global brands has the highest value ? a. Coca -Cola b. Toyota c. Samsung d. Apple ANS: d 3. Approximately what percent of Canadians who were born abroad live in Canada’s 15 largest cities ? a. 90 percent b. 80 percent c. 70 percent d. 60 percent ANS: a BUSN 3CE MindTap Solutions Manual 1–2 Copyright © 201 7 by Nelson Education Ltd. Fill in the Blank Questions 1. The overall sense of well -being experienced by either individuals or groups is referred to as ____________; however, the quality and quantity of goods and services available to those same individuals or groups is referred to as ____________. ANS: quality of life; standard of living 2. ____________ firms launch products that fail because they are too far ahead of the market; ____________ firms launch products just as the market is ready to embrace them. ANS: Bleeding edge; leading edge 3. . A company that is concerned with rising worker expectations is concerned with the ____________ environment of business; a comp any concerned with the personal disposable income of Canadians is concerned with the ____________ environment of business. ANS: social; economic Drag and Drop Questions 1. This factor includes machines, tools, buildings, information, and technology: ___ _________. This factor includes the physical, intellectual, and creative contributions of people: ____________. This factor includes inputs such as land, wind, fresh water, and mineral deposits: ____________. This factor harnesses the other factors of prod uction to create opportunity: ____________ . ANS: capital; human resources; natural resources; entrepreneurship 2. ___________ is any activity that provides goods and services in an effort to earn a profit. ___________ is the result that happens when expenses are lower than revenues. ___________ is an organization that has a fundamental goal of contributing to the community. ___________ is the overall sense of well -being experienced by either an individual or a group. ANS: business; profit; not -for-profit; quality of life BUSN 3CE MindTap Solutions Manual 1–3 Copyright © 201 7 by Nelson Education Ltd. 3. During the ____________, jobs became more specialized and businesses were focused on efficiency. During the ____________, technological advances fueled a period of rapid growth as mass production took hold. During the __________ __, the balance of power began to shift from businesses to consumers. During the ____________, businesses began to see that cultivating current customers is better than constantly seeking new ones . ANS: production era; industrial revolution; marketing era ; relationship era 4. Businesses focused on speed -to-market will be focused specifically on the ____________ environment. Businesses focused on e -commerce will be focused specifically on the ____________ environment. Businesses focused on demographics wi ll be focused specifically on the ____________ environment. Businesses focused on free trade will be focused specifically on the ____________ environment . ANS: competitive; technological; social; global Quiz Answers 1. a 2. c 3. a 4. c 5. b 6. b 7. a 8. a 9. a 10. d 11. b 12. a 13. b 14. b BUSN 3CE MindTap Solutions Manual 1–4 Copyright © 201 7 by Nelson Education Ltd. 15. a 16. c 17. b 18. b 19. b 20. a Video Case : Let’s Go Get a Graeter’s! Critical Thinking Questions 1. Briefly explain how Graeter’s manages to produce a product that is personal to both the consumer and the company itself. ANS: Graeter’s, a fourth generation family business, is most popular for its ice creams. Despite the availability of modern technology, Graeter’s sticks to its root s, still making its ice creams in the traditional way. This has helped the company develop and maintain a personal relationship with its consumers. Graeter’s believes that it stands out from the numerous frozen desserts in the market because the ice creams are not mass -produced. The company also hand -packs its ice creams to maintain quality. As a result, for its large number of loyal customers, getting an ice cream means getting a Graeter’s. 2. How does Graeter’s emphasize the concept of quality of quality de spite the advent of mechanization in the ice cream industry ? ANS: With industrialization, the quality of ice creams went downhill as the quantity volume of production increased. However, Graeter’s refused to compromise on quality and stuck to its way of m aking ice creams. At a time when other ice cream companies focused on volume, Grater’s churned out dense ice creams with very little air in them, ensuring this by packing the ice cream by hand. The company does not engage in mass production and has created a unique position in the market for frozen desserts because of its emphasis on quality 3. Briefly explain the role the media played in the expansion of Graeter’s as a business. ANS: The media have played a significant role in popularizing Graeter’s. In 200 2, Graeter’s found itself on one of North America’s most celebrated television show —the Oprah Winfrey Show —where Oprah BUSN 3CE MindTap Solutions Manual 1–5 Copyright © 201 7 by Nelson Education Ltd. told everyone that Graeter’s ice cream was the best she’d ever had. After the show, orders for Graeter’s poured in. With a new plant in t he offing and strategic planning in place, the company is all set to grow further . MindTap