Important Project Management MCQs: Correct Answers

1. Which of the followingbusinesses is required by law tomake its data available to thepublic?

1. A restaurant owned andmanaged by an individualproprietor
2. A premium salon owned bytwo business partners
3. A carpet manufacturing unitruns solely by a third-generation entrepreneur
4. A software company with over300 shareholders

2. _____ precisely indicates howmuch of a firm's sales isconverted into profits.

1. Break-even price
2. Working capital turnover 
3. Return on revenue 
4. Inventory turnover

3. Which of the followingequations best expressesreturn on revenue?

1. Net profits/Revenue 
2. Revenue - Cost 
3. Sales/Revenue 
4. Revenue - Gross profits

4. True Machine Inc. and OneElectrona Inc. are twocompeting consumerelectronics companies. WhileTrue Machine's COGS/Revenueis 66%, One Electrona's is 74%.What do you infer from thisfinancial data?

1. One Electrona has acompetitive advantage overTrue Machine. 
2. True Machine's profit margin ishigher than that of OneElectrona. 
3. One Electrona is more efficientthan True Machine by eightpercentage points. 
4. True Machine should focusmore on driving down costs,while increasing revenues, andOne Electrona should focusmore on increasing its fixedasset turnover.

5. A high percentage ofR&D/Revenue ratio indicatesa(n): 

1. strong focus on innovation toimprove current products andservices. 
2. inefficiency in the managementto focus on new products. 
3. strong focus on marketing andsales to promote products andservices. 
4. negligent investment towardresearch and development.

6. _____ is best described as ameasure of how effectivelycapital is being used by a firmto generate revenue. 

1. Return on revenue 
2. Risk capital 
3. Working capital turnover 
4. Revenue per employee

7. The working capital turnoverof Tesva Systems Corp. is 6.0.What does this financial datasuggest?

1. For every $6.00 Tesva Systemsputs to work, the companyincurs a cost of $1.00. 
2. For every $6.00 Tesva Systemsputs to work, the companyrealizes a sales of $1.00. 
3. For every dollar Tesva Systemsputs to work, the companyrealizes $6.00 in loss.
4. For every dollar Tesva Systemsputs to work, the companyrealizes $6.00 of sales.

8. The working capital of asmall home-based business is$200,000. The revenuesgenerated account to$600,000, and the profitsincurred are $300,000. Whatwould be the company'sworking capital turnover?

1. 3, that is, $600,000/$200,000 
2. $300,000, that is, $600,000 - $300,000
3. 2, that is, $600,000/$300,000 
4. $100,000, that is, $300,000 -$200,000

9. _____ most precisely measureshow well a company leveragesits fixed assets, particularlyproperty, plant, and equipment(PPE).

1. Working capital turnover
2. Fixed asset turnover 
3. Fixed assets to equity ratio 
4. Capital leverage ratio

10. The fixed asset turnover of acompany is 8.3. What do youinfer from this?

1. Every dollar spent on thecompany's fixed assetsgenerates $8.30 of revenue.
2. 8.3% of the company's revenueis invested in fixed assets.
3. The return on fixed assets willbreak even in 8.3 years. 
4. The cost of capital invested onfixed assets is 8.3% of the totalprofit.

11. Which of the following bestexpresses fixed asset turnover?

1. Current assets/Fixed assets 
2. Revenue/Fixed assets 
3. Fixed assets/Total return toshareholders 
4. Fixed assets/Current liabilities

12. Which of the following ratiosbest expresses inventoryturnover? 

1. Inventory/Working capital 
2. Annul profits/Inventory 
3. Inventory/Per unit cost ofproduction 
4. Cost of goods sold/Inventory

13. _____ indicates how fast a firmis collecting the credit amountextended by a firm to itscustomers. 

1. Payables turnover 
2. Receivables turnover 
3. Assets turnover 
4. Inventory turnover

14. _____ indicates how much afirm benefits from interest-freeloans extended by its suppliersand creditors. 

