Test 1

Question 1

What is profit?

Answer 1

Difference between revenues and expenses

Question 2

What is the environment where a firm conducts business known as?

Answer 2

Domestic business environment

Question 3

What is the general term for resources used by a business to produce a good or service referred to as?

Answer 3

Factors of production

Question 4

When making decisions about production and allocation, which type of system depends on individual producers and consumers to create a combination of supply and demand?

Answer 4

Market economy

Question 5

Which of the following best explains the difference between a market economy and a planned economy?

Answer 5

In a planned economy, consumers have little choice in where they work or what they purchase or pay.

Question 6

In which type of economy do the individual producer and consumer control production through supply and demand?

Answer 6

Market

Question 7

What is the point at which the supply curve and the demand curve intersect on a graph?

Answer 7

Equilibrium price

Question 8

What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal?

Answer 8

The market price

Question 9

What occurs when the quantity demanded exceeds the quantity supplied?

Answer 9

Shortage

Question 10

What is the willingness and ability of producers to offer a good for sale referred to as?

Answer 10

Supply

Question 11

What takes place when buyers purchase more of a product when the price drops, and less when the price increases?

Answer 11

Laws of demand

Question 12

What is needed to gain a competitive advantage over competitors?

Answer 12

The ability to produce goods or services efficiently and at a reasonable profit

Question 13

What is created when one company is able to supply all the goods or services needed by the marketplace?

Answer 13

Natural monopolies

Question 14

How does monopolistic competition differ from perfect competition?

Answer 14

In a market characterized by monopolistic competition, individual firms have some control over price.

Question 15

Which term refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production?

Answer 15

Gross domestic product

Question 16

Which of the following should be the first step in assessing ethical behavior in a certain situation?

Answer 16

Collect facts related to the situation

Question 17

What is likely the single MOST effective step that a company can take to set ethical standards?

Answer 17

Demonstrate support from top management

Question 18

How do top managers BEST demonstrate a commitment to ethical business practices?

Answer 18

By adopting and enforcing written codes of ethics

Question 19

What category of ethics relates to matters such as hiring, firing, working conditions, privacy and respect?

Answer 19

Behavior toward employees

Question 20

When an activity benefits an individual but not the employer, what ethical dilemma has been created?

Answer 20

Conflict of interest

Question 21

When evaluating a decision based on the ethical norm of rights, a manager is MOST likely to consider which of the following questions?

Answer 21

Does the decision respect the individuals involved?

Question 22

What term refers to the way in which a business tries to balance its commitments to groups and individuals in its social environment?

Answer 22

Social responsibility

Question 23

What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization?

Answer 23

Organizational stakeholders

Question 24

What stakeholder group is being protected when managers follow proper procedures and strive to be accurate and candid in assessing future growth?

Answer 24

Investors

Question 25

Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks?

Answer 25

Insider trading

Question 26

If a firm hides responsibility for wrongdoing, what type of stance are they taking toward social responsibility?

Answer 26

Obstructionist

Question 27

How have companies such as Tyvek, General Motors, and DuPont worked to lessen the impact of waste on the environment?

Answer 27

By achieving zero-landfill status

Question 28

What is the practice of injecting water and chemicals into underground rock in order to break the rock apart called?

Answer 28

Fracking

Question 29

When a firm increases the price of a good or service because of an increase in demand, what unethical practice are they potentially engaging in?

Answer 29

Price gouging

Question 30

If a manager believes their job is to generate profits and is willing to do everything legally required, but no more, what social responsibility stance is being taken?

Answer 30

Defensive

Question 31

The U.S. Department of Commerce considers a business "small" if it has fewer than how many employees?

Answer 31

500

Question 32

Which of the following industry groups is the fastest growing segment of small business enterprise?

Answer 32

Services

Question 33

Which of the following types of venue is favored by small-business retailers?

Answer 33

Specialty shop

Question 34

Why is it difficult to compare relative job growth for different-sized businesses?

Answer 34

It is hard to determine the cutoff point at which a small business becomes a large business.

Question 35

Why do attitudes about entrepreneurship vary internationally?

Answer 35

Attitudes towards risk-taking in business are culturally determined.