Questions 1. Which of the following is an example of a Graeter’s proactive social responsibility initiative? a. Graeter’s allowed employees to contribute time to community social activities. b. Graeter’s donated cash to a local public library. c. Graeter’s sponsored a fun run to raise money for Alzheimer’s research. d. Graeter’s donated ice cream to a local summer camp for disadvantaged children. ANS: b 2. What factor most likely accounts for Graeter’s long success in the ice cream industry? a. Price b. Distribution c. Location d. Product quality ANS: d 3. What role has change played in the continued success of Graeter’s? ANS: For three generations, Graeter’s avoided change. However, the fourth generation of management has embraced change and argues that the key to success is knowing and maintaining your values (who you are and what you believe), and then accepting the change that is necessary in our rapidly changing business environment. 4. In which of the five eras of business was Graeter’s established? ANS: Graeter’s was established in 1870, the entrepreneurship era, an era when many businesspeople established dominant businesses. BUSN 3CE MindTap Solutions Manual 1–6 Copyright © 201 7 by Nelson Education Ltd. Online Case: Case Connection 1 -1: Fracking with Our Future Critical Thinking Questions 1. Should oil and gas companies be allowed to engage in fracking, or should Canada ban the practice? Should certain regulations be put in place? Defend your answer, using examples from the text ? ANS: Student opinions will certainly vary, and those who live in or near communities that are affected may have very strong opinions. Answers should consider the various dimensions of the business environment: social, economic, technological, competitive, and global . 2. Imagine that you’re a marketing manager for a gas company that is about to venture into fracking. What steps will you take to maintain current customers? How will you address potential new ones ? ANS: Compa nies need to promote the benefits to all stakeholders as a result of their operations. At the same time, there will be a number of negative consequences for some stakeholders, and these need to be addressed. Where the negative consequences are uncertain, i t is legitimate to raise questions about them; however, “trumping” them up by denying them would likely not be a good strategy. The company can still focus on what it is doing to minimize the negative consequences of its operations while also trying to get people to consider the value that it provides . 3. Canada’s oil and gas companies are among the nation’s largest. The oil and gas industry is growing rapidly —some periodic contraction aside, especially since the introduction of fracking —and many companies ar e desperate for young business professionals to join their ranks. Would you consider a career in the oil and gas industry? Why or why not? If so, what sort of work would you like to do? If not, what other career path could you see yourself taking ? ANS: This question is designed to focus students on future career choice. Some will see the value of a job that pays well in an industry that is important to the Canadian economy. Some will question whether they want to work in an industry where there are envir onmental concerns and where, most likely, many jobs will be in reasonably remote locations. Student opinions will certainly vary . MindTap Questions 1. For fracking to be successful, oil and gas companies must operate with the business philosophy that charac terizes which business era ? a. The marketing era BUSN 3CE MindTap Solutions Manual 1–7 Copyright © 201 7 by Nelson Education Ltd. b. The production era c. The relationship era d. The entrepreneurship era . ANS: c 2. For fracking to be successful, what dimension of the business environment should oil and gas be most concerned with ? a. The economic environment b. The competitive environment c. The social environment d. The technological environment ANS: c 3. How will fracking activity impact the standard of living and quality of life of Canadians ? ANS: The oil and gas industry should be a ble to produce more product at lower cost, and this should result in lower prices for Canadian consumers. At the same time, those employed directly in the industry, or through spin -off jobs, will have good incomes, giving them greater purchasing power and a better standard of living. For those Canadians, there may also be an improved quality of life. But if they are negatively affected, as many Canadians may be, their quality of life could suffer. Fracking is certainly harmful to the environment and could n egatively affect the quality of life of many Canadians. 