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demand
 
for shares. A reduction in the number of shares issued reduces the 
supply
of shares. As 
the price of shares is determined by demand and supply (for shares) these options will cause the 
price of shares to rise. 
However, a rise in interest rates will lead to other investments becoming relatively more attractive 
instead of shares, so demand (and therefore price) for shares will fall. 
(Chapter 4)
22 
Shift in demand 
Shift in supply 
Neither 
An increase in household incomes 

A rise in wage costs 

A fall in the price of raw materials 

A fall in the price of the good 

An increase in household incomes will lead to an increase in the quantity demanded at all prices, 
and so will lead to an outward shift in the demand curve.
A rise in wage costs will lead to an inward shift (contraction) of the supply curve, while a fall in 
the price of raw materials will lead to an outward shift (expansion) of the supply curve.
A fall in the price of the good will lead to a movement along both the demand and supply curves, 
but will not lead to a shift in either of them. 
(Chapter 4)
23 
Cliques and other informal groups can be either helpful or dysfunctional in an organisation
Cliques can be helpful in encouraging cross-functional communication, but they can also 'freeze 
out' individuals and focus on their own agendas. The other statements are untrue: a grapevine 
flourishes even where formal communication is good; all organisations also have informal social 
systems; and informal organisation can undermine health and safety (eg by creating informal 
'short-cuts' or a culture of recklessness). 
(Chapter 5)
24 Technostructure 
The technostructure is concerned with standardisation of work processes and outputs. The 
strategic apex and middle line are layers of management (controlling the operating core). Support 
staff fulfil ancillary functions.
25 
Administration staff
Mintzberg
 
uses the term 'support staff'. 
 
26 
The technostructure
Machine bureaucracies are characterised by multiple layers of management, formal (often rigid) 
procedures and standardised production processes, so the technostructure is very important 
(
Chapter 5) 
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