Chapters 1-5, 14-16

Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?

A conglomerate merger is done to reduce risk.

Which of the following statements about those people designated by demographics as millennials is true?

Millennials are technologically savvy and prosperous young people.

_____ are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members.

Pension funds

A type of business entity that provides liability protection but is taxed like a partnership is a:

S corporation

To avoid double taxation, a new entrepreneur may elect to organize as a(n):

S corporation

Corporate philanthropy:

can be either a cash or a noncash donation

Which of the following is an example of nondepository financial institutions?

commercial finance companies

_____ is the quantity of a good or service that people are willing to buy at various prices.

demand

The form of business ownership that is easiest to dissolve is the:

sole proprietorship

Fiscal policy is concerned with:

taxation and spending

Depository financial institutions include commercial banks, thrift institutions, and credit unions.

true

When Addison Wilcox buys an H&R Block franchise, he becomes a franchisee.

true

_____ are deposits at a bank or other financial institution that pay interest but cannot be withdrawn on demand without penalty.

Time deposits

Which of the following is a disadvantage of sole proprietor ownership?

Unlimited liability

In perfect competition, there is:

a large number of sellers producing nearly identical products

A _____ is a formal written statement that describes in detail the idea for a new business and how it will be carried out.

business plan

Direct Small Business Administration (SBA) loans are made from funds set aside each year by Congress.

false

Once the business plan is finished, the next step is to:

find financing for the business

A company has achieved the level of _____ responsibilities when it has met its ethical, legal, and economic responsibilities.

philanthropic

An S corporation is generally set up to:

reduce tax burdens

Federal Reserve banks must hold a certain portion of their deposits in reserve. This percentage is called the:

reserve requirement

The laborers displaced due to assembly line automation at the textile plant may not have the skills needed to operate the computerized machines that replaced them. This is an example of _____ unemployment.

structural

Human rights include an individual's right to life, to freedom, and to the pursuit of happiness.

true

The slope of the supply curve is:

upward and to the right

Which of the following is NOT one of the advantages of owning a small business?

avoidance of taxes

In 1993, Purdue Pharmaceuticals of Stamford, Conn. applied for the first in a series of patents on Oxycontin, a painkiller. The U.S. Patent and Trademark Office (PTO) granted those patents based on the manufacturer's contention that the drug contained a novel innovation: It had been engineered so that only a very small dose was required for the drug to be effective for 90 percent of patients. Seven years later, a generic drug maker, Endo Pharmaceuticals, applied to the FDA for permission to sell its own, lower-priced version of Oxycontin. Purdue's patents acted as a(n) _____ and prevented Endo from entering the market.

barrier to entry

TD Ameritrade is a company that buys and sells stocks and bonds as well as providing its customers with advice on when to buy and when to sell. TD Ameritrade is an example of a _____, a type of nondepository financial institution.

brokerage firm

Laws have curtailed smoking, and as a result, the sale of cigarettes is down. Rather than fighting the law, the cigarette industry is looking for ways to take their business beyond cigarettes. Many experts believe that the cigarette producers have found a way around the law with the promotion and distribution of smokeless tobacco, which has shown consistent sales gains over the last decade. In terms of the social responsibility pyramid, at which level is the cigarette industry operating?

legal

Weeds, sand, and paper clips would not make good mediums of exchange because they lack the key characteristic of:

scarcity

The most common form of business organization is the:

sole proprietorship

Entrepreneurs typically are innovators who start companies to pursue their ideas for a new product or service.

true

Social responsibility goes beyond obligations provided by law or union contract. Two important aspects of social responsibility are that the obligation is both:

voluntary and broad

Thrift institutions:

were formed specifically to encourage household savings

Which of the following factors would most likely result in a shift in the supply curve?

an increase in the price of raw materials used in the production process

Jeff Arnold and Reggie Bradford created WebMD, an Internet provider of health care information. Early in the development of this high-growth company, Arnold and Bradford attracted a group of investors who provided them with money needed to acquire other Internet companies with similar missions. The investment group is called:

angel investors

The corporation's board of directors elects the corporate officers.

true

The distributive process by which the burdens and rewards that society has to offer are shared varies from society to society.

true

Which of the following services would you expect a depository institution to offer?

electronic funds transfer

_____ contributes to an employee's self-worth, which, in turn increases productivity and reduces absenteeism.

empowerment

In a(n) _____, a few sellers can exert substantial control over prices.

oligopoly

In the middle of the desert in Arizona, there are five service stations competing for all the business that exists in this isolated location. When one service station lowers its price on gas, all must follow suit. These service stations are operating in a(n) _____ market structure.

oligopoly

The most frequently used and the most flexible tool that the Federal Reserve has that it can use to change the economic environment is:

open market operations

the general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time

True

Jack Smith and four other people own Persimmon Hill Farm, an agric-entertainment farm which provides corn mazes, bonfires, hay rides, and food treats to paying visitors. All of the owners have limited financial risk. Persimmon Hill Farm is a(n):

corporation

A _____ is a nonprofit, member-owned financial cooperative.

