Topic 1 Business Environment (ch1) and Understanding the Global Context of Business(ch4)

Question 1

1) Which environment is NOT an important dimension of a business organization’s external
environment?
A) The political-legal environment
B) The sociocultural environment
C) The technological environment
D) The corporate cultural environment
E) The global business environment

Answer 1

Answer: D

Question 2

2) What is profit?
A) Total money taken in by a corporation
B) Increases in income from year to year
C) Increases in a corporation’s stock price
D) Revenue generated by goods and services
E) Difference between revenues and expenses

Answer 2

Answer: E

Question 3

3) What is the environment where a firm conducts business known as?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment

Answer 3

Answer: C

Question 4

4) Factors such as international trade agreements, economic conditions, and political unrest will
have the greatest impact on what type of business environment?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment

Answer 4

Answer: A

Question 5

5) Which type of business environment can reduce or replace the need for traditional working
methods, physical equipment, and other platforms needed to conduct business?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment

Answer 5

Answer: D

Question 6

6) The pursuit of profits is how a business differs from organizations such as public universities,
public hospitals, and government agencies. (T/F)

Answer 6

T

Question 7

7) An organizations external environment consists of everything that might affect it.
(T/F)

Answer 7

T

Question 8

What is the general term for resources used by a business to produce a good or service
referred to as?
A) Labor
B) Human Resources
C) Human capital
D) Factors of production
E) Economic systems

Answer 8

Answer: D

Question 9

What is the process for converting government enterprises into individually owned firms
known as?
A) Production allocation
B) Privatization
C) Entrepreneurship
D) Demand assessment
E) Profit maximization

Answer 9

Answer: B

Question 10

What term denotes a nation’s basis for allocating its resources among its citizens?
A) Capital structure
B) Economic system
C) Ownership processes
D) Distribution network
E) National regulations

Answer 10

Answer: B

Question 11

What is the term for the physical and intellectual contributions of people while engaged in
the production of goods and services?
A) Human resources
B) Working capital
C) Physical resources
D) Planned resources
E) Market resources

Answer 11

Answer: A

Question 12

Who is the person who accepts the risks and opportunities inherent in a new business
opportunity?
A) Capital managers
B) Entrepreneurs
C) Human resources
D) Home country economic systems managers
E) Managers

Answer 12

Answer: B

Question 13

What factor of production is used to generate forecasts based on specialized knowledge and
economic data?
A) Economic resources
B) Labor
C) Information resources
D) Entrepreneurs
E) Physical resources

Answer 13

Answer: C

Question 14

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?
A) Planned economy
B) Communism
C) Private economy
D) Market economy
E) Socialism

Answer 14

Answer: D

Question 15

Which of the following best explains the difference between a market economy and a
planned economy?
A) In a planned economy, consumers have little choice in where they work or what they
purchase or pay.
B) In a market economy, consumers must pay what the market demands.
C) Capitalism is the root of a planned economy.
D) Market economies are also known as mixed market economies.
E) Planned economies promote the use of privatization to increase market share.

Answer 15

Answer: A

Question 16

) The customs, values, and demographic characteristics of the society in which an organization
functions are the principal elements of the political-legal environment. (T/F)

Answer 16

F

Question 17

Physical resources include the data and other information used by businesses. (T/F)

Answer 17

F

Question 18

35) What occurs when the quantity demanded exceeds the quantity supplied?
A) Demand deficit
B) Surplus
C) Equilibrium point
D) Shortage
E) Supply schedule

Answer 18

Answer: D

Question 19

What is the willingness and ability of producers to offer a good for sale referred to as?
A) Private enterprise
B) Supply
C) Free market economy
D) Law of supply
E) Degrees of competition

Answer 19

Answer: B

Question 20

46) Which of the following does NOT fall into the degrees of competition continuum?
A) Perfect competition
B) Monopolistic competition
C) Competitive advantage
D) Oligopoly
E) Monopoly

