Suppose a Chain of Convenience Stores Reorganized Its System of Supplying

question 145

Multiple Choice

Suppose a chain of convenience stores reorganized its system of supplying its stores with food. This led to a sharp reduction in the number of trucks that the company had to use and increased the amount of fresh food on store shelves. Which of the following statements best describes the chain stores' actions?

• A) The change implemented is not an example of technological change because it did not require the use of new machinery of equipment.
• B) Technological change refers only to the introduction of new products or improvements to existing product. As such, the scenario described in the question is not technological change.
• C) The firm is able to produce more output (increase its sales) using fewer inputs (less trucks). Therefore, the chain of convenience stores has implemented a positive technological change.
• D) The scenario described is an example of management efficiency and not technological change. Essentially, the chain changes its way of operating its business.

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Definitions:

Information Content Effect

A market phenomenon where stock prices adjust in response to the news contained in a company announcement, suggesting the news has value for investors’ decisions.

Dividend Payout

The segment of a company's income that is given to shareholders in dividends.

Residual Dividend

A policy whereby a company pays dividends to its shareholders from the residual or leftover equity once all operational and capital expenditure needs are met.

Information Content

The value or significance of a piece of information, especially in terms of its utility in influencing decisions or behaviors in financial markets.