4. What impact will the economic environment have on fracking activity by oil and gas companies ? ANS: Analysis: Companies will only employ this technology for oil and gas extraction as long as it is profitable. Only recently have improvements in the process allowed it to become financially viable as a large -scale, stand -alone venture. However, with the dro p in oil prices on the world market, the fracking process is no longer as attractive, and much of the fracking activity has thus been curtailed. When it again becomes economically viable, activity will increase, particularly in areas where such activity wi ll boost the economy without harm to the environment. BUSN 3CE MindTap Solutions Manual 2–1 Copyright © 201 7 by Nelson Education Ltd. Chapter 2 Business Ethics and Responsibility : Doing Well by Doing Good Homework Multiple Choice Questions 1. What are among the most challenging issues faced by individuals and companies that are involved in the international business? a. Finding qualified works and management b. Safe working conditions and health care c. Bribery and corruption d. Wages and living conditions ANS: c 2. Why is McDonald’s so concerned with both reducing its amount of garbage and recycling the garbage it does create? a. It wants to reduce its carbon footprint. b. It has embraced the idea of sustainable development. c. It wishes to practise green marketing. d. It practises cause -related marketing. ANS: b 3. The consumerism movement has resulted in consumers getting which of the following rights? a. The right to own property b. The right to profit c. The right to vote d. The right to be informed ANS: d BUSN 3CE MindTap Solutions Manual 2–2 Copyright © 201 7 by Nelson Education Ltd. Fill in the Blank Questions 1. When a company donates its employees’ time to work on community activities, it is practising _____________, but when a company allows its employees to take time to accommodate their personal needs, it is practising _________ _. ANS: corporate philanthropy; corporate responsibility 2. A social audit is focused on the “double bottom line,” which takes into consideration such traditional indicators as _______________ and socially responsible indicators such as _____________. ANS: profitability; community involvement 3. If two pharmaceutical companies were to collaborate to establish low prices on drugs in low - income countries, thus saving lives, their behaviour would be __________; however, if those same com panies used workers in low -income countries to produce those drugs but paid them a non - living wage, their behaviour would be ____________. ANS: iilegal and ethical; legal and unethical Drag and Drop Questions 1. The amount of harmful greenhouse gasses t hat a firm emits throughout its operations is referred to as its __________. ___________ focuses on the actions of the business itself rather than donations of money and time. Doing business to meet the needs of this generation without harming the ability of future generations is _______________. __________________ includes all business donations to not -for-profit groups, including both money and products . ANS: carbon footprint; corporate responsibility; sustainable development; corporate philanthropy 2. ___________ are core values that transcend political, religious, class, and ethnic divisions. ___________ are a set of beliefs about right and wrong. BUSN 3CE MindTap Solutions Manual 2–3 Copyright © 201 7 by Nelson Education Ltd. ___________ are ethical standards that shift depending on particular individuals and the specific situations they face. When a person believes it is wrong to steal a pen from Walmart, but that it is okay to take one home from work, he or she has a(an) __________ issue . ANS: universal ethical standards; ethics; relative ethics; business ethics 3. When a company forms a partnership with a not -for-profit firm to raise money for that organization, the company is considering its responsibility to its ____________. When a company has decided it will not deliberately design products t o fail in order to shorten repurchase times, the company is considering its responsibility to its ____________. When the company CEO has decided that all business air travel will be by economy class, the company is considering its responsibility to its ___ _________. A company that has a very strong and comprehensive harassment policy, is a company that considers its responsibility to its ____________. ANS: community; customers; investors; employees 4. ____________ are the cornerstone of any formal ethics program. Personal needs, family, culture, and religion all influence employees’ ____________. ____________ have more influence than any other variable on the ethical conduct of individuals in organizations. An effective corporate ethics program will provi de support for any ____________. ANS: codes of ethics; value systems; organizational culture; whistleblowers Quiz Answers 1. b 2. b 3. c 4. a 5. b 6. d 7. c BUSN 3CE MindTap Solutions Manual 2–4 Copyright © 201 7 by Nelson Education Ltd. 8. b 9. b 10. a 11. c 12. d 13. b 14. c 15. a 16. b 17. a 18. b 19. b 20. d Video Case : Zappos Employees Do More Than Sell Shoes Critical Thinking Questions 1. Briefly explain how Zappos has implemented social responsibility programs into its business . ANS: Zappos believes in working for the greater good and giving back to the community. It engages in activities with charitable organizations to foster social responsibility and has developed relationships with charitable organizations to further causes such as education, cancer awareness, and poverty alleviation. For example, Zappos has partnered with “Goody Two Shoes,” a charitab le organization that gives new shoes to students in need. It has partnered with several of its vendors to supply shoes for these students . 