Business 110 Final Study Set

According to economists, inflation is:

A general rise in the level of prices

When did the U.S. government become more deeply involved in business than it had been previously?

After Franklin D. Roosevelt became president

Andrew and Timmy are neighbors. Andrew owns a boat but never uses it. Timmy owns a car that he no longer needs since his son left for college in another state. Andrew needs a car. Andrew and Timmy make an agreement to trade the boat for car. What is the economic term given to this kind of exchange?

Barter

____ is all activities undertaken to protect the rights of consumers.

Consumerism

If all leading corporations in the soft-drink industry merged, this would

Create a monopoly

After consulting her company's code of ethics, Vera is still unsure of whether or not the decision she is about to make is ethical. Which of the following actions would be most appropriate?

Determine whether coworkers, suppliers, and customers would approve of the action.

D'Jeanea inherited money from her grandparents in 2007 and invested it in the stock market. In 2008 the market dropped drastically. During the recession that followed, her portfolio lost thousands of dollars in value even though all of the companies she invested in remained solvent. D'Jeanea left her money in the market and kept it invested in the same companies as 2007. What is the most likely state of her portfolio today?

It has most likely gained value due to the uptick in the business cycle and economic growth experienced since 2011 and it is no doubt worth as much or more than it was worth in 2007.

If Japan were regarded as the best electronics manufacturer in the world, what would be true?

Japan would have an absolute advantage in electronics production

Countries experiencing balance-of-payments deficits can obtain short-term loans from the

International Monetary Fund

Mario Dean owns a Wendy's franchise. Mario feels that the franchisor is hurting his business by forcing him to use certain high-priced suppliers. The franchisor says that this power is implied in the franchise agreement. Who is likely to arbitrate this dispute?

National Franchise Mediation Program

Will works in a position where there is very little supervision. In fact, although he considers himself ethical, he figures he could go away for a week without anyone noticing. Which general set of factors is most likely to influence Will's ethical behavior?

Opportunity

As Veronica Janneck and her friends prepare to graduate from college, they are faced with numerous job offers with starting salaries better than they could have imagined when they began college four years ago. Based on this information, which stage of the business cycle would the economy be in?

Peak

Economists define a ____ as two consecutive three-month periods of decline in a country's gross domestic product.

Recession

During which phase do high unemployment rates decline and levels of income increase?

Recovery

In Adam Smith's view, which of the following is not the role of government in business?

Regulating business activity

Jennifer Sands, Bethany Alexis, and Dave Walker want to obtain limited liability for their business, but they want to avoid double taxation. Which type of business ownership would you recommend?

S-corporation

Mandy Bush decides to start a residential landscaping business. How would this business most likely be classified?

Service business

By establishing Ronald McDonald Houses, temporary lodging for individuals with seriously ill family members, McDonald's has committed itself to more than just shareholder wealth maximization. The corporation's active role in improving societal conditions suggests that it is responsive to which of the following arguments?

Social responsibility promotes environmental stability and long-run profitability.

April, a recent college graduate, has always been concerned about protecting the environment and now hopes to play a major role in seeing that legislation for protecting the environment is enforced. With whom should April seek employment?

The Environmental Protection Agency

Which bank includes main goals of promoting exchange rate stability and assisting in establishing a multilateral system of payments?

The International Monetary Fund

​Germany is experiencing balance-of-payment deficits and needs a short-term loan. It will most likely turn to _____ for the loan.

The International Monetary Fund

Andy is interested in investing in the stock market, but having studied the Great Depression in school, she is afraid she could lose all of her money. She reads through the finance pages of the newspaper and sees that unemployment has dropped to the lowest level it has been in the past ten years, new businesses are opening, housing sales are up because interest rates are level, and the national debt is decreasing. If the economy is her only concern about buying stock, should she buy stock?

The level of unemployment, the rise in new business starts, the increase in housing sales, and the decrease in national debt indicate that the economy is growing so it would be a good time to buy stock.

