Intro to Business

To make money from a small business, the owner must obtain capital. A small retail store will probably need at least what amount of initial financing? A. $500 B. $5,000 C. $50,000 D. $500,000 E. $1,000

$50,000

Your textbook uses the term small business to refer to an owner-managed business that employs not more than A. 100 people. B. 500 people. C. 15,000 people. D. 25 people. E. 1,000 people.

500 people.

Using the supply and demand curves shown in the graph that follows, what is the equilibrium price for soft drinks? A. 35 cents B. 45 cents C. 50 cents D. 55 cents E. 75 cents

55 cents

XYZ, Inc. is attempting to avoid a hostile takeover by a corporate raider by allowing stockholders to buy more shares of stock at prices lower than current market value. Which of the following methods is being used to avoid the takeover? A. A leveraged buyout B. A tender offer C. A white knight D. A poison pill E. Shark repellant

A poison pill

Which segment of the population is probably the wealthiest in the U.S.? A. Echo boomers B. Generation Y C. Baby boomers D. Millennials E. Generation Z

Baby boomers

Which segment of the population is probably the wealthiest in the U.S.? A. Echo boomers B. Generation Y C. Baby boomers D. Millennials E. Generation Z

Baby boomers

In which economic system(s) does central government provide basic services? A. Communism and socialism B. Capitalism and socialism C. Communism and capitalism D. Socialism only E. Capitalism only

Communism and socialism

Why is there a shortage of experienced board members available to sit on boards of major corporations? A. There are not enough qualified people B. All the experienced ones recently retired C. Companies are telling their CEOs that they cannot sit on outside boards D. Conflict of interest problems E. Top executives are not interested in sitting on boards anymore

Companies are telling their CEOs that they cannot sit on outside boards

Because Colombia can produce coffee so much more efficiently than other items produced there, it has which of the following advantages? A. Absolute B. Positive C. Negative D. Marginal E. Comparative

Comparative

Which of the following organizational forms is most expensive to set up? A. Sole proprietorship B. Limited partnership C. General partnership D. Cooperative E. Corporation

Corporation

Increased unemployment can reduce consumer demand for goods and services, leading to A. Economic contraction B. Inflation C. Deflation D. A budget deficit

Deflation

Which of the following is a disadvantage of a partnership? A. Difficulty of selling ownership B. Ease of organizing business C. Specialization of partners D. Relatively fast decision making E. Limited government regulation

Difficulty of selling ownership

Which industries will likely continue to grow as baby boomers age? A. Clothing and entertainment B. Travel, financial planning, and health care C. Cosmetics and food D. Clothing, travel, and cosmetics E. Recreation and sports equipment

Travel, financial planning, and health care

The law that allows selected American firms desiring international trade to form monopolies to compete with foreign cartels is the A. Webb-Pomerene Export Trade Act. B. Bretton Woods Agreement. C. GATT. D. Foreign Corrupt Practices Act. E. Sherman Antitrust Act.

Webb-Pomerene Export Trade Act.

A budget surplus, when a nation spends less than it takes in from taxes, is the opposite of a(n) A. stagnant income. B. budget deficit. C. economic expansion. D. balance of trade. E. economic contraction.

budget deficit.

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is a A. mission statement. B. corporate charter. C. business plan. D. corporate statement. E. balance sheet.

business plan.

Under a capitalist system, goods and services provided are determined by all of the following except A. competition. B. supply. C. consumer demand. D. market forces. E. businesses owned by the government.

businesses owned by the government.

Supply and demand may be an efficient way to distribute resources, A. but it may not distribute resources equally among those who need them. B. but it doesn't allow the poor to get rich. C. although equilibrium price is determined by the government. D. but it helps inefficient producers to succeed. E. and it is always fair.

but it may not distribute resources equally among those who need them.

Articles of partnership are required by many states for businesses that have two or more co-owners. The issues covered usually include all of the following except A. a statement of what each partner contributes. B. how the profits and losses will be divided. C. what duties the partners will have. D. provisions for leaving the partnership. E. classes of stock to be issued.

classes of stock to be issued.

The fact that the American company 3M owns a film-manufacturing facility in Italy is an example of A. contract manufacturing. B. a direct investment. C. a trading company. D. licensing. E. exporting.

contract manufacturing.

When Kelly flies from the United States to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys wool sweaters from Scotland to bring home, she A. decreases the trade deficit. B. is disloyal and unpatriotic. C. contributes to the negative balance of payments. D. buys American-made goods. E. does all of the above.

contributes to the negative balance of payments.