1. Payables turnover 
2. Receivables turnover 
3. Assets turnover 
4. Inventory turnover

15. The payable turnover forApple and BlackBerry (as offiscal year 2012) was 7.4 and24.8 respectively. From thisdata we can conclude that: 

1. BlackBerry has taken a longertime to pay its creditors ascompared to Apple. 
2. Apple has been more efficientthan Blackberry in payingcreditors and generatinginterest-free loans fromsuppliers. 
3. BlackBerry has a clearadvantage over Apple as itscredits are paid much fasterthan that of Apple. 
4. BlackBerry can extend itspayment periods, while Appleis required to pay its creditorsmore quickly.

16. The receivables turnover ofGD Products Inc. is 13.6 andthat of its competitor, APGoods Inc., is 6.0. What doesthis financial data primarilyimply? 

1. GD Products is less efficientthan AP Goods in collectingaccounts receivables. 
2. AP Goods pays its creditorsmore quickly as compared toGD Products. 
3. GD Products collects accountsreceivables faster than what APGoods does. 
4. AP Goods has a larger valuegap as compared to GDProducts.

17. In the fiscal year 2012,BlackBerry's Cost of goodssold (COGS)/Revenue ratiowas higher than that of itscompetitor, Apple. This impliesthat BlackBerry needs to worktoward: 

1. driving down its costs. 
2. lowering its inventory turnover. 
3. increasing its fixed costs anddecreasing its variable costs. 
4. reducing its return on revenue.

18. Which of the followingstatements is true ofaccounting data? 

1. Accounting data focus mainlyon intangible assets, ratherthan tangible assets. 
2. Accounting data are historicaldata and thus backward-looking. 
3. Accounting data do not haveto be adjusted in any mannerto compare companies withdifferent capital structures. 
4. Accounting data consider off-balance sheet items, such aspension obligations of a firm.

19. Which of the followingcompetitively important assetsis typically excluded from afirm's balance sheet? 

1. Land and building 
2. Accounts payable 
3. Patents 
4. Customer experience

20. _____ are the legal owners ofpublic companies. 

1. Employees 
2. Shareholders 
3. Category captains 
4. customers

21. Which of the following is anexternal performance metric? 

1. Return on revenue 
2. Fixed assets turnover 
3. Inventory turnover 
4. Total return to shareholders

22. From an investors' orshareholders' perspective, themeasure of competitiveadvantage that matters most isthe _____. 

1. return on risk capital 
2. economic value created 
3. consumer surplus 
4. customer value

23. Which of the following isNOT true of risk capital? 

1. From the shareholders'perspective, the measure ofcompetitive advantage isprimarily based on return ontheir risk capital. 
2. Risk capital invested in a firmcan be legally recovered if thefirm goes bankrupt. 
3. A person who provides capitalto a firm gets equity shares inreturn. 
4. Return on risk capital includesstock price appreciation plusdividends received over aspecific period.

24. Return on risk capitalprimarily includes: 

1. stock price appreciation plusdividends received over aspecific period. 
2. consumer surplus plus firmprofit. 
3. account receivables plusaccount payables. 
4. economic value created by afirm plus reservation price.

25. _____, which is the return onrisk capital, includes stockprice appreciation plusdividends received over aspecific period. 

1. Total return to shareholders 
2. Earnings per share 
3. Receivables turnover 
4. Dividend yield

26. A firm has 30 million sharesoutstanding, and each share istraded at $100. Also, eachshareholder gets a dividend of$2000 annually. In this case, themarket capitalization is _____. 

1. 30,000 shares, that is, 30 millionshares/$100 
2. $200,000, that is, $2000 × $100 
3. $3 billion, that is, 30 millionshares × $100 
4. 20:1, that is, $2000/$100

27. The market capitalization ofa public company is $5 billion.Each share of the company istraded at $200. What do youinfer from this financial data? 

1. The firm's number ofoutstanding shares is 25 million.
2. The firm pays an annualdividend of 10 percent. 
3. The firm's total return toshareholder is $5 billion. 
4. The firm's economic valuecreated is $5 billion.

28. Which of the followingexpressions accuratelydescribes market cap? 

1. It is the product of the numberof outstanding shares and theshare price. 
2. It is the difference between thebook value and the marketvalue of a firm's assets. 
3. It is the ratio of a firm's equityfinance and its debt finance. 
4. It is the difference between afirm's account receivables andaccount payables.

29. Unlike the financial ratiosbased on accounting data,total return to shareholders is: 

1. backward-looking and historicin nature. 
2. an external performancemetric. 
3. an absolute measure ofcompetitive advantage. 
4. unaffected by market volatilityor macroeconomic factors.