As a farmer, Charles Forsythe is familiar with the economics of perfect competition. How is the price at which he sells his corn determined?

The price is determined by combining the actions of all buyers and all sellers together.

Boeing, Airbus, Bombardier Aerospace, and Cessna are among the ten manufacturers and sellers of business jets. Because the production of jets requires a sizeable investment, it is difficult to enter this market and the sellers are quite large. Which of the following best describes the market or industry situation in which these companies operate?

These businesses operate in an oligopoly.

If a small country wants to buy aircraft from the United States and the United States wants to export its aircraft, the United States may work through ____ in removing preset trade barriers so that the small country can more easily purchase the aircraft.

WTO

A large computer manufacturer forbids its executives and managers from serving as directors or officers for Hewlett-Packard or any other corporations from which it might purchase component parts. The company is trying to prevent

a conflict of interest

Cassandra is about to finish her degree in business management and wants to find a job that will provide her with opportunities to advance within an organization. What type of business organization should Cassandra work for?

a corporation

Imagine that you want to open your own small business. You will probably be most concerned with having

a good source of capital and good management skills

Kroger grocery stores would most likely be classified as

a marketing intermediary.

A.J. and April Couch just opened a computer store in a small community. Before opening the store, they listened to their SBA counselor's warnings about the importance of having balanced experience, that is, marketing, finance, and personnel experience in the computer-store business because

about 2 out of 3 small firms close within 5 years of their founding

Andrea purchases a Blu-ray player at a store that sells refurbished merchandise. The store has a big sign stating "Caveat Emptor" posted out front and at the cash register. This sign most likely translates to a policy of

all sales are final (no refunds or exchanges).

A friend of yours has recently received his MBA. He wants to open his own business but feels that it might be too risky at this point in his career. As an SBA counselor, you are able to advise him and explain more clearly to him some of the advantages and disadvantages of starting a small business. Which of the following statements best represents something you might tell him?

although opening a small business is risky, there is practically unlimited potential

Before Troy can incorporate his advertising business in Champaign, Illinois, he must have a(n) ____ approved by the ____.

articles of incorporation, secretary of state of Illinois

Anisa Smith and Danielle Johnson decide to go into business together. They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities. Anisa and Danielle created a(n)

articles of partnership

Bill had a problem with a coffee maker he purchased recently. He has been trying for days to speak with the company by calling its toll-free number, but it rings forever or sends him through a long menu with no opportunity to speak to an individual or to leave a message. Steve feels his basic consumer right to ____ has been violated.

be heard

A credit card company is offering an annual percentage rate of 3.9 percent. However, the company fails to mention that this is an introductory rate, and when consumers receive their bills after six months the rate increases to 21.9 percent. The consumers feel their right to ____ has been abused.

be informed

Before seeking financial backing for his new business, Charlie puts together a concise document explaining the nature, mission, and goals of his new business and its expected costs and potential. Charlie has constructed a(n)

business plan

Cynthia Catucci is considering going into business. She wants to offer an income tax service. To minimize her chances of failure, she might consider

buying a franchise

Amy starts a small quilting and embroidery business. She purchases a technologically advanced quilting machine and an embroidery machine for a combined $25,000. Her monthly payments on the equipment are $500, but she has only one client at this time. Amy is facing a potential

cash-flow problem

Mars, Inc., maker of M&Ms and other candy, is 100 percent owned by the Mars family and is therefore referred to as a(n)

closed corporation

An example of a command economy is:

communism

Jackie has been reading about international trade and that one nation has the ability to produce a specific product more efficiently than any other nation. She and her friend, Allie, are required to create a PowerPoint presentation for their business class about international trade. Jackie can create animated PowerPoint presentations that clearly and precisely convey the message they need to make, but in a light and entertaining fashion. She is not good at public speaking. Allie is an excellent public speaker and can create equally excellent PowerPoints. Both girls have homework for other classes to do and agree to divide the work-Jackie will create the PowerPoint and Allie will do the verbal and written part of the presentation. What advantage does Allie have over Jackie in making presentations?

comparative advantage

Capital or capital goods as recognized by economists would include all of the following except

crude oil.