When Kelly flies from the United States to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys wool sweaters from Scotland to bring home, she A. decreases the trade deficit. B. is disloyal and unpatriotic. C. contributes to the negative balance of payments. D. buys American-made goods. E. does all of the above.

contributes to the negative balance of payments. (Same as 24)

A mortgage is an example of A. owners' equity. B. debt financing. C. venture capitalism. D. equity financing. E. none of the above.

debt financing.

Countries measure the state of their economies to A. determine whether they are expanding or contracting. B. regulate wages and employment. C. let other nations know the state of their economic health. D. avoid taking corrective action. E. control government spending.

determine whether they are expanding or contracting.

The balance of payments includes all the following except A. a country's balance of trade. B. foreign investments. C. domestic investments. D. tourist expenditures. E. foreign aid and military expenditures.

domestic investments.

The balance of payments includes all the following except A. a country's balance of trade. B. foreign investments. C. domestic investments. D. tourist expenditures. E. foreign aid and military expenditures.

domestic investments. (Same as 20)

By requiring products to be sold for not less than their production cost plus a percentage for overhead and profit, the United States is attempting to prohibit A. embargoes. B. quotas. C. dumping. D. surpluses. E. shortages.

dumping.

Most economic systems A. exist in a pure form. B. exist in a mixed form. C. are ineffective. D. create revolutions. E. give individuals freedom.

exist in a mixed form.

An intermediary, or middleman, who markets goods in another country is acting as a(n) A. licensing agent. B. franchising agent. C. export agent. D. contract manufacturer. E. direct investor.

export agent.

A license to sell another's products or to use another's name in business is called a A. franchise. B. franchisee. C. franchiser development system. D. franchise logo. E. franchiser.

franchise.

One of the attractive features of franchising is that A. franchisers have well-known names and products. B. franchises are inexpensive. C. franchisees are almost certain to succeed. D. a new-business owner can be assured that he or she gets honest information from the franchiser. E. franchisers have total financing available so that a new business owner doesn't need any capital.

franchisers have well-known names and products.

Individuals who take responsibility for the development of innovations of any kind within larger organizations are called A. crazy. B. entrepreneurs. C. inventors. D. intrapreneurs. E. engineers.

intrapreneurs.

When Weseeyu, Inc., of Rochester, New York, sells contact lenses to a firm in Moscow, Weseeyu A. is importing the lenses. B. is exporting the lenses. C. has an absolute advantage. D. is increasing the trade deficit. E. is making a big mistake.

is exporting the lenses.

When Weseeyu, Inc., of Rochester, New York, sells contact lenses to a firm in Moscow, Weseeyu A. is importing the lenses. B. is exporting the lenses. C. has an absolute advantage. D. is increasing the trade deficit. E. is making a big mistake.

is exporting the lenses. (Same as 34)

When a Chicago-based company buys coffee from Colombia, it A. is importing the coffee. B. is exporting the coffee. C. has an absolute advantage. D. is decreasing the trade deficit. E. is making a big mistake.

is importing the coffee.

When a Chicago-based company buys coffee from Colombia, it A. is importing the coffee. B. is exporting the coffee. C. has an absolute advantage. D. is decreasing the trade deficit. E. is making a big mistake.

is importing the coffee. (Same as 28)

Small business success A. rarely lasts more than two years. B. is not guaranteed. C. is not really attainable. D. happens only in the United States. E. is a sure thing.

is not guaranteed.

A sole proprietorship is a popular form of business because A. it is heavily regulated by the government. B. it is taxed more than other forms. C. it is hard to dissolve. D. the proprietor does not have direct control. E. it is easy to form.

it is easy to form.

Because many countries do not permit foreign companies to purchase and operate facilities in their countries, a company wishing to do business in such a country may share the business costs with the host country by forming a A. direct investment. B. contract manufacturing arrangement. C. corporation. D. joint venture. E. sole proprietorship.

joint venture.

PepsiCo allows a Canadian firm to use its name, formula, and brands in return for a royalty. This arrangement is known as A. exporting. B. licensing. C. direct investment. D. contract manufacturing. E. a joint venture.

licensing.

Charles has been asked to join a new partnership that is developing an office park. He does not want to be liable for the firm's debts if the project should fail. He could still participate as a A. general partner. B. limited partner. C. silent partner. D. working partner. E. contributor.

limited partner.

