Business Test

One way that competition benefits business is by encouraging the creation of

new companies

Offering high quality, large assortments, and free shipping are examples of

non-price competition

When Maura purchased a new car, she was able to get part of the purchase price back from the car's manufacturer. The car's manufacturer engaged in

offering rebates

The automobile industry, the pharmaceutical industry, and the oil industry are all examples of

oligopolies.

The money spent to run a business is called

operation expenses

A union strike that stops production at a manufacturing plant is a(n) __________ risk.

operational

What category of business risk includes production problems and incompetent employees?

operational

One of the results of freedom in the marketplace is that

people can buy anything they can afford that can legally be sold.

Which of the following is a disadvantage of private enterprise:

periods of unemployment

A characteristic of human wants is that they are

unlimited

Which of the following is a characteristic of economic services:

useful

A business that produces a product should be socially responsible to the __________ of the product.

users

To use resources wisely, business owners must reduce

waste

One of the freedoms provided to individuals by the private enterprise system is the freedom to choose

where they will work

The two main divisions of the trade industry are

wholesalers and retailers

Which of the following is a direct benefit to consumers of the effects of competition:

wider product selection

If a good or service is scarce, consumers will usually be

willing to pay money to get it.

Most businesses put their greatest competitive efforts into competing

with direct competitors

Over the next few years, members of Generation X and Generation Y are expected to fill many job positions vacated by retiring Baby Boomers. This is an example of a change in

working demographics

Emilia works for a company that constructs houses and business facilities. Which type of producer does she work for?

A builder

In business terms, what is profit?

A monetary reward

Which of the following statements about economic resources is true:

As natural and human resources become limited, capital goods become limited.

Jake wanted to run his own business but was unsure that he had adequate business skills to be successful. Which type of business would give Jake the help he needs?

Business-format franchise

Who answers the basic economic questions in a private enterprise economic system?

Businesses and indivisuals

What type of corporation sells millions of shares and must furnish complete information about its earnings, assets, and debts?

C

The Scott Company decided to sell stock to raise capital. Under what form of business organization does the company operate? Selected

Corporation

Determine whether the following statement is true or false: Trade industries all have the same form of ownership.

False; they may be independent or belong to a chain.

Wendy's sells the right to operate its restaurants to individuals who meet the company's criteria. The arrangement between Wendy's and these individuals is an example of

Franchising

Maintenance, modifications, and use of alternative sources are responses to limited

Human resources

Which of the following occurs when the supply of individuals who are able and willing to work diminishes:

Human resources become limited.

Which activities are likely to increase a firm's profit?

Increasing sales and decreasing expenses

Each day, a restaurant sends its used linens to a laundry to be cleaned and pressed. In economic terms, the laundry service would be classified as a(n) __________ service.

Industrial

What do service businesses sell?

Intangible activities

Which of the following is a benefit of the freedom to own private property:

It encourages people to save and to invest.

Which of the following statements about perfect competition is correct:

It is used as a benchmark to compare real market structures against.

Which of the following statements is true regarding joint ventures:

Joint-venture arrangements are usually short-term relationships.

Lois and Lora plan to open a florist shop. Lois is unable to devote full time to the daily operations of the shop but wishes to provide financial support. Which form of business partnership is most likely to appeal to Lois?

Limited

What type of market structure is most commonly found in a private enterprise economy?

Monopolistic competition

Which of the following statements regarding economic resources is true:

Natural resources, human resources, and capital goods are often referred to as factors of production.

A car manufacturer receives a shipment of bolts that are going to be used in the production of automobiles. What type of industrial product would the bolts be?

Parts

What do business owners consider when they select a business ownership structure?

Personal circumstances, financial needs, and type of business

Which of the following situations involves finding an alternative resource to use in place of a nonrenewable natural resource

Powering a motor vehicle with biodiesel instead of gasoline

What type of corporation may be owned by just a few people and does not offer its shares for sale to the general public?

Private

What is an example of a pure business risk?

Robbery

A type of state-chartered corporation that was developed to help small businesses by taxing them as individuals in a partnership is a(n) __________ corporation.

S

Which of the following pieces of legislation prevents monopolies from forming and hinders price fixing:

Sherman Antitrust Act

George has decided to purchase a dishwasher. He is checking the newspaper ads for the best place to get quality goods and services at a reasonable price. What type of product is the dishwasher?