All of the following are factors that affect the level of ethical behavior in an organization except

demographic factors.

Arnold Finn III and his son, father, and grandfather gathered last week to compare notes on the business. Arnold's grandfather started the business in 1928. His father became active in 1947, Arnold in 1965, and his son in 1983. During their conversations, they discovered that many things about the past were similar to conditions today, although others were quite different. For example, after the 1930s,

government protection of workers and consumers increased.

Despite trade restrictions, international business is

growing

Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for entrepreneurs because they

have a relatively low initial investment

Jonathan serves on Foot Locker's board of directors. How did Jonathan get this position?

he was elected by the company's stockholders

Nick wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because

he will get to keep all of the profits the business makes

Franky believes that there should be no trade restrictions for any reason. What effect would Franky say that trade restrictions have on prices?

he would say that restrictions reduce competition and therefore can cause an increase in prices

Japanese tourists come to experience the magic of Disney World and other attractions around Orlando, Florida. These tourists are

helping the United States' balance of payments

Lance is looking for ways to get more capital for his appliance sales and service business. He is very protective of his company's information and fears that it will get into the wrong hands. Lance would probably not want to

incorporate his company

CAFTA, NAFTA, OECD, and OPEC are all examples of

international economic communities

Caveat emptor

is a Latin phrase meaning "let the buyer beware."

Business ethics

is the application of moral standards to business situations.

If Germany exports $100,000 of sauerkraut to Jamaica and purchases $100,000 of Blue Mountain coffee beans from Jamaica, Germany has

neither a favorable nor an unfavorable balance of trade with Jamaica

Habitat for Humanity and Girl Scouts are both examples of

not-for-profit corporation

As a limited partner in a construction business, Joe

only risks his initial investment

Anyone with the money can purchase shares of PepsiCo's stock. This makes PepsiCo a(n) ____ corporation.

open

All of the following are arguments against increased social responsibility except

social responsibility by firms can prevent increased government intervention.

Gwyn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Gwyn's business is organized as a

sole proprietorship

Julio decides his business will begin staying open until 7 p.m. instead of 6 p.m. The next day, the shop stays open until 7 p.m. This environment of flexibility to quickly change is characteristic of what form of business organization?

sole proprietorship

When the United States levies a tax on textiles from India, this tax is a type of

tariff

Cindy owns a 7-Eleven franchise. What is the primary disadvantage of owning a franchise for Cindy?

the franchisor still retains a great deal of control

"This business will create a caring, learning environment for elementary school children after regular school hours to meet the needs of working parents." This statement answers which of the following issues that should be addressed in a business plan?

what is the nature and mission of the business?

When consumers spend their money to purchase Samsung android phones or computers with an Intel processor, or when they discontinue buying such items as compact discs, they are telling resource owners

what to produce

Brice stormed into the office, exclaiming, "That's the last straw! I've experienced unethical behavior at this company one time too many. I'll be calling the press immediately." It appears that Brice is about to engage in

whistle-blowing.

​The economic model of social responsibility holds that society will benefit most when business is left alone to produce and market profitable products that society needs. This economic model is based on the notion that

​social responsibility is someone else's job.

Joel decides to purchase and operate a Subway restaurant. Joel is the

franchisee

Bob, a restaurant supplies and equipment business manager, believes in the economic model of social responsibility. Which of the following would most likely be a quote from Bob in relation to social responsibility?

"That is someone else's job."