2. How have charitable giving and volunteer engagement programs helped Zappos foster social responsibility ? ANS: With industrialization, the quality of ice creams went downhill as the quantity volume of production increased. However, Graeter’s refused to compromise on quality and stuck to its way of making ice creams. At a time when other ice cream companies focused on vo lume, Grater’s churned out dense ice creams with very little air in them, ensuring this by packing the ice cream by hand. The company BUSN 3CE MindTap Solutions Manual 2–5 Copyright © 201 7 by Nelson Education Ltd. does not engage in mass production and has created a unique position in the market for frozen desserts because of its emph asis on quality 3. Describe the effect of Zappos’ social responsibility programs on employee morale . ANS: Zappos employees enjoy coming together for social activities. These activities foster team building. There is a sense of camaraderie and strong bonds are created among employees. Employees are motivated to do things for the greater good . MindTap Questions 1. What is the reasoning behind Zappos starting a corporate social responsibility program ? a. The company does it because it feels it is the right thing to do. b. The company does it because it helps the business grow. c. The company does it because federal governmental regulations require it. d. The company does it because it provides the firm with good publicity. ANS: a A business’s involvement in social responsibility depends on its values, mission, resources, and management philosophy. 2. How has Zappos helped the surrounding community as part of its social responsibility? a. It is paying local corporate taxes that are used to build up the surrounding area. b. It has invested in the surrounding infrastructure. c. It has invested only in its own core business. d. It has invested in other bu sinesses in the area. ANS: b Beyond increasing everyone’s standard of living, businesses can contribute to society through corporate responsibility, actions that have a positive impact on the community, beyond donations of money and time. 3. Where on the spectrum of social responsibility would you position Zappos? Explain ? ANS: BUSN 3CE MindTap Solutions Manual 2–6 Copyright © 201 7 by Nelson Education Ltd. Zappos clearly belongs at the proactive contributions end of the spectrum. It has chosen to integrate social responsibility into its strategic plans, making contributions as pa rt of its business goals. 4. Provide an example of how Zappos has been involved in a cause -related marketing program. ANS: Zappos has partnered with Goodie Two Shoes, a charitable organization, to provide shoes and socks to children in need. Online Case Case Connection 2-1: Flushing Grandpa Critical Thinking Questions 1. Given the increased alternatives for burial today, what method would you prefer for disposing of the bodies of your loved ones? Why ? ANS: Student preferences will certainly vary, and may do so very much based on religious beliefs. Some students might be very environmentally conscious, but still hold to more traditional burial practices . 2. Identify the pros and cons of this new business. ANS: Pros: • cost • being environmentally friendly Cons: • social acceptance • government regulation may be a problem 3. While this new form of burial is much better for environmental sustainability, what dimension of the environment of business will pose the greatest challenge for anyone trying to operate this new business? Explain . ANS: Some students may suggest that government regulation will pose the greatest threat to the business. Governments at both the municipal and provincial levels may have concerns. However, BUSN 3CE MindTap Solutions Manual 2–7 Copyright © 201 7 by Nelson Education Ltd. given that it is now acceptable in three provinces and eight U.S. states, it will likely gain increased approval as it becomes more common, and as it becomes increasingly popular. The social environment will probably be the biggest are of concern as many people will be opposed to this practice, some for religious reasons, and some simply because it just might not seem right to “flush” grandpa. However, if one of the earliest suppliers of this service was able to sell over 200 services in the first full year of operations , it is likely that there will be sufficient demand to make the business profitable. As demand grows, the competitive environment may also pose a challenge. Currently, people who wish this service have few places to get it. If it becomes a popular method o f body disposal, a growing number of funeral homes will offer it. It is very cost effective for those who purchase the service, and likely very high margin for the funeral home that provides it as, beyond an initial investment in capital equipment, there w ill be very little cost per service . MindTap Questions 1. Which of the following is not an advantage of bio -cremation compared to traditional cremation? a. It can easily recover surgical hardware. b. It is a much faster process. c. It consumes less energy. d. It has less remaining material at the end of the process. ANS: d 2. Which of the following is a major advantage of bio -cremation? a. It completely dissolves a body so there are no remains. b. It is a “greener” alternative than most methods of body disposal. c. It is available across Canada through most funeral homes. d. Its carbon footprint is about the same