Shopping

"To form my business, I used all of my savings and borrowed from the bank, and I'm personally liable for all of the debts." This is an example of which of the following forms of business ownership:

Sole proprietorship

Which of the following economic resources helps people to be more productive:

capital goods

Which of the following is a characteristic of a product trade-name franchise:

The franchisee can choose the name of the business

Which of the following describes the services offered by trade industries:

They may be limited or full line.

Which of the following statements about wholesale trade businesses is true:

They operate from a variety of business premises.

Which of the following is an example of an economic want:

clothing

Which of the following is an industrial good:

Tires for a tow truck

Why do marketers classify goods and services?

To aid in marketing planning

What determines whether an economic product is an industrial product or a consumer product?

Who buys and uses the product

Because of competition, people in our society enjoy

a higher standard of living than that of people in many other countries.

In many places, trash pickup is legally controlled by just one company. This is known as

a regulated monopoly

One way in which many businesses demonstrate their social responsibility toward employees is by providing them with

a safe working environment.

Social responsibility should be part of the objectives of __________ businesses.

all

Management decides to hold its annual meeting in one U.S. city rather than another because of crime in that city. This is an example of __________ the risk.

avoiding

Burger King and McDonald's are examples of

direct competitors

Which of the following is a situation in which people are out of work and can't afford "extra" purchases:

bad economy

Which of the following is a general benefit profit provides:

better wages

For each new product it offers, a business seeks

buyers

When a stove is used in a restaurant kitchen, it is a

capital good

Automation involves replacing human resources with

capital goods

Which of the following is one of the main principles of the private enterprise system:

compeitition

In a private enterprise economic system, consumers can choose from a variety of products as a result of

competition

When a rival's product on the market reduces sales of your company's product, your company is experiencing strategic risk caused by

competition

A student purchased a laptop to use for homework assignments. In economic terms, this computer would be classified as a(n) __________ good.

consumer

Profitable businesses often help improve their local communities by

contributing to charitable causes.

Bread for a family would best be classified as a(n) __________ product.

convinence

The amount of money paid for raw materials and products sold is called

costs of goods

One way that competition helps to build a prosperous society is by

creating new jobs

When employees are working faster or better, they are increasing their

efficiency

How would a business's computers be classified?

equipment

Which of the factors that affect profit are usually able to be controlled?

expenses and pricing

Rather than being required to start his workday at 8:00 a.m. and end at 4:00 p.m., Tyler is allowed to start and end his workday at his convenience as long as he works 40 hours per week. This is an example of

flextime

An example of a noneconomic want would be the desire for

friend

If all of the individuals who own a business share unlimited liability for the business's losses, these individuals are part of a(n)

general partnership.

The connection between the social responsibility of a business and the community in which the business operates is that the business's social responsibility __________ the community.

has an effect on

A garden store customer tripped over a plant, fell, and sued the store for damages. This is an example of a(n) __________ risk.

hazard

A hurricane that destroys a business is an example of a(n) __________ risk.

hazard

The general classifications of business risks are

hazard, operational, strategic, and financial.

Which of the following are qualities of monopolies

high prices and low production

A salesclerk working part-time at a clothing store is an example of a(n)

human resource.

Offering higher wages, employee-assistance programs, and benefits are responses to limited

human resources

Which of the following economic resources is responsible for combining the other resources to produce goods and services:

human resources

One of the ways that competition benefits customers is by encouraging businesses to

improve their existing products

A popular product is said to be

in demand

An economic good or service that is scarce is one that is

in limited supply

Which of the following is an example of a business risk that cannot be covered by insurance:

increase in interest rates

Producers respond to consumers' positive economic votes by

increasing production

If a consumer chooses to go to the movies rather than to a pizza parlor, then the movie theater and the pizza parlor are

indirect competitors

Private enterprise is based on the idea that everyone is better served when

individuals are free to sell their own goods

Resources that enable businesses to operate are also known as

inputs

For which of the following do workers compete in a private enterprise system:

jobs

Business owners are usually interested in net profit because they want to know what they can

keep

ABC Specialty Wear is the only company that has written permission to use a national football team's logo on its sportswear. This is an example of a

licensing agreement.