Answer 20

Answer: C

Question 21

When there are many small firms in a specific industry, what is likely to occur?
A) Competitive advantage
B) An oligopoly
C) Private enterprise
D) Perfect competition
E) Market force reliability

Answer 21

Answer: D

Question 22

What is created when one company is able to supply all the goods or services needed by the
marketplace?
A) Communism
B) Natural monopolies
C) Marketplace shifts
D) Monopolistic competition
E) Oligopolies

Answer 22

Answer: B

Question 23

In perfect competition, which of the following conditions must prevail?
A) All firms must adhere to cost and pricing standards.
B) The number of firms in the industry must be limited.
C) A single firm is able to influence the price of its product.
D) It is relatively difficult to enter the industry.
E) All firms in a given industry must be small.

Answer 23

Answer: E

Question 24

How does monopolistic competition differ from perfect competition?
A) There are more sellers in a market characterized by monopolistic competition.
B) It is easier for sellers to enter a market or industry characterized by monopolistic competition.
C) In a perfectly competitive market, products are more dissimilar.
D) In a market characterized by monopolistic competition, individual firms have some control
over price.
E) In a perfectly competitive market, the size of the firms must be large.

Answer 24

Answer: D

Question 25

In an oligopoly, when one firm reduces its prices, how do other sellers react? A) There is no reaction from other firms to change their prices. B) Other firms reduce their prices also, usually quite quickly. C) Other firms may reduce their prices, but usually gradually. D) Other firms are not usually aware that price has changed. E) There is a combined response from other firms to stabilize prices.

Answer 25

Answer: B

Question 26

What is the term used to describe a market condition where buyers are able to satisfy the demand of the consumer, yet have some product remain unsold? A) Surplus B) Stoppage C) Shortage D) Demand deficit E) Equilibrium price

Answer 26

Answer: A

Question 27

In a natural monopoly, prices tend to be government regulated. (T/F)

Answer 27

T

Question 28

Where can a firm find statistical information on the strength and performance of an economy? A) Aggregate output B) Business cycle reports C) Economic indicators D) Standard of living indexes E) Gross domestic product

Answer 28

Answer: C

Question 29

Which of the following is a likely cause of increased prices for products, decreased purchasing power, and decreased profit margins? A) Low unemployment B) Stagnant wages C) Declining living standards D) Cyclical inflation E) Limited credit

Answer 29

Answer: A

Question 30

Which term refers to the total quantity and quality of goods and services that people living in an economic system can purchase? A) Business cycle supply B) Demand and supply schedule C) Standard of living D) Aggregate output E) Consumer price index

Answer 30

Answer: C

Question 31

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? A) Standard of living B) Aggregate output C) Gross domestic product D) Gross national product E) Purchasing power parity

Answer 31

Answer: C

Question 32

) What does productivity measure? A) The total value of all goods and services produced by a national economy B) How much a system produces with the resources needed to produce it C) How much output is necessary to produce a certain level of demand D) The standard of living relative to purchasing power parity E) How much gross national product results from inputs of labor

Answer 32

Answer: B

Question 33

What is the economic condition characterized by widespread increased prices without increased purchasing power? A) Unemployment B) Inflation C) Expansion D) Deflation E) Recession

Answer 33

Answer: B

Question 34

What is the condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate? A) Unemployment B) Stability C) Deflation D) Inflation E) Oversupply

Answer 34

Answer: B

Question 35

Which of the following is an indication of national economic growth, shown by measuring aggregate output? A) Gross domestic product B) Standard of living C) Economic indicators D) Gross national product E) Real growth rate

Answer 35

Answer: A

Question 36

When gross domestic product increases, what is the outcome for economic growth? A) Aggregate output will increase. B) The nation will experience a slowdown in growth. C) Aggregate output will decrease. D) Growth will remain steady when compared to developing nations. E) Growth will decline based on the value of the national currency.