Question 36

When an investor is not interested in owning their own business, why do they need to understand entrepreneurship?

Answer 36

To assess the market potential for up-and-coming businesses

Question 37

In a small business, who determines prices for wholesalers and customers?

Answer 37

Market forces

Question 38

Small businesses impact key aspects of the U.S. economy including

Answer 38

job creation and innovation

Question 39

What term is most closely associated with the pursuit of entrepreneurship with the goal of independence from working for someone else with a reasonable degree of financial security?

Answer 39

Small business

Question 40

What is the MOST important source of money for new business start-ups?

Answer 40

Personal resources

Question 41

What does a start-up company need in order to estimate the required size of a plant, store, or office, inventory levels, and size of staff?

Answer 41

Sales forecast

Question 42

What is the major drawback of accepting venture capital?

Answer 42

Sharing company control

Question 43

What is the MOST effective way for an entrepreneur to become a competent manager?

Answer 43

Working for a successful company first

Question 44

Which distinctive competency must an entrepreneur identify when attempting to enter an established market?

Answer 44

The ability to identify niche markets

Question 45

Which key element of a business plan will determine inventory, size of space required, and number of employees needed?

Answer 45

Sales forecasting

Question 46

What is the advantage to starting a business from scratch instead of buying an existing business?

Answer 46

There are no ill-effects from the previous owner.

Question 47

Which of the following is the MOST significant recent trend in small-business start-ups?

Answer 47

Emergence of e-commerce

Question 48

Which of the following factors MOST contributes to small business failure?

Answer 48

Managerial incompetence or inexperience

Question 49

What is a major drawback of sole proprietorships?

Answer 49

Unlimited liability

Question 50

What is the MOST common type of partnership?

Answer 50

General partnership

Question 51

What organization was founded in 1967 for economic, political, social, and cultural cooperation in the Asia Pacific region?

Answer 51

ASEAN

Question 52

Which organization created the classification of countries based on per capita income?

Answer 52

The World Bank

Question 53

Which of the following resulted from NAFTA?

Answer 53

Mexican imports to the United States have increased.

Question 54

Which of the following treaties sought to eliminate trade barriers such as tariffs and quotas?

Answer 54

General Agreement on Tariffs and Trade

Question 55

How does globalization of business benefit shareholders of an organization?

Answer 55

Through increased and improved profitability

Question 56

What caused manufacturing jobs to move from Mexico to China in the late 1990s?

Answer 56

Increases in Mexico's cost of living and wages

Question 57

Where is the world's largest free marketplace?

Answer 57

Europe

Question 58

Which of the following refers to the situation when a country's imports exceed its exports?

Answer 58

Trade deficit

Question 59

With what type of exchange rate does the value of a country's currency remain constant relative to that of another country?

Answer 59

Fixed

Question 60

The value of the U.S. dollar relative to the value of the British pound fluctuates with market conditions. What is this type of exchange rate?

Answer 60

Floating

Question 61

Which of the following exists when a country can produce something more cheaply and/or of higher quality than any other country can?

Answer 61

Absolute advantage

Question 62

What typically happens to a country's balance of trade as the value of its currency falls?

Answer 62

It improves.

Question 63

What condition will be created when gaining a national competitive advantage by developing strong local or regional suppliers?

Answer 63

Related and supporting industries

Question 64

Why did the European Union develop the euro as its common currency?

Answer 64

To improve the integration of the economic system between member countries

Question 65

Which of the following provides exclusive rights to produce a product for another firm, thereby avoiding transportation costs and tariffs?

Answer 65

Licensing arrangement

Question 66

Which of the following types of tariff is meant to discourage the import of particular products?

Answer 66

Protectionist tariff

Question 67

Which of the following goals is a primary purpose of tariffs on imports?

Answer 67

Maintain domestic competitiveness

Question 68

Which of the following statements BEST describes the effects of subsidies?

Answer 68

A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods.

Question 69

Which of the following refers to associations of producers that control supply and prices?

Answer 69

Cartels

Question 70

Many governments require that products sold in their particular country be at least partly made there. This policy involves what type of laws?

Answer 70

Local content laws