FIT3174 Study Guide - Final Guide: Transaction Cost
24 Jun 2018
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Lecture 1 Exam Revision Questions
1) Which one of the following statements best represents a characteristic of the
behavioural theory of firms?
a) Firms seek no profits
b) Firms seek minimal profits
c) Firms seek satisfactory profits
d) Firms seek maximum profits
2) The transaction cost theory states that the organization is a(n):
a) entity that can/may grow larger when its external transaction costs are higher than its
internal transactions
b) system of formal functions that include planning, organizing, coordinating, deciding, and
controlling
c) system of management based on the observation of what managers actually doing their
jobs
d) nexus of contracts among self-interested individuals who must be supervised and
managed.
3) In agency theory, agents are advised to adopt a philosophy of:
a) Pursuing self-interest by management
b) Improving customer satisfaction
c) Enhancing employee satisfaction
d) Protecting shareholder interest
4) One reason for the existence of agency problems between managers and
shareholders is that:
a) there is a separation of ownership by shareholders and control of the firm by managers
b) managers and stakeholders have differences in interests
c) shareholders have unreasonable expectations about managerial performance
d) customers have high expectations of employee’s services provided for them
5) If a resource is 'inimitable', a competitor finds it:
a) Easy to copy
b) Easy to acquire
c) Easy to copy and easy to acquire
d) Difficult to copy
6) Indicate which perspective on strategy that stresses the importance of capabilities
in determining sustainable competitive advantage is called:
a) Transaction cost theory
b) Porter’s value chain
c) Resource Based View
d) Agency theory
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