Answer 36

Answer: A

Question 37

Inflation results in increased purchasing power for the consumer. (T/F)

Answer 37

F

Question 38

What are products that are created abroad and then transported and sold domestically? A) Dumped goods B) Exports C) Imports D) Buy backs E) Domestic goods

Answer 38

Answer: C

Question 39

What are products that are created domestically and transported for sale abroad? A) Dumped goods B) Exports C) Imports D) Buy backs E) Domestic goods

Answer 39

Answer: B

Question 40

Globalization refers to the process by which countries around the world are becoming more self-sufficient. (T/F)

Answer 40

F

Question 41

Which of the following refers to the situation when a country's imports exceed its exports? A) Balance of payments B) Balance of trade C) Trade deficit D) Trade surplus E) Trade advantage

Answer 41

Answer: C

Question 42

Which of the following is the name for the overall flow of money into or out of a country? A) Exchange rate B) Trade rate C) Balance of exchange D) Balance of payments E) Balance of trade

Answer 42

Answer: D

Question 43

Which of the following BEST describes a positive trade balance? A) The economic condition in which a country's exports exceed its imports B) The economic condition in which a country's imports exceed its exports C) The economic condition in which a country's inflow of money exceeds its outflow D) The economic condition in which a country's outflow of money exceeds its inflow E) The economic condition in which a country's natural resources exceed its human resources

Answer 43

Answer: A

Question 44

Which of the following organizations is a firm that makes products in one country and then distributes and sells them in others? A) Importer B) Exporter C) Multinational firm D) International firm E) Direct foreign investor

Answer 44

Answer: B

Question 45

Which of the following buys products in foreign markets and then sells them for resale in its home country? A) Importer B) Exporter C) Multinational firm D) International firm E) Direct foreign investor

Answer 45

Answer: A

Question 46

Which of the following will allow one firm to use another firm's brand name, operating procedures or technology? A) A foreign direct investment B) A licensing arrangement C) A branch office setup D) A strategic alliance E) An import-export relationship

Answer 46

Answer: B

Question 47

Which of the following denotes the international organization strategy of finding a partner in the country in which a company would like to conduct business? A) Opening a branch office B) Developing a strategic alliance C) Forming an independent agency D) Outsourcing E) Investing directly in a foreign venture

Answer 47

Answer: B

Question 48

Ford, an American car company, purchased Volvo, which is based in Sweden. What is this an example of? A) A multinational firm B) An independent agency C) A licensing arrangement D) A foreign direct investment E) A strategic alliance

Answer 48

Answer: D

Question 49

Which of the following types of firms design, produce, and manufacture products in many nations? A) Multinational firms B) Importing firms C) Domestic firms D) International firms E) Exporting firms

Answer 49

Answer: A

Question 50

Which of the following is NOT considered an international organizational structure? A) Independent agents B) Licensing arrangements C) Foreign direct investments D) Branch office E) Exporters

Answer 50

Answer: E

Question 51

Which statement is true regarding independent agents? A) They represent one firm at a time. B) They usually specialize in a particular product. C) They act as sales representatives. D) They are usually based at domestic offices. E) They do not monitor or address customer satisfaction.

Answer 51

Answer: C

Question 52

Which of the following provides exclusive rights to produce a product for another firm, thereby avoiding transportation costs and tariffs? A) Licensing arrangement B) Strategic alliance C) Foreign direct investment D) Independent agent E) Branch office

Answer 52

Answer: A

Question 53

In which international organization structure does a firm have greatest control over foreign activities? A) Exporting arrangements B) Strategic alliances C) Importing arrangements D) Licensing arrangements

Answer 53

Answer: B

Question 54

What is a difference between an international firm and a multinational firm? A) Multinational firms design, produce, and market products in many nations, whereas international firms are based primarily in one nation. B) International firms design, produce, and market products in many nations, whereas multinational firms are based primarily in one nation. C) International and multinational firms are the same thing. D) Multinational firms are concerned primarily with foreign markets, whereas international firms are concerned primarily with the domestic market.

Answer 54

Answer: A

Question 55

Strategic alliances give firms greater control over foreign activities than do agents and licensees. (T/F)

Answer 55

T