30. Which of the following is adisadvantage of measuring firmperformance through totalreturn to shareholders and firmmarket capitalization? 

1. Market volatility makes itdifficult to assess firmperformance through thesemeasures, particularly in theshort term. 
2. These tools fail to indicate howthe stock market views allavailable public informationabout a firm's expected futureperformance. 
3. These tools measurecompetitive advantage inabsolute terms rather thanrelative terms. 
4. Only the book value of theshare prices is taken intoaccount when applying thesemeasures, and not the marketvalue.

31. _____ is best described as thedifference between a buyer'swillingness to pay for a productor service and a firm's totalcost to produce it. 

1. Economic value created 
2. Break-even point 
3. Consumer surplus 
4. Cost of capital

32. A firm incurs $400 tomanufacture a television. In themarket, customers are willingto pay a maximum of $600 forthe television priced at $500.The difference of $200 ($600minus $400) is the _____. 

1. consumer surplus 
2. total return to shareholders 
3. customer lifetime value 
4. economic value created

33. Both Vibrant Phones Inc.and Oryxo Inc. incur a cost of$200 to manufacture a singleunit of a cell phone. However,Vibrant Phones creates moreeconomic value than whatOryxo does. What does thisimply? 

1. Vibrant Phones and Oryxohave achieved a competitiveparity. 
2. Oryxo has a competitiveadvantage over VibrantPhones. 
3. Vibrant Phones sells itsproducts at a better price thanOryxo. 
4. Oryxo's offering has greatertotal perceived consumerbenefits than Vibrant Phones'soffering.

34. A watch-making companyhas priced one of its wristwatches at $210. Most of itscompetitors sell similarwatches at $180. Sellinganything less than $150 wouldresult in a loss for the company.However, the absolutemaximum a customer is willingto pay for it is $170. In thisscenario, what is thereservation price of the wristwatch? 

1. $150 
2. $180 
3. $170 
4. $210

35. A firm incurs $100 tomanufacture an office table. Itfixes the market price of thetable as $250, and discountsthe price to $200. However, themaximum a person is willing topay for it is $180. What is theamount of total perceivedconsumer benefits in thisscenario? 

1. $180 
2. $100
3. $250 
4. $200 

36. The difference between theprice charged for a productand the cost to manufacture itis referred to as the _____. 

1. consumer surplus 
2. break-even price 
3. producer surplus 
4. reservation price

37. _____ denotes the dollaramount a consumer wouldattach to a good or service. 

1. Utility 
2. Value 
3. Consumer surplus 
4. Economic contribution

38. The value a consumerattaches to a product orservice is captured in the: 

1. least price a consumer iswilling to pay for it. 
2. consumer's maximumwillingness to pay for it. 
3. expenses incurred by the firmin manufacturing it. 
4. difference between the pricecharged for it and the cost toproduce it.

39. After trying on a dress, aconsumer assesses it to beworth a maximum of $100 andis willing to pay that amount forthe dress. However, the dresswas priced at $80. What is theamount, $100, referred to as? 

1. The producer surplus 
2. The firm's cost (C) inmanufacturing the dress 
3. The consumer surplus 
4. The value (V) the consumerattaches to the dress

40. How does a firm capture itsproducer surplus for a good orservice? 

1. As cost per unit sold 
2. As profit per unit sold 
3. As earnings per share 
4. As market price per share

41. Gina paid $900 for a camerathat she thought was worth$1100 for all the featuresincluded in it. For the consumerelectronics firm selling thecamera, however, the cost ofproducing the camera was only$350. What is the consumersurplus in this scenario? 

1. $900 
2. $1100 
3. $550 
4. $200

42. Economic value creation isbest expressed as _____.

1. producer surplus minusconsumer surplus 
2. consumer surplus minus cost ofproduction 
3. consumer surplus plus firmprofit 
4. producer surplus plus firmprofit

43. Osion Electronics Inc.incurs a cost of $350 toproduce one unit of a cellphone. The company'smanagement has priced theproduct at $600 in the market.Considering the technologicaladvancement of the cellphone, customers perceive itsvalue to be around $800. Whatis the economic value createdin this scenario?