Businesses in trade industries that offer discount prices usually offer

limited services

Businesses must be careful about increasing the prices of their goods to increase profits because the result may be that they

lose sale to competitors

"Economic votes" are cast by consumers each time they

make a purchase

Individuals put limits on their own economic freedom by

making personal economic choices.

A company that transforms cotton into wearable clothing is considered a

manufacturer

Sugar and flour that are purchased to make baked goods are classified as

materials

One way in which a business can show its social responsibility is by __________ its profits.

maximizing

One of the differences between private enterprise and other types of economic systems is that in other systems, workers

may be unable to improve their standard of living.

Every society must develop a system for deciding how it will use its resources so that it can

meet people's needs

Olivia runs a home-based business that distributes high quality, handmade baskets. She sells the products and earns commissions on the baskets sold by four other basket representatives. This is an example of

multi-level marketing.

Using a stream to supply water for crops is an example of using

natural resources

Weather conditions can most directly affect the supply of

natural resources

The state of technology that exists in a society can limit

natural resources and capital goods

Jane is the owner of a pizza shop associated with a national chain of pizza restaurants. She established her business in a regional supermarket. The pizza shop is referred to as a

piggyback franchise.

Having well-planned buildings and providing effective employee training are ways that a business can __________ business risks.

prevent or control

Carefully selecting goods or services to sell is an example of handling business risks by __________ the risk.

preventing or controlling

Careful screening of credit customers is an example of handling business risks through

prevention

An electronics store charges less for a new television than other electronics stores. The store is engaging in ________ competition.

price

A business that advertises a special sale as well as its delivery service is using a combination of ___________ competition.

price and nonprice

The private enterprise economic system is often described as a(n)

price-directed system

Alex owns a guitar, several books, and a telescope. Alex's possessions are examples of

private property

The basic role of the United States government is to

protect U.S. citizens.

One reason a physicians' practice might form a partnership as an LLP is to

protect innocent partners from the malpractice of another partner.

Businesses can show their social responsibility by contributing to

public interest

Businesses can protect themselves from the risk associated with lost shipments by

purchasing transportation insurance

Illegally run organizations that emphasize the collection of high fees from potential product distributors are often referred to as

pyramid schemes

Farms, mines, and lumber companies are examples of

raw-goods producers

in business terms, income is the money

received

Financial loss from investing time and money to comply with accounting standards is an example of which strategic risk:

regulatory and political issues

If a risk is small in terms of money, a business may decide to __________ the risk.

retain

When a business keeps a risk because management is unaware of it, the business is _________ the risk.

retaining

If expenses are greater than income, there's no

reward

People who go into business know that the business may not succeed. This possibility is referred to as business

risk

Besides motivation, what does profit provide business owners in particular?

satisfaction

Which of the following situations involves finding another source of a limited natural resource:

searching for oil on the ocean floor

f no profit is generated in the long run, a business must

shut down

A large retailer feels that it has a duty to contribute to the well-being of society, so it donates a portion of its proceeds to a charity that helps the environment. The retailer is demonstrating

social responsibility

Retailing takes place whenever goods are

sold to the ultimate consumer

Susan is willing to pay a high price for the brand of china that she wants for her home. This china would be classified as a(n) __________ product.

specialty

Gross profit shows business owners the difference between what they've

spent and recieved

Cash-register tapes and shipping forms used by a business would be classified as industrial

supplies

One of the factors that directly limits the economic freedom of individuals in a private enterprise system is government

taxation

A socially responsible business will attempt to give customer

the best products at the best prices

What motivates businesses to produce efficiently and sell effectively?

the hope of making a profit

One of the benefits of economic freedom is that it provides individuals with

the opportunity for success

One of the characteristics of the form of business ownership known as an LLC is that

the owners' personal property cannot be taken to pay the business's debts.

The economic basis for the private enterprise economic system is

the profit motive

Why are entrepreneurs important in a private enterprise system?

they encourage the development for new products

When producers use the best combination of resources, consumers are more likely to get goods and services that

they want

Each purchase strengthens the economy by encouraging

trade

Rembert works for a grocery store that buys food from producers and sells it to customers. The grocery store is considered a

trade industry

Contractual agreements such as guarantees, surety bonds, and leases are examples of business risks being handled through

transfer

Requiring a contractor to purchase a surety bond is an example of handling business risk by __________ the risk.

transfering

The act of reducing or removing risks by shifting the risk factor to another person or business is referred to as __________ risk.

transfering