BUS 101 midterm

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.

Which of the following would least likely be stated in the articles of partnership?

What products the company will not sell

Mercedes-Benz, which is chartered as a corporation in Germany but conducts much of its business in the United States, is known as a(n) ____ in the United States.

alien corporation

Globalization represents a huge opportunity for

all countries rich or poor

A contract between a business and a state recognizing the business as an artificial person is known as the

articles of incorporation

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

Tim Hughes works at an institutional bakery and is paid a wage dictated by the government. He does not like his job but is not allowed other options. Tim must purchase necessities for his family at fixed prices. The country Tim lives in can be described as a ____ economy.

command

In the first three decades of the twentieth century, working conditions were horrible and dangerous, and abuses were common. Most people of the time believed these abuses would be rectified by

competition and interaction in the marketplace.

Walmart is incorporated in Arkansas, the state of its origins and headquarters. Within Arkansas, Walmart is classified as a(n) ____ corporation.

domestic

In the state in which it is incorporated, a business is known as a(n)

domestic corporation

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

To qualify as a small business, a manufacturing plant can employ no more than ____ people.

500

What is the most popular course offered by the SBA?

A general course that surveys eight to ten areas of business management

The Federal Reserve uses ____ when it lowers the interest rate charged to banks on short-term loans.

monetary policy

Harry is a businessperson who works for a successful and admired Fortune 500 company. About how often is Harry likely to encounter ethical issues in the workplace?

on a daily basis

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

open

Echo Air Company Refer to Echo Air Company. Since the company created its code of conduct, employees have limited ____, or amount of freedom to perform an unethical act.

oppportunity

Taking credit for others' ideas or work or not meeting one's commitments in a mutual agreement are ethical issues concerning

organizational relationships

A voluntary association of two or more people acting as co-owners of a business is known as a

partnership

Home inspirations Refer to Home Inspirations. Mary noticed that when sales were up, the economy was in a

peak period

Kai promised to repair Krystal's car on Thursday. After picking up the necessary part at a junkyard, he discovered he could not do the job after all and that the junkyard would not buy back the part. Krystal does not know about these developments. However, she thinks Kai will be finished with her car sometime today. What should Kai do?

Call Krystal to inform her of the problem, and recommend a reputable repair shop.

How might a sole proprietorship have a possible tax advantage?

It does not pay special state and federal taxes that corporations pay.

Which of the following is not an advantage of a sole proprietorship?

It has unlimited liability.

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total annual sales.

4

According to Census Bureau and Federal Reserve surveys, about 50 percent of all new businesses begin with less than ____ in total capital.

$30,000

What must a monopoly, such as a public utility, account for when setting its prices?

A monopoly must consider customer demand, and then set prices at the most profitable level.

Early government regulations prior to 1920 that affected American business include all of the following except the

Americans with Disabilities Act.

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

He was elected by the company's stockholders.

In the early 1980s, Craig Anderson, a corporate finance manager, was faced with which of the following problems?

High inflation rates

When was GATT first established?

End of World War II

One example of an economic community is the organization started by France, Germany, Belgium, Italy, the Netherlands, and Luxembourg. This organization is known as the

European Union.

In a socialist economy, key industries owned by the government include all except

Food production

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

Guaranteed income

Which of the following is a potential drawback of licensing?

If quality is compromised, it may reflect poorly on the company providing the license.

What is the significance of the name preferred stock?

Its claims on dividends are paid before those of common stock.

William Welsh, a former Air Force pilot, decides to operate a helicopter tour company to provide customers with breathtaking views of the Rocky Mountains. He obtains a loan and purchases the necessary land, facilities, advertising, and five helicopters for his business. What important factor of production has he overlooked in creating his business?

Labor

Which of the following examples least represents the definition of social responsibility?

Military members pledge a portion of their salary to the United Way.

All of the following are material resources for Honda Motor Company except

Money

Suppose the country of Peru wanted to join GATT and thus be treated the same as other GATT members. What GATT principle is Peru interested in receiving?

Most-favored-nation status

What are the three sets of factors that influence the standards of behavior in an organization?

Opportunity, individual factors, social factors

What is the main advantage of small business that helps retain effective employees who could earn more at a larger firm?

Personal relationships with employees

Luis Fisher, a recently retired corporate executive, is becoming restless in his new role and would like to make this transition smoother by participating in the business community in some limited manner. Since Luis is financially secure and primarily interested in some sort of volunteer work, he should consider becoming involved with which of the following SBA programs?

SCORE

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

Service business

Your friend, Linda, started a graphic design firm about a year ago. The business has done well, but it needs a lot more equipment, computers, and employees to continue expanding. Linda does not see any problem because she thinks she can easily get all the money she will need from her local bank. What advice might you give her?

She should consider alternative sources of financing because banks provide only about one-fourth of the total capital to small businesses.

Michelle wants to start a business, but she is unsure of the legal form best for her. Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation. Which would you recommend?

Sole proprietorship

Mc-Queen Chicken Refer to Mc-Queen Chicken. Which of the following would not be an advantage of a franchise?

Success will cause another outlet to be opened nearby.

Several European countries have banded together to reduce the trade barriers between them and encourage trading among themselves. This is known as

The European Union

Taiwanese manufacturers are dumping toys in Germany. What will happen to German toy manufacturers if the German government allows this dumping to continue?

They will be put out of business because they cannot compete with the prices.

The World Trade Organization was created by the

Uruguay Round

Which of the following would not be included in the gross domestic product of the United States?