1. $350 
2. $450 
3. $800 
4. $200

44. By selling a laptop at $1000for which consumers are willingto pay up to $1200, a consumerelectronics firm makes a profitof $400 per unit. In thisscenario, the amount $600, thatis ($1200 - $1000) + $400, is the_____.

1. opportunity cost 
2. economic value created 
3. reservation price 
4. consumer surplus

45. Which of the following isNOT an accurate expression ofthe economic value createdper unit of a product sold?

1. The sum of consumer surplusand producer surplus 
2. The difference betweenconsumer's reservation priceand firm's cost 
3. The sum of consumer surplusand firm profit 
4. The difference between theprice charged and the firm'scost

46. In an economic context,strategy for producers isprimarily about: 

1. distributing the economic valuecreated equally betweenconsumers and themselves. 
2. reducing the differencebetween consumer'swillingness to pay for a productand the cost to produce it. 
3. capturing the economic valuecreated as much as possible. 
4. lowering producer surplus andincreasing consumer surplus.

47. Competitive advantagegoes to the firm that achievesthe: 

1. largest economic valuecreated. 
2. lowest producer surplus. 
3. highest payable turnover. 
4. highest Cost of goodssold/Revenue ratio.

48. In order to achieve acompetitive advantage, a firmshould be able to: 

1. increase its payable turnover. 
2. keep its producer surplus low. 
3. increase the differencebetween the value created andthe cost to produce it. 
4. increase the differencebetween consumer surplus andits profits.

49. The cost of capital to createa product is a fixed costbecause it is: 

1. directly proportional to theoutput level. 
2. uniform throughout all firmsand industries. 
3. not a part of the profitcalculations. 
4. unaffected by consumerdemand.

50. _____ are best described asthe value of the best forgonealternative use of the resourcesemployed. 

1. Variable costs 
2. Opportunity costs 
3. Social costs 
4. Switching costs

51. Samantha is a recent fashiongraduate. She started her ownapparel store with aninvestment of $300,000. In thefirst year she made a profit of$60,000. If she had taken up ajob as a fashion editor for amagazine, she would haveearned $50,000 as salary peryear. Also, she could haveinvested her capital, $300,000,in treasury bonds and earnedan interest of $12,000. Thus, theamount $62,000 ($50,000 +$12,000) would be Samantha's_____. 

1. social cost 
2. break-even price 
3. reservation price 
4. opportunity cost

52. Andrew invested $200,000in the shares of a company. Atthe end of a year, he hadearned $7,000 as dividends onhis shares along with a $1,000appreciation in the overallvalue of his shares. However, ifAndrew had invested the sameamount on an asset, like gold,the appreciation in its valuewould have earned him$10,000 at the end of the year.In this scenario, which of thefollowing is Andrew'sopportunity cost? 

1. $7,000 
2. $10,000 
3. $2,000 
4. $200,000

53. When GD Inc. declared adividend of $20,000,000, itsmarket value increased from $8billion to $8.5 billion. However,it lost a chance to reinvest$20,000,000 in the researchand development of a newproduct which would haveearned a profit of $200 million.Thus, this $200 million isreferred to as GD Inc.'s _____. 

1. producer surplus 
2. consumer surplus 
3. opportunity cost 
4. social cost

54. Which of the following is anadvantage of applying theeconomic value creationperspective to assess a firm'sperformance? 

1. When the need for "hardnumbers" arises, managers andanalysts rely on economicvalue creation perspective tomeasure competitiveadvantage. 
2. In economic value perspective,analysts not only considerhistorical costs, but alsoopportunity costs. 
3. Arriving at the economic valuecreated is easy becausedetermining the value of agood in the eyes of consumersis a simple task. 
4. It is the most efficient tool forassessing corporate-levelcompetitive advantage ofhighly diversified companieswith large product portfolios

55. Which of the following isNOT a limitation of theeconomic value creationframework? 

1. The framework falls short whenmanagers are called upon tooperationalize competitiveadvantage. 
2. The framework is not aseffective as accountingprofitability or shareholdervalue creation when the needfor "hard numbers" arises. 
3. The framework fails to providethe foundation that will helpfirms decide between cost-leadership or differentiationstrategies. 
4. The framework cannot beeffectively applied forassessing corporate-levelperformance of diversifiedconglomerates.

