Changes in the rental price of land is largely determined by:

[Answer to ques. #1]  b

[Answer to ques. #2]  F

[Answer to ques. #3]  FALSE

[Answer to ques. #4]  c

[Answer to ques. #5]  The ABB produces and sells five major product lines worldwide. The company produces transmissions and switchgear for electric utilities (the Power Products Division), sells engineering services for transmission systems (the Power Systems Division), produces lower-voltage transmissions and electronics for large power users (the Automation Products Division), designs control and energy management systems (the Process Automation Division), and makes robots for manufacturers (the Robotics Division).

ABB is doubly divisionalized into superimposed M-form organizations. It is called a matrix organization, or sometimes an MX-form..The matrix form has advantages and disadvantages and is more likely to be found in firms that produce diverse goods that are sold in diverse markets. As an example of its potential benefits to ABB, many of its electrical equipment customers are utilities that are operated or regulated by governments. A country unit can use its accumulated experience to reduce the costs of dealing with government for all of ABB's products sold there. Likewise, all of ABB's product divisions can use a country unit to manage risks denominated in that country's currency. If several product divisions manufacture in a country there may be advantages in procuring inputs for them jointly. (For example most of ABB's divisions use copper wire, and copper is subject to great price risks that are cheaper to hedge as a unit.) ABB's MX-form also has potential advantages when broken down by product. If it produces and markets a certain good in several countries, the various plants may be able to share innovations or learn better operating practices from one another.

[Answer to ques. #6]  TRUE

[Answer to ques. #7]  b

[Answer to ques. #8]  A divisionalized firm is often called M-form, where the M stands for multidivisional. M-form firms originated in the nineteenth century when manufacturers and metals producers reached unprecedented sizes after adopting new technologies. These firms often had plants in different locations and produced many products. If such a firm were U-form, its managerial decisions (e.g., whether to introduce a new product or open a plant in a new country) would be greatly complicated by difficulties in collecting and comparing information about products and geographic areas.
An M-form organization reduces the problems of management acquiring information and making comparisons among products or activities within the company. Relative to the U-form, an M-form firm incentivizes managers in ways a U-form may not. In a U-form firm the head of a functional department may have incentives to inflate its costs for the personal benefits (higher salary) of managing a larger group, and management will have difficulty evaluating whether increased size is actually necessary. In an M-form firm the interests of executives in product or geographic divisions can be better aligned with those of shareholders, because their performances will be judged by profitability, which is measurable, is comparable among divisions, and benefits shareholders.
The M-form keeps decisions at the divisional level that would be sent to headquarters in a U-form firm. Product-specific decisions at the lower level are made by those who are most likely to have the relevant information at hand and know how evaluate it. The headquarters of an M-form firm, however, must be able to identify, measure, and compare a division's performance (and its future prospects) with other divisions. Comparisons are complicated by the fact that much of the information used at headquarters comes from divisional managers, and there are few if any alternative sources. Headquarters must incentivize the divisional managers to provide accurate and adequate information, with awareness that the division's managers may have motivation to supply information that is more in own interests than those of shareholders.

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