credit union

Which of the following financial institutions is a not-for-profit institution?

credit union

Margin requirements tell the minimum amount of cash an investor must put up when borrowing from a bank or brokerage firm to purchase stock.

true

Monopolistic competition is a market structure in which entry is easy.

true

National banks must belong to the Federal Reserve System and must carry FDIC insurance.

true

One of the disadvantages of the sole proprietorship is that the owner has unlimited liability.

true

One of the reasons why there has been a dramatic increase in the number of small business startups is rapidly changing technology.

true

Organizations can be evaluated on two basic dimensions with regard to social responsibility--legality and responsibility.

true

The Federal Deposit Insurance Corporation (FDIC) is an independent, quasi-public corporation backed by the full faith and credit of the United States government.

true

The Federal Deposit Insurance Corporation (FDIC) monitors the banking practices of the institutions that it insures.

true

U.S. banks provide loans to foreign governments.

true

The Federal Deposit Insurance Corporation (FDIC) insures deposits in commercial banks. The FDIC was created by the:

Banking Act of 1933

_____ inflation is triggered by increases in production costs which increase the costs of final goods and services.

Cost-push

A farmer's market where sixty farmers come weekly to sell the produce they grow in their gardens is an example of monopolistic competition.

False

Legal challenges arising from laws designed to control anticompetitive behavior occur in monopolistic competition.

False

Finance companies that make loans to promising new businesses with little track record and to firms that are unable to get any more bank credit are _____ finance companies.

commercial

The two forms of business financing are _____ (borrowed funds) and _____ (ownership funds).

debt; equity

Corrine Attlee has always enjoyed cooking more than doing anything else. Atlee has decided to quit her job as a college professor and invest her life savings in starting a restaurant. Attlee is an example of a(n):

entrepreneur

The key element in socialism is:

governmental control

The most basic measure of economic growth is the:

gross domestic product

One of the keys to ethical business behavior is:

how the company's top management conducts themselves

The average price of construction materials increased by 8.1 percent in 2005. The head of the Home Builders Association said it was due totally to increases in lumber, metal, and labor costs. The 8.1 percent increase is probably an example of:

inflation

The franchise agreement:

is the contract that datails the terms of the franchise

Another factor influencing business ethics is _____, or what is fair according to prevailing standards of society.

justice

The fifth factor of production identified by many managers and academicians is:

knowledge

Which of the following is an example of a factor of production?

labor

Thrift institutions were formed specifically to encourage household savings and to:

make home mortgage loans

The purchase of savings bonds by individuals allows the U.S. government to:

make sure that the burden of the national debt is spread more equitably

The standard of living in any country is:

measured by the output of goods and services people can buy with the money they have

Many classic entrepreneurs are _____ who start small and plan to keep their business small.

micropreneurs

Any object or objects that a group of people use to buy and sell goods and services is called:

money

Angel investors:

provide funding for start-up businesses

The quality of life is:

the general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time

Money market deposit accounts and certificates of deposit are officially called ______ deposits.

time

Baby boomers are having a strong effect on the franchise industry.

true

Consumer finance companies make loans to individuals; commercial finance companies make loans to businesses.

true

inflation and interest rates are most closely associated with _____ within the external business environment.

economic forces

One way to ease the burden of managing a business is to hire an outside consultant. Which of the following is an example of an outside consultant that might be useful to a small interior design company?

all of the above

Individual ownership of property is a key element in:

capitalism

Once small businesses hire employees, they can _____ to increase job satisfaction and retain their employees.

do all of the above

Which of the following is a trend that is changing the face of entrepreneurship and small business ownership?

entrepreneurial diversity

Navim Jain sold stock to investors in order to finance Sparkart, LLC, a company that markets software to track how many times music is played and shared among peers. Jain used _____ financing.

equity

Inputs, such as natural resources, labor, capital, and entrepreneurship, are known as:

factors of production

A brokerage firm is an example of a depository financial institution.

false

All businesses approach ethics the same way.

false

Corporate philanthropy excludes any noncash donations.

false

Dissolving a partnership is easier than dissolving a sole proprietorship.

false

For partnerships to be legal, they must be established in writing.

false

Some global corporations are large enough to create major changes in the external environment.

false

The only social responsibility that a company has to its investors is an economic responsibility--it must make a profit.

false

The prime rate is the interest rate that the Federal Reserve charges member banks for loans.

false

The two sources for debt financing are angel investors and venture capitalists.

false

Competing against foreign banks can be difficult for U.S. banks because:

foreign banks are subject to fewer regulations than U.S. banks

U.S. Steel has established an alcoholic rehabilitation program for the city of Pittsburgh. The company provides the facilities and the personnel to operate the program. U.S. Steel is practicing:

social responsibility

The _____ of any country is measured by the output of goods and services people can buy with the money they have.

standard of living

Which of the following is an example of a trend in ethics and social responsibility?

strategic giving