56. When using the balancedscorecard approach to assess afirm's performance, which ofthe following is NOT a keyquestion that managers needto answer? 

1. How do customers view us? 
2. How do we reduce theeconomic value created? 
3. What core competencies dowe need? 
4. How do shareholders view us?

57. Which of the followingframeworks used to measurecompetitive advantage relieson both an internal and anexternal view of a firm? 

1. The economic value creationmodel 
2. The accounting profitabilitymodel 
3. The shareholder value creationmodel 
4. The balanced scorecard model

58. Which of the followingstatements is true of thebalanced scorecard? 

1. It is a more or less a one-dimensional metric ofmeasuring competitiveadvantages of a firm. 
2. It is one of the traditionalapproaches of measuring firmperformance. 
3. Its primary focus is to base afirm's strategic goals entirelyon external performancedimensions. 
4. It attempts to provide a holisticperspective on firmperformance.

59. Which of the following is anadvantage of the balancedscorecard? 

1. It is a tool for both strategicformulation and strategicimplementation. 
2. It allows managers to translatea firm's vision into measureableoperational goals. 
3. The balanced scorecard isindependent of the skills of themanagers responsible for itsimplementation. 
4. Its implementation is a one-time effort and does notrequire continuous tracking ofmetrics or updating of strategicobjectives.

60. Which of the following is NOT an advantage of thebalanced scorecard approachto assess firm performance? 

1. It allows managers tocommunicate and link thestrategic vision to responsibleparties within an organization. 
2. It helps managers to implementfeedback and organizationallearning in order to modify andadapt strategic goals whenindicated. 
3. It provides a concise reportthat tracks chosen metrics andmeasures and compares themto target values. 
4. It is a tool which can beeffectively used by managersfor both strategicimplementation and strategicformulation.

61. Which of the followingapproaches to assesscompetitive advantage isbased on the view thatnoneconomic factors can havea significant impact on a firm'sfinancial performance? 

1. The triple-bottom-lineapproach 
2. The economic value creationframework 
3. The accounting profitabilityapproach 
4. The balanced scorecard

62. Which of the followingstatements is true of the triplebottom line? 

1. It is more or less a one-dimensional metric ofmeasuring competitiveadvantage of a firm. 
2. Its primary focus is to base afirm's strategic goals entirelyon external performancedimensions. 
3. According to this approach,achieving positive results in anyone of the dimensions,economic, social, andecological, can lead to asustainable strategy. 
4. Three dimensions, economic,social, and ecological, makeup the triple bottom line.

63. The tenet behind the triplebottom line is that: 

1. a firm should solely focus onincreasing the economic valuecreated to/for its customers. 
2. a firm's primary objectiveshould be increasing the totalreturns to its shareholders. 
3. a firm should achieve positiveresults along the economic,social, and ecologicaldimensions to gain asustainable strategy. 
4. a firm's return on revenue canbe broken down into threeratios: COGS/Revenue,R&D/Revenue, andSG&A/Revenue.

64. How does a sustainablestrategy typically help a firm? 

1. It helps the firm focus solely onits financial goals. 
2. It reduces the need forcorporate social responsibilitywithin the firm. 
3. It facilitates the firm ineffectively isolating its externalstakeholders. 
4. It helps the firm achievepositive results along the socialand ecological dimensions.

65. Using the _____ approach,managers audit their company'sfulfillment of its social andecological obligations tostakeholders such asemployees, customers,suppliers, and communities asconscientiously as they track itsfinancial performance. 

1. triple-bottom-line 
2. economic value creation 
3. accounting profitability 
4. shareholder value creation

66. Which of the following is anadvantage of a triple-bottomline approach? 

1. The approach takes anintegrative and holistic view inassessing a company'sperformance. 
2. The approach does not rely onan external view of a firm toassess its performance. 
3. The approach is more of aquantitative performancemetric rather than a mereconceptual framework. 
4. The framework can helpmanagers assess a firm'scompetitive advantage withouttaking into account the firm'sperformance alongnoneconomic dimensions.