as for a traditional cremation. ANS: b 3. What indications are there that bio -cremations will become an attractive alternative to burial in the future? ANS: In just over a year, it has become legal in three Canadian provinces, including the country’s two largest. The first company to offer this service in Ontario performed approximately 200 services in its first year. (Smiths Falls has a population of about 9000 people, so obviously, people are travelling from outside the immediate area for this service.) BUSN 3CE MindTap Solutions Manual 2–8 Copyright © 201 7 by Nelson Education Ltd. 4. Is bio -cremation a legal or an ethical issue? Explain. ANS: This is a legal issue, not an ethical one. Provin cial governments must approve this form of body disposal, but then municipal governments are also involved, for the affluent from the process flows into municipal waste -water systems. BUSN 3CE MindTap Solutions Manual 3–1 Copyright © 201 7 by Nelson Education Ltd. Chapter 3 Economics: The Framework for Business Homework Multiple Choice Questions 1. What is the federal government managing when it spends money to build new roads during an economic downturn ? a. Market operations b. Fiscal policy c. Federal debt d. Monetary policy ANS: b 2. How does the Bank of Canada try to expand the money supply ? a. It reduces the discount rate. b. It focuses on fiscal policy. c. It establishes an equilibrium price. d. It increases the discount rate. ANS: a 3. Which of the following would be included in Canada’s GDP ? a. Toronto -based Teknion’s manufacturing of furniture in Malaysia b. Japan -based Honda’s manufacture of cars in Ontario c. The sale of illegal drugs d. Gardening services paid in c ash and not reported, to save taxation ANS: b BUSN 3CE MindTap Solutions Manual 3–2 Copyright © 201 7 by Nelson Education Ltd. Fill in the Blank Questions 1. ____________ is an economic system based on the principle that the government own and operate key enterprises that directly affect public welfare; ____________ is an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government. ANS: socialism; communism 2. The government uses ____________ as one measure of inflation in the economy; it measures economic output in relation to the amount of input to get a measure of ____________ . ANS: the consumer price index; productivity 3. The study of economic activity that focuses on such things as the gross domestic product and taxation policies is known as ____________; the study of economic activity focuses on consumers and households is known as ____________. ANS: macroeconomics; microeconomics Drag and Drop Questions 1. Government efforts to influence the economy through taxation and spendi ng is called ____________. Actions that shape the economy by influencing interest rates and the supply of money is called ____________. ____________ involves buying and selling government securities, such as treasury bonds, notes, and bills. Banks sometime s have a ____________, which means they hold funds equal to a percentage of the deposits held by their customers . ANS: fiscal policy; monetary policy; open market operations; reserve requirement 2. ___________ is a period of rising economic growth and in creasing employment when consumer confidence and spending begins to rise. ___________ occurs when GDP decreases for two consecutive quarters. BUSN 3CE MindTap Solutions Manual 3–3 Copyright © 201 7 by Nelson Education Ltd. ___________ is a period of economic downturn, marked by rising unemployment ___________ is a period of robust economic growth and high employment . ANS: recovery; recession; contraction; expansion 3. A market structure where sellers have some control over price, depending on the value they offer their customers: ____________. A market structure where no seller has any control over price: ____________. A market structure where sellers avoid intense price competition as all sellers would lose: ____________. A market structure where there is no incentive to hold down prices or improve quality: __________ __. ANS: monopolistic competition; pure competition; oligopoly; monopoly 4. When the rate of price increases slows down: ____________. When production increases relative to the amount of resources needed: ____________. When prices actually decrease: ___ _________. When prices are, on average, double: ____________. ANS: disinflation; productivity; deflation; hyperinflation Quiz Answers 1. a 2. b 3. c 4. b 5. a 6. c 7. a 8. d 9. a 10. b BUSN 3CE MindTap Solutions Manual 3–4 Copyright © 201 7 by Nelson Education Ltd. 11. d 12. d 13. a 14. b 15. b 16. b 17. c 18. c 19. b 20. d Video Case : Nederlander Critical Thinking Questions 1. Explain the role of capitalism in the 100 -year growth of Nederlander Concerts. ANS: The economic system of capitalism produces a “private sector” characterized by economic freedom, individual property rights, competition, and low taxation and regulation. This business climate fosters innovation, entrepreneurship, and the potential for lar ge personal and corporate financial gain. Unlike the command -and-control systems of socialism and communism, which are characterized by high government regulation and taxation, along with redistribution of business profits, capitalism offers economic and l egal freedoms that enable the greatest number of entrepreneurial ventures to grow into successful businesses. Nederlander, as a company founded in the twentieth century, owes much of its success to the business -friendly environment of capitalism. 