The functions of organizing, staffing, planning, and controlling are most closely associated with A. employees. B. customers. C. managers. D. stockholders. E. accountants.

managers

If companies research cultural differences before engaging in foreign trade, problems that might arise from cultural differences can be A. completely avoided. B. minimized. C. unaffected. D. maximized. E. exploited.

minimized.

If companies research cultural differences before engaging in foreign trade, problems that might arise from cultural differences can be A. completely avoided. B. minimized. C. unaffected. D. maximized. E. exploited.

minimized. (Same as 25)

When Apple introduced the iPod portable digital music player, the price of and demand for digital music players were high. As a result, A. other suppliers introduced digital music players to meet the demand. B. consumers stopped buying digital music players. C. manufacturers stopped producing digital music players. D. competition was not allowed to enter the market. E. the equilibrium price met supply.

other suppliers introduced digital music players to meet the demand.

When a business fails or does not make a profit, _______ have the most to lose. A. customers B. workers C. managers D. owners E. consumers

owners

A change in administration in a foreign government is an example of a new A. political factor. B. cultural factor. C. exchange factor. D. export quota. E. body language.

political factor.

Competition fosters efficiency because A. the government regulates prices. B. producers have to offer the best products at reasonable prices. C. supply depresses prices. D. all buyers have perfect knowledge. E. businesses can set whatever prices they want.

producers have to offer the best products at reasonable prices.

Businesses differ from nonprofit organizations in that a business's focus is on A. price. B. goods. C. profit. D. organization. E. plans.

profit

Advertising, personal selling, coupons, and sweepstakes are forms of ______. A. publicity B. promotion C. marketing research D. management activities E. the marketing mix

promotion

To reduce dollars flowing out of the country, the United States can limit the number of Japanese cars being imported by imposing a(n) A. quota. B. exchange control. C. trade deficit. D. embargo. E. free trade zone.

quota.

All of the following concerns contribute to high stress levels for small-business owners except A. rent increases. B. changing market demand. C. competition. D. expanding inventory. E. reputation.

reputation.

Factors of production are A. resources used to produce goods and services. B. fixed resources. C. taxes. D. seldom in demand. E. free.

resources used to produce goods and services.

If a business is to be successful in the long run, it must treat its customers, employees, and community with social A. meetings. B. responsibility. C. agendas. D. insight. E. interests.

responsibility.

When purchasing a product, the consumer is actually buying its anticipated benefits and A. satisfaction. B. price. C. costs. D. productivity. E. form.

satisfaction.

Many service businesses are considered retailers because they A. sell small quantities of goods. B. sell their services to consumers. C. sell from a single store location. D. open their businesses for the same hours that most retailers are open. E. employ only a small number of people.

sell their services to consumers.

Franchising first began in the United States within the following industry: A. fast food restaurants. B. home delivery food services. C. sewing machines. D. maid services. E. printing services.

sewing machines.

When two computer companies joined together in hopes of obtaining a competitive advantage on a worldwide basis, this exemplifies a A. direct investment. B. contract manufacturing deal. C. cartel. D. joint venture. E. strategic alliance.

strategic alliance.

To facilitate free trade among members, the European Union is working toward all of the following except A. the standardization of business regulations. B. the standardization of import duties. C. the elimination of customs checks. D. the creation of opportunities to trade with countries in South America. E. the creation of a standardized currency.

the creation of opportunities to trade with countries in South America.

Perhaps one of the most significant strengths of small businesses is A. their ability to innovate and bring significant changes and benefits to customers. B. the entrepreneurial spirit they foster. C. the encouragement they receive from larger businesses. D. the competition they encourage. E. the ease of starting one.

their ability to innovate and bring significant changes and benefits to customers.

About 80 percent of all businesses in the United States are sole proprietorships, and they earn somewhere around 15 percent of total business income. We may conclude that A. the average corporation is small, but earns little income. B. the average corporation hires many people, but makes little income. C. the average sole proprietorship is large, but earns little income. D. there are many sole proprietorships, but their average income is small. E. there are few sole proprietorships, and their average income is small.

there are many sole proprietorships, but their average income is small.

Although some businesses are less risky than others, overall the financial risks of running a small business are A. very low. B. moderate. C. insurmountable. D. low. E. very high.

very high.