Value of McDonald's sales for their Tokyo locations

If the United States and Japan can't settle their trade disputes on their own, they probably should settle them through the

WTO

The following statement answers which major question that a business plan should address? "This business will serve over 200 customers by the end of the year and employ seven full-time employees."

What are the goals for the business?

Suppose a set of English bone china costing £1,000 costs $3,000 in the United States. After devaluation, the set of china costs $1,000. This change

makes the china more attractive to foreign purchasers.

A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours. That means Underwater is facing a potential

cash-flow problem

The form of business organization that comprises about 18 percent of all businesses in the United States is the

corporation

The most effective form of business organization for raising capital is the

corporation

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

crude oil

Intel expects its code of ethics and shared values to provide all of the following benefits except

describe what to do in every ethical situation.

Lucas has been saving his excess funds for several years and has contemplated entering a partnership with a friend from college. Lucas hesitates because he knows that it is ____ to invest money in a partnership and ____ to get the money back out.

easy, difficult

The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)

economic community

An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies is called a(n)

economic community.

When the U.S. government will not allow meat from another country to be marketed in the United States, it is imposing a(n)

embargo

Arguments for imposing trade restrictions include

equalizing a nation's balance of payments.

The Johnson Spring Coal Mine recently discovered that the mine was contaminating the local drinking water. Cleaning up the mine and the surrounding areas would probably bankrupt the mine, causing the loss of hundreds of local jobs, but doing nothing would endanger the health of the community. The mine faces a serious ____ decision.

ethical

Robert Mullins is applying for a mortgage to purchase his first home. His credit rating is mediocre due to several late payments on his credit cards and car loan. He is upset because his friend Mark was offered an interest rate 3 percent less than what Robert was offered by the same mortgage company. This mortgage company's actions were

ethical—this is just a part of doing business because credit history is an important indicator of future payments.

All of the following are reasons people go into business except the

guaranteed return on investment

All of the following would typically be considered consumer products except a

high-powered drill press.

A limit on the amount of a particular good that may be brought into a country during a given period of time is called a(n)

import quota

The United States wishes to import no more than 100 million tons of sugar from India in any given year. The type of import restriction it should impose is a(n)

import quota

New ways to do a job with less effort and at lower cost is the basic principle characterizing the

increases in productivity for the past two hundred years.

Because it has not been around long enough to establish itself, the Russian automobile industry could be classified as a(n)

infant industry

caveat emptor

is a Latin phrase for "let the buyer beware"

Large firms generally buy parts and assemblies from smaller firms because

it is less expensive than making their own.

MillerCoors allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as

licensing

Which of the following is necessary for starting a sole proprietorship?

limited legal documents

In the mid-1970s, American auto manufacturers produced big gas-guzzling cars and tried to sell them to consumers who needed fuel-efficient transportation. This happened because manufacturers

lost sight of consumers' needs.

Suppose a manager at the Post-it Brand has recently become aware that employees are taking office supplies home and taking longer coffee and lunch breaks than the personnel policy allows. The manager finds these are widespread practices and wants to solve the problem. The best way to do this would be to

make the corporate culture encourage more ethical behavior.

satellite communications Refer to Satellite Communications. Steven is operating in a ____ because he has the opportunity to decide what to produce.

market economy

home inspirations Refer to Home Inspirations. Mary's goal of offering products with unique features and special services is called

product differentiation.

Daniel's business constructs storage sheds for new housing developments as requested by the builders. Daniel's business would best be classified as a

production business.

The main reason there are fewer production industries than distribution or service industries is that

production industries need a large initial investment.

Suppose France imposes a tax on agricultural products from the United States to help its own farmers. This describes a(n)

protective tariff

A whistle-blower is a person who

reports illegal or unethical conduct within his or her organization.

Manna's coffe Refer to Manna's Coffee. If Eun-Sang were Caucasian and the company employees were mostly Asian, the way she was treated would be referred to as

reverse discrimination.

The relationship between sales and profits can be written as

sales revenue − expenses = profit.

Price Waterhouse, a large accounting firm, would be most properly classified in the ____ industry, whereas a grocery store such as Kroger would be included in the ____ industry.

service; distribution

The economic model of social responsibility was developed in a period when the primary concern of firms was

short-run profits and survival.

Monopolistic competition is a market situation in which

similar but not identical products are available.

Fatima's cleaning business has several customers but is not dominant in its field. This is an example of a(n) ____ business.

small

A group of senior and graduate students in business administration providing management counseling to small businesses is known as a

small-business institute

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

Mark Zuckerberg's Internet.org program that helps bring Internet access to underserved communities in various parts of the world is an example of

social responsibility

Echo Air Company Refer to Echo Air Company. The principles that EAC choose to pride itself on show that the company has

social responsibility.

The nationalization of key industries in countries such as Sweden and Norway is indicative of a(n) ____ economy.

socialist

Sandy is tired of her boss as well as corporate America in general. She decides she would like to start a business where no one tells her what to do, and she can always make the decisions. The best form of business for Sandy is a(n)

sole proprietorship.

Steven Jobs and Stephen Wozniak, the founders of Apple Computer, Inc., creative, free-spirited individuals who decided that being corporate underlings was not what they wanted from a career. They had an innovative idea for a product and desired to create their own business based on this idea. All of the following are factors that could have led them to go into business except

the low risk and high rewards inherent in entrepreneurship.

When medical research indicated that a high-fiber diet might help reduce one's risk of colon cancer, a few producers of fiber cereals suggested in their advertisements that if you eat fiber cereal, you will not get cancer. This is an example of

unethical communications.

All of the following are advantages of the partnership form of organization except

unlimited liability