67. The top management atBioTrue Pharma Inc. throughrigorous testing ensures thatthe company develops andsells drugs that are free ofharmful side-effects. Also, thecompany ensures that thechemical waste generated inthe manufacturing process iskept to a bare minimum and isdisposed of according to theregulations of theEnvironmental ProtectionAgency. The managementassesses its overallperformance based on thesedimensions. Thus, the managersat Bio True Pharma areapplying the _____ approach tomeasure firm performance. 

1. economic value creation 
2. shareholder value creation 
3. triple bottom line 
4. accounting profitability

68. Janet is a 23-year-oldemployee at DR Products Inc.As a millennial, she will tend to:

1. view superior financialperformance as the soleobjective of her firm. 
2. expect her company to besocially responsible. 
3. be much more like GenerationXers than Baby Boomers. 
4. work for companies with valuesthat are contradictory to herown values.

69. At present, _____ make up theoldest cohort of the workforce.

1. Baby Boomers 
2. Generation Xers 
3. Millennials 
4. Generation Yers

70. The translation of strategyinto action primarily takesplace in a firm's _____. 

1. mission statement 
2. executive summary 
3. business model 
4. code of conduct

71. During the process offormulating an effectivebusiness model, a firm'smanagers should first: 

1. transform their strategy of howto compete into a blueprint ofactions and initiatives. 
2. implement their strategy atcorporate, strategic businessunit, and functional levels. 
3. implement their blueprint ofactions and initiatives throughstructures, processes, culture,and procedures. 
4. evaluate the firm's strategyalready in effect and takecorrective actions if necessary.

72. _____ is best described as aprocess in which a group ofpeople voluntarily performstasks that were traditionallycompleted by a firm'semployees. 

1. Bootstrapping 
2. Outsourcing 
3. Amalgamating 
4. Crowdsourcing

73. Red Ink Electronics Inc.faced a serious technicalproblem when developing amicroprocessor for a high-techmedical device. The employeesof the company includingthose in the research anddevelopment department wereunable to solve the issue. Thus,an open call was made to thegeneral public, mainlytechnicians and productengineers, on the company'swebsite to volunteer to solvethe technical problem thecompany faced. Which of thefollowing does the scenariobest illustrate? 

1. Crowdsourcing 
2. Vertical integration 
3. Bootstrapping 
4. Amalgamating

74. Which of the followingscenarios best illustratescrowdsourcing? 

1. A company uses a teamconsisting of employees fromdifferent functionaldepartments to complete aproject. 
2. A company hires an externalfirm to look into its legalmatters. 
3. A company hires low-costmanufacturers in less-developed nations to produceits merchandise. 
4. A company encourages thegeneral community to postnew product ideas on itsofficial website.

75. Threadless is a community-centered online apparel storethat leverages user-generatedcontent. The idea is to turnconsumers into prosumers, ahybrid between producers andconsumers. Members of theThreadless community do mostof the work, which theyconsider fun: They submit T-shirt designs online, andcommunity members vote onwhich designs they like best.The designs receiving the mostvotes are put in production,printed, and sold online. It canbe said that Threadless usesthe _____ technique. 

1. offshoring 
2. product diversification 
3. crowdsourcing 
4. horizontal integration

76. Blue Ego Inc. is a marketleader in the cell phoneindustry. To gain competitiveadvantage, the company has apost on its official siterequesting its suppliers andcustomers to contribute ideasabout the kinds of features andtechnology they think shouldbe included in the nextsmartphone. This has helpedthe company reduce theburden of innovation on itsemployees, effectively meetcustomers' needs, and alsoinclude the larger community inproduct development. Thisprocess best exemplifies: 

1. offshoring.
2. product diversification
3. crowdsourcing
4. horizontal integration

77. In the _____ business model,the initial product is often soldat a loss or given away for freein order to drive demand forcomplementary goods. 

1. subscription-based 
2. razor-razor-blade 
3. pay-as-you-go 
4. direct sales

78. True Vibgyor Inc. sells its e-book readers at the cost priceof $15 each. However, thecompany makes its profitswhen users have to downloador buy books online. Which ofthe following business modelsis True Vibgyor implementing? 

1. Subscription-based 
2. Razor-razor-blade 
3. Pay-as-you-go 
4. Direct sales

79. Manufacturers of electricfragrance diffusers sell theelectric outer device at anextremely low price,sometimes even at a loss.However, they make theirmoney on the product bycharging a premium on theperfume refills that have to bereplaced regularly. Which ofthe following business modelsdoes this best illustrate? 