If Peru wants to purchase machine parts from a German company but lacks German marks, it will probably borrow the marks from which of the following institutions? A. International Monetary Fund B. World Bank C. Citicorp Bank D. International Bank E. Eximbank

International Monetary Fund

Which of the following makes short-term loans to member countries with trade deficits and provides foreign currencies to member nations? A. Foreign Credit Insurance Association B. General Agreement on Tariffs and Trade C. World Bank D. Eximbank E. International Monetary Fund

International Monetary Fund

If Peru wants to purchase machine parts from a German company but lacks German marks, it will probably borrow the marks from which of the following institutions? A. International Monetary Fund B. World Bank C. Citicorp Bank D. International Bank E. Eximbank

International Monetary Fund (Duplicate)

The type of ownership form which can raise capital most easily is a A. public corporation. B. private corporation. C. sole proprietorship. D. general partnership. E. limited partnership.

Public Corporation

Jane has discovered that she is bored working for others. She wants to open a business in which she will have maximum control and the least interference from government regulation. Which business form should she use? A. Joint venture B. Cooperative C. Corporation D. Partnership E. Sole proprietorship

Sole proprietorship

Which of the following forms of business ownership is directly limited by the life of its owner? A. Sole proprietorships B. Limited partnerships C. Corporations D. Holding companies E. Subsidiaries

Sole proprietorships

Some larger corporations have acted like small businesses from their inception with great success. Which airline is an example? A. Northwest Airlines B. Delta C. Southwest Airlines D. American Airlines E. TWA

Southwest Airlines

A central issue of economics is how to fulfill an unlimited demand for goods and services in a world with limited resources.

TRUE

A severe recession may turn into a depression.

TRUE

Advertising first made consumers aware of differences in products and prices in the manufacturing economy.

TRUE

Economic expansion occurs when an economy is growing and people are spending more money.

TRUE

Licensing is a way of entering the international marketplace without spending large amounts of money abroad.

TRUE

Nations trade with other nations to obtain resources that would otherwise be unavailable to them.

TRUE

Protective tariffs raise the price of foreign goods to allow competition with more expensive domestic goods.

TRUE

The International Monetary Fund promotes trade among member nations by eliminating trade barriers and fostering financial cooperation.

TRUE

The equilibrium price is represented by the point where a product's supply and demand curves intersect.

TRUE

When firms that make and sell similar products to the same customers merge, it is known as a horizontal merger.

TRUE

Which characteristic of a sole proprietorship can be considered both an advantage and a disadvantage? A. Taxation B. Fund sources C. Liability D. Continuity E. Secrecy

Taxation

Worries about new equipment, expanding inventory, rent increases, competition, changing market conditions, and the like may contribute to A. overoptimism. B. a high stress level. C. a high failure rate. D. undercapitalization. E. a low stress level.

a high stress level.

A trade advantage with the best chance of surviving is one based on A. worker know-how. B. technology. C. a monopoly of a resource. D. production efficiency. E. lack of a resource.

a monopoly of a resource.

Because it virtually controls the world's deposits of gem-quality diamonds, DeBeers Consolidated Mines, Ltd. has a(n) A. absolute advantage. B. comparative advantage. C. advantage based on efficient production. D. trade deficit. E. balance of payment.

absolute advantage.

Until recently, the United States could produce oil-drilling equipment more efficiently than other countries, and, in a sense, monopolized the industry. In the market for oil-drilling equipment the United States had a(n) A. positive advantage. B. comparative advantage. C. negative advantage. D. absolute advantage. E. marginal advantage.

absolute advantage.

The United States' prohibition of imported Cuban cigars is an example of A. an embargo. B. a quota. C. dumping. D. a tariff. E. countertrade.

an embargo.

The difference between the flow of money into and out of a country is called its A. balance of trade. B. imbalance of trade. C. balance of payments. D. trade payment balance. E. exchange rate.

balance of payments.

Differences in spoken language and body language have no impact on international business.

FALSE

Direct investment is the least risky and least expensive way to participate in foreign trade.

FALSE

Exporting is available only to large corporations.

FALSE

Exporting is the purchase of products from another nation.

FALSE

Maquiladoras are possible under the Asia-Pacific Economic Cooperation.

FALSE

Nonprofit organizations such as Habitat for Humanity do not engage in management, marketing, or finance activities.

FALSE

All multinationals are American firms.

FALSE

Corporations cannot be sued.

FALSE

Which of the following began as a small business based on the entrepreneurial vision of its founders? A. Procter & Gamble B. Dell Computers C. McDonald's D. Federal Express E. All of the above

All of the above

Which of the following questions are addressed by all economic systems? A. What goods and services should be produced? B. How much of each good and service should be produced? C. Who will produce the goods? D. How should the goods and services be distributed? E. All of the above.

All of the above.