Amelia, Hannah, and Lucretia, who had been friends since high school, have a business they formed as a partnership. The business takes orders for parties and then provides all of the decorations to match the party theme, orders food, and contracts for entertainment for the party. They named the business Party On! They all majored in business in college and felt capable of running their business. Because they were in a hurry to get started, and were old friends, they did not put their articles of partnership in writing, but instead relied on mutual trust. To get the business started and operating its first year, Amelia contributed $200,000 to the business, Hannah contributed $40,000 to the business, and Lucretia contributed $20,000 to the business. They discussed how profits and losses would be divided, but never came to a solid conclusion; therefore, Amelia thought they would divide them according to the percentage of their contributions, but Hannah and Lucretia thought they would be divided equally. Six months into operating the business they had a disagreement about whether they should limit their business to children's parties or should expand to include adult and corporate events. Amelia wanted to expand to the adult and corporate market but Hannah and Lucretia wanted to remain focused on children's parties. By the end of the first year, the women were so divided that Hannah and Lucretia decided to quit working with Amelia and open their own business. They demanded that the business be sold and their contributions returned to them. Which of the following statements is true about the division of profits and losses?

Division of profits and losses is one of the benefits of forming a business as a partnership

Arthur Jones distributes rawhide to several different homes. In turn, each household produces a product such as satchels, belts, shoes, and boots, and then Arthur sells the finished goods. This represents a(n)

Domestic system

Bart inherited an interest in an open publicly traded corporation shortly after he graduated from high school. He has now graduated from college and would like to sell his ownership in order to purchase a house. Which of the following best describes the sale process?

Ease of transfer of ownership is one of the benefits of corporate ownership therefore he should have no difficulty selling his ownership interest

Which of the following is not a feature of laissez faire capitalism?

Guaranteed income

Amanda wants to start a business to sell handmade jewelry. She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business. Who of the following would make the best partner for Amanda?

Gwyn, who has business experience with accounting, management, and marketing

By age 26, Marco was a plant manager in the snack-foods division. By 33, he headed the division, one of the most profitable in the corporation. Eventually, however, the company decided to move its corporate offices. Although he loved the job and thought the work was great, Marco's lifestyle was awful. He was on the road so often that he was giving up much of his family life. Marco had also become disenchanted with corporate life. He saw that the closer one got to the top, the more vulnerable one's position became. Thus, Marco left the corporation to start his own snack-foods company. His thoughts and actions most clearly reveal his

desire to determine his own destiny

A small business is all of the following except

dominant in its field

China is selling school supplies in the United States for very low prices, even lower than the prevailing prices in China, and thus making it extremely difficult for American manufacturers to compete. This is referred to as

dumping

General Motors and Ford products produced in the United States are found around the world. The United States is ____ these automobiles.

exporting

At the age of 16, Jacek knew several professional skiers who were given several sets of skis and extra ski gear by their promotors. They did not use the extra skis and gear because they had all they could use. He contacted the skiers and offered to buy the extra skis and gear from them. He then sold the skis and ski gear to individuals who picked it up from him at mutually agreed-upon locations. Eventually he had enough money to buy a car which he used to transport the goods. When he had enough money to buy a building, he bought a small building on a busy street and made it into a sporting goods department store. When he had enough money saved to import goods from other countries, he added these to his sporting goods offerings. He invested his profits in energy stocks which returned a large gain and gave him the ability to start other businesses. By the age of twenty-five, Jacek was a millionaire. In a recent interview, Jacek said he will never work for someone other than himself and has wanted to have his own business all of his life. Which of the following best describes Jacek?

jacek is an entrepreneur

Builders Inc., Real Estate Broker, Inc., and Developers, Inc. form a business to purchase, develop, and build a shopping mall in Temecula, California. According to their agreement, the business will operate only until the mall is built, then the mall will be sold to Downtown Mall, Inc., an owner and operator of shopping malls across the United States. Once the sale is complete, their business will be dissolved. What type of business have they formed?

joint venture

Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a ____ to make heating and cooling units in Japan for Mazda cars beginning in 1988. The new company's heating and cooling units may also be used in Ford's cars.