2. Why is Nederlander able to charge higher prices for small theatre performances when audiences could pay less at stadium concerts? ANS: According to CEO Adam Friedman, Nederlander can sell high -price concert tickets because fans compete for the limited seating of Nederlander venues —6000 or fewer seats. The demand for musical artists like Pearl Jam, Dave Matthews, and Bruce Springsteen is very high, but the ticket supply at Nederlander venues is very low, since the venues are small. This high demand for the prod uct combined with a low supply of seats boosts the equilibrium price far higher than tickets for concerts in a typical stadium. BUSN 3CE MindTap Solutions Manual 3–5 Copyright © 201 7 by Nelson Education Ltd. 3. Would you expect the current economic downturn to affect Nederlander’s ticket sales? Why or why not? ANS: In an economic d ownturn, consumers limit their buying habits to products that fulfill basic needs. During global recession, fewer people are willing to make discretionary buys, such as the purchase of premium concert tickets. This pattern is certain to affect Nederlander concerts. MindTap Questions 1. By focusing on promoting musical talent that can command high ticket prices and sell out small to mid-sized concert venues to concertgoers that can afford to pay high prices, Nederlander is seeking to _______. a. establish an equilibrium price that balances supply with demand b. stimulate extraordinarily high demand c. restrict the supply of tickets d. manipulate ticket prices ANS: a 2. Nederlander's efforts to work out mutually beneficial and financially successful deals with artists and their agents illustrates all of the following fundamental rights of capitalism except: a. The right to own a business and keep after -tax profits. b. The right to private property. c. The right to have unregulated business practices. d. The right to free choice. ANS: c 3. In contrast to concert promoters than focus on large venues and/or lesser known artists, the business model used by Nederlander Concerts emphasizes being successful in small to mid -size venues by attracting and promoting top talent that can command high ti cket prices targeted toward fans who are willing to pay those prices. Which degree (or form) of competition does this business model reflect? ANS: The degree of competition reflected in this business model is monopolistic competition. 4. Assume that Ned erlander decided to explore different pricing strategies, such as offering much lower prices or much higher prices. What are the risks to Nederlander? BUSN 3CE MindTap Solutions Manual 3–6 Copyright © 201 7 by Nelson Education Ltd. ANS: At much lower prices, demand for tickets would likely exceed supply of seats. Nederlander would risk losing money, and some bigger name artists might no longer wish to perform there. At much higher prices, supply of seats might exceed demand for tickets. Again, Nederlander would risk losing money, and some bigger name artists might no longer wish to per form there. Online Case Case Connection 3-1: Blink and the Price Goes … Critical Thinking Questions 1. Explain the rationale for demand -based pricing for airline tickets . ANS: Airlines have fixed supply on any particular flight; that is, if there are 218 seats, there can only be 218 passengers. Raising prices will reduce demand (or move it to alternative, but cheaper, flights). If it approaches departure time and there are too many seats potentially empty, prices usually go down. This is done to increa se demand, so that all 218 seats are filled. By using demand -based pricing, airlines attempt to maximize the revenue they get for each flight . 2. Do you think demand -based pricing will have a real impact in the restaurant and bar business, or is it simply an interesting fad? Explain . ANS: Student opinions will vary. However, if it works to boost bar or restaurant revenue and profit, it will likely last longer than a fad. One advantage that a bar or restaurant may see from using such pricing is an increased ability to sell out of items they would like to discontinue, or to sell food ingredients that are approaching a spoilage date MindTap Questions 1. When Uber uses “surge” pricing, what is it attempting to do? a. Decrease supply b. Increase supp ly c. Increase demand d. Decrease demand BUSN 3CE MindTap Solutions Manual 3–7 Copyright © 201 7 by Nelson Education Ltd. ANS: b 2. What is the greatest danger inherent in demand -based pricing in baseball if prices are adjusted upwards by an average of $4 during popular times, but down by an average of $2 during less popular times? a. Demand actually shifts to the low -priced tickets, reducing demand by an equal number for the higher -priced tickets. b. People who buy the lower -priced tickets begin to enjoy baseball and begin to come to some high -priced games as well. c. People see the greater value in the higher -priced tickets and those ticket sales increase, but there is an equal drop in the number of lower -priced tickets that are sold. d. People who come to watch better -performing teams begin to lose interest in baseball beca use of