1. Razor-razor-blade 
2. Subscription based 
3. Freemium 
4. Pay-as-you-go

80. Which of the followingbusiness models has beentraditionally used by themagazine and newspaperindustry? 

1. Subscription-based 
2. Razor-razor-blade 
3. Pay-as-you-go 
4. Freemium

81. A defining characteristic ofthe subscription-basedbusiness model is that the: 

1. user pays for only the serviceshe or she consumes. 
2. user pays for access to aproduct or service whether heor she uses it during thepayment term or not. 
3. basic features of a product orservice are provided free ofcharge, but the user must payfor premium services such asadvanced features or add-ons. 
4. initial product is often sold at aloss or given away for free inorder to drive demand forcomplementary goods.

82. Master's Health Club, achain of gyms and spas,requires its customers to pay aquarterly or an annual fee touse its services. Irrespective ofwhether they frequently usethe services during thepayment period or not,members have to pay inadvance. Which of thefollowing business modelsdoes this best illustrate? 

1. Razor-razor-blade 
2. Pay-as-you-go 
3. Subscription-based 
4. Freemium

83. Mia has purchased anInternet package for threemonths, in which she can use30 mbps Internet speed.However, for the service, sheneeds to pay a fee of $50 inadvance irrespective ofwhether she uses the Internetduring the service period ornot. This arrangement bestillustrates the _____ strategy. 

1. razor-razor-blade 
2. subscription-based 
3. pay-as-you-go 
4. freemium

84. A defining characteristic ofthe pay-as-you-go businessmodel is that the: 

1. users pay for only the servicesthey consume. 
2. users pay for access to aproduct or service whetherthey use it during the paymentterm or not. 
3. initial product is often sold at aloss in order to drive demandfor complementary goods. 
4. the basic features of a serviceare provided free of charge,but the user must pay forpremium services.

85. Maverick CommunicationsInc. is a cellular serviceprovider that charges itscustomers $1 for three hours oftalk time. So, if a customer's talktime for a month is 60 hours,the company charges him orher $20 at the end of themonth. Which of the followingbusiness models does this bestillustrate? 

1. Razor-razor-blade 
2. Subscription-based 
3. Pay-as-you-go 
4. Freemium

86. In the freemium businessmodel, the: 

1. initial product is sold at apremium price and thecomplementary goods aregiven free. 
2. users are free to pay for theservices in advance or afterusing the services. 
3. users are not charged for thebasic features of a product orservice, but the user must payfor premium advanced featuresor add-ons. 
4. users pay for access to aproduct or service whetherthey use it during the paymentterm or not.

87. Photohome is a file hostingservice that allows users tostore up to 5GB of data with norestrictions or charges.However, users have to pay afee for advanced features onthe cloud storage system andadditional storage space.Which of the followingbusiness models does this bestillustrate? 

1. Subscription-based 
2. Freemium 
3. Pay-as-you-go 
4. Razor-razor-blade

88. Pilot Games Inc. allowsusers to play the trial versionsof its games without anycharge. However, users have topurchase the games to accessthe upgraded version of thegames with advanced features.Which of the followingbusiness models is Pilot Gamesusing in this scenario? 

1. Freemium 
2. Subscription-based 
3. Pay-as-you-go 
4. Razor-razor-blade

89. Blue Horizon Inc. is anInternet service provider. Itprovides a router free ofcharge when users sign up fora two-year wireless serviceplan. In this plan, users pay inadvance irrespective ofwhether they use the Internetpackage during the two-yearperiod or not. Which of thefollowing business modelsdoes this scenario bestillustrate? 

1. A combination of the razor-razor-blade model and thesubscription-based businessmodel 
2. The pay-as-you-go businessmodel 
3. A combination of the freemiumbusiness model and the pay-as-you-go business model 
4. The direct sales businessmodel

90. Which of the followingstatements about competitiveadvantage is true? 

1. Competitive advantage is anabsolute measure; it is notrelative. 
2. Competitive advantage is aone-dimensional concept. 
3. Competitive advantage ispermanent and not transitory;once gained by a firm it stayswith the firm. 
4. Competitive advantage can beassessed by measuringaccounting profit, shareholdervalue, or economic value.