joint ventures

Amy owns 100 shares of General Electric preferred stock. She wants to attend the annual stockholder meeting to cast her vote on company issues. Based on your knowledge from school, you caution Amy that

most preferred stock does not have voting rights

Companies such as ExxonMobil and Mitsubishi operate on a worldwide scale without ties to any single country. These are examples of

multinational enterprises

Celina has owned a small coffee shop at the corner of a tourist area in her town for several years. The shop offers coffee, coffee drinks, tea, fresh scones, cinnamon rolls, and other pastries, breakfast, and sandwiches made on fresh bread with fresh ingredients. All breads and pastries are made on the premises. Celina has several regular customers who eat at the same time on the same days each week. One week, one of her regulars did not eat breakfast but the customer's companion ate without him. Celina inquired about the customer by name and when she discovered that he was quite ill, put together a basket of goods from the store and sent them to him. When a fire threatened the town and the firefighters were up all night trying to extinguish the blaze, Celina made pots of coffee and baskets of baked goods and took them to the firefighters' staging area. Because of her contributions, Celina has been awarded a Friends of the Community award. Which of the following best demonstrates Celina's relationship with her customers and community?

owners of small businesses get to know many of their customers by name and deal with them on a personal basis. Through such relationships, small business owners often become involved in the social, cultural, and political life of the community.

As a businessperson planning to open a new small business, you know that the business plan should not contain

pages and pages of detailed facts and figures

Stella and Matt went to the mall. While there they passed a Vans store, Nike's store, New Balance store, and Adidas store. Matt commented that there was really a large number of sellers and noted that there seemed to be many buyers as well. What kind of market competition is represented by these stores?

perfect

Bryan applies for a small-business loan from the SBA. If he is approved for the loan, where will the money actually come from?

private leaders

The United States does not sell fighter jets, such as F-16s, to Libya. The rationale for this restriction is most likely to

protect national security

Before the 1930s, most government involvement in day-to-day business was aimed at

protection of the free-market system.

Forming a joint venture with an existing foreign company offers all of the following advantages except

requiring less commitment from all parties involved in the joint venture

Tony Jamerson decides his company will start exporting and he wants to start at the most basic level. What action should Tony take to meet his objectives?

sell the company's products to an export-import merchant

Ben decides to start his own business designing websites for other businesses. Ben's business would be classified as a

service business

Billy Tucker operates Tucker Farms in northern Illinois. Last year, his annual receipts were just under $750,000. According to the Small Business Administration, Tucker Farms is a

small business

At Park Incorporated, employees are allowed one-hour lunches, but it has become common that most stroll back fifteen minutes late every day. The factor affecting the ethical behavior of Park's employees is

social

Downtown Mufflers, a partnership formed by Edmundo and Javier Escobar in California, has been in operation for five years. Edmundo and Javier would like to convert the business to a corporation. They will transfer all of the assets of the partnership to the corporation once it is formed and dissolve the partnership. They are having a difficult time deciding where to incorporate the business. California seems to be the obvious choice because that is where they are located, but Oregon and Nevada are nearby, industrial rental space is inexpensive in Nevada, and the population would supply an adequate number of qualified employees if they chose to move their operation there. Oregon would be a good choice because its damp environment leads to muffler rust which necessitates muffler replacement more often than in California or Nevada. Edmundo mentions that there are other considerations for selecting a state in which to incorporate a business. Which of the following is not a consideration for selecting a forum for incorporating a business?

the number of competing firms in the forum state

Belle and Diamond are spending the day together. First, they have breakfast at McDonalds, then have a quick work-out at Curves followed by a massage at Massage Envy, and getting their nails done a Red Persimmon. They finish their day with getting their hair done at Fantastic Sams followed by ice cream at Ben & Jerry's. What do these businesses have in common?

they are franchises

A program to implement social responsibility in business begins with

total commitment of top management.

If the United States exports $100 worth of diamonds to the Kingdom of Mocha and imports $80 worth of bows and arrows, it has a(n)

trade surplus

Jonathan inherited a large amount of money from his uncle. Jonathan wishes to start his own business, and his lawyers encourage him to make it a corporation. What disadvantage of a sole proprietorship are the lawyers trying to avoid?

unlimited liability