the higher prices. ANS: a 3. What would be the impact on team revenues if the Toronto Blue Jays sold out (49,282 seats) for 41 premium games at an average increase of $6 per ticket, but sales dropped by 20% for the lower - priced games, where prices were dropped by $4? (Previously, the higher -priced games sold at 90% capacity, and the lower -priced games sold at 70% capacity.) ANS: Previously, the games that are now high -priced would have averaged 44,354 fans. So an average increase in revenue would equal $266,124 (44,354 x $6). Previously, the games that are now lower - priced would have averaged 30,997 fans. If the number of fans dec reased by 20%, then average attendance would be 24,798 fans. So, an average decrease in revenue would be equal to $99,192 (24,798 x $4). The team would be better off. Total revenue would increase by $6.8 million. ($266,124 – $99,192 x 41). 4. If you got a taxi last week and you decide to get another today, to go to and from the same place, you can reasonably expect to pay the same price. However, that does not necessarily hold if you use Uber. Explain why. ANS: Taxis generally charge a flat fee, plus so much per kilometre. Uber, on the other hand, changes prices based on supply and demand. For example, you could expect fewer Uber drivers to be working on New Year’s Eve, but demand will also be much higher. By raising rates, Uber encourages more drivers to work, to meet demand. It tries to increase supply to meet demand, or create equilibrium. BUSN 3CE MindTap Solutions Manual 4–1 Copyright © 201 7 by Nelson Education Ltd. Chapter 4 The World Marketplace: Business Without Borders Homework Multiple Choice Questions 1. What is it called when a company contracts with foreign suppliers to produce products, usually at a lower cost than domestic production ? a. Insourcing b. Foreign franchising c. Outsourcing d. Exporting ANS: c 2. What is one of the benefits of international trade ? a. Increased foreign ownership b. Access to factors of production c. New industries d. Lower opportunity costs ANS: b 3. What barrier to international trade includes differences among countries in language, attitudes and values ? a. Political differences b. Economic differences c. Legal differences d. Sociocultural differences ANS: d BUSN 3CE MindTap Solutions Manual 4–2 Copyright © 201 7 by Nelson Education Ltd. Fill in t he Blank Questions 1. If the total value of a country’s exports is higher than the value of its imports the country has a _____________ and if imports are higher than exports the country has a __________ . ANS: trade surplus; trade deficit 2. A formal, long -term agreement is usually called a _______________; a less formal, less encompassing agreement is usually called a _____________. ANS: partnership; strategic alliance 3. The _____________ is an international trade accord designed to encou rage worldwide trade and the ____________ is a global institution to promote international trade and settle trade disputes. ANS: General Agreement on Tariffs and Trade (GATT); World Trade Organization (WTO) Drag and Drop Questions 1. Industries tend to succeed on a worldwide basis in countries that enjoy a __________. The value of producing the second -best choice represents the ___________ of producing the first choice product. A country has a(n) _______________when it can produce more of a good than ot her nations, using the same amount of resources. A(n) __________________ is the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries . ANS: competitive advantage; opportunity cost; absolute adva ntage; comparative advantage 2. The ___________ is a basic measure of the difference between a nation’s exports and imports. The ___________ is a measure of the total flow of money into or out of a country. The ___________ is a measure of the value of one nation’s currency relative to the currencies of other nations. _______________ is an international trade that involves the barter of products for products rather than for currency . BUSN 3CE MindTap Solutions Manual 4–3 Copyright © 201 7 by Nelson Education Ltd. ANS: balance of trade; balance of payments; exchange rate; countertrade 3. ____________ is the most basic level of international market development. ____________ involves a domestic firm granting a foreign firm the right to produce and market its product or to use its trademark rights within a defined geographic area. ____________ is when a firm either acquires a foreign firm or develops new a facility from the ground up in a foreign country. A (n) ____________ is when two or more companies join forces to share resources, risks, and profits but without merging in order to pursue specific opportunities. ANS: exporting; foreign licensing; foreign direct investment; joint venture 4. A (n) ______________ is a tax levied against imports. A (n) ___________ is a limitation on the amount of a specific product that may b e imported from certain countries during a given time period. A (n) are limitations on the amount of specific products that one nation will export to another nation. A (n) ________ is a total ban on international trade in a certain item or a total halt in trade with a particular country. ANS: tariff; quota; voluntary export restraint (VER); embargo Quiz Answers 1. d 2. c 3. a 4. b 5. a 6. b 7. a 8. b 9. c 10. a 11. b