Business Dynamics Midterm

A common characteristic of most entrepreneurs is that they A. accept the risks involved in starting and managing a business. B. have a high level of scientific and technical expertise. C. possess a great deal of personal wealth. D. have experience in running large, complex organizations.

A

A free-trade agreement is unlikely to result in A. pay increases for domestic workers. B. higher-priced imports. C. decreased innovation. D. productivity declines.

A

A merger involving a commercial bakery and a grocery retailer would be an example of a __________ merger. A. vertical B. horizontal C. linear D. conglomerate

A

After Malin graduated from college last year, her uncle created an accounting position for her in his business. His son is in charge of purchasing inventory for the store, yet often the store runs out of popular items or is overstocked with products that must be marked down to be sold. Malin is confident that her cousin is more suited for handling accounting and finance, while she has a sense of what sells and how much sells. Although she has spoken with her uncle about it a couple of times, he seems reluctant to change. As the founder of the business, he may A. find it difficult to remove family members from positions, even if it is not good for the business. B. find it difficult to retrain Malin for the job, and even though his business is losing opportunities, he will stay the course. C. know that profit margins have declined, but he doesn't care. D. have a bigger picture of things, and not feel the need to respond to a family member's request.

A

An American company recently won a huge contract with a company in Kosovo, by gifting its government officials with American cars and an assurance of monetary gifts. Clearly, this procedure A. violates the Foreign Corrupt Practices Act. B. violates the Fair and Balanced Competitive Practices Act. C. defines the common business practices of the foreign nation and should be respected. D. defines the terms of the business contract, and as long as both parties sign, the agreement is binding.

A

An entrepreneur who wishes to start a business with little delay or hassle, and who wants to be his or her own boss, should organize the business as a A. sole proprietorship. B. cooperative. C. C corporation. D. general partnership.

A

Any debts or damages incurred by a firm organized as a sole proprietorship are A. the responsibility of the owner. B. limited to the amount the owner has invested in the firm. C. paid for out of a reserve contingency fund required by law. D. normally covered by liability insurance.

A

As a business strategy, the strategy behind dumping is to A. gain a foothold in a new market. B. get rid of faulty products. C. avoid trade protectionist laws. D. achieve eligibility for foreign aid.

A

Brooke's Boutique sells clothing from around the world in the United States. Brooke regularly travels overseas to find the best and most unusual shirts, dresses, and pants that foreign producers have to offer. Brooke is a(n) A. importer. B. licensee. C. dumper. D. exporter.

A

Cal is an inventive engineering new graduate who just started working for a large company that makes medical products for both hospital and patient use. One of his primary responsibilities is to initiate and develop new products to complement the firm's current product line. Cal's position is A. intrapreneurial. B. entrepreneurial. C. an outside consultant for other firms. D. micropreneurial.

A

Compliance-based ethics codes typically A. rely on laws and regulations outside the firm for guidance. B. stress shared accountability among employees. C. promote a "do-it-right" climate. D. define the company's guiding values.

A

Creating intense competition between employees within the corporation A. can encourage employees to deceive customers. B. will improve customer service. C. must be ignored when corporate ethics are developed. D. can bring out the best in employees.

A

Don is a flight attendant for a large, international airline. While in China, Don often finds look-alikes of famous designer brands of watches, sunglasses, and golf clubs. In fact, he will often do some shopping for friends. Don's actions demonstrate A. a continual problem with product piracy in China. B. how expensive it is to trade with China. People who travel there are really the only ones who can benefit from China trade. C. the low level of economic development in China, and the fact that only tourists can afford to purchase name-brand goods in that nation. D. the World Trade Organization's encouragement of China to increase its production of counterfeit goods because there is a high demand for these globally.

A

Double taxation is experienced by corporations that pay dividends. Which scenario is an accurate example of double taxation? A. If Cyber Stellar Inc. distributes 20% of its net profit after taxes to its stockholders, these funds will be taxed again, when each individual stockholder claims his/her portion as earnings. B. By law, Cyber Stellar Inc. is permitted to tax its executive employees twice on their earnings, and then pass those funds on to its stockholders in the form of dividends. C. Due to the fact that it is a corporation, the accountants of Cyber Stellar Inc. calculate 35% of the company's earnings, multiply it by 2, and then distribute that amount to the federal government each year for taxes. D. If Cyber Stellar Inc. fails to pay its taxes on time during any given year, it must pay the current year and the delinquent year, in order to stay in business, similar to being taxed two times.

A

Earnings of C corporations can be A. taxed twice if they are distributed as dividends to stockholders. B. taxed at twice the going rate of a partnership or sole proprietorship. C. taxed by the federal government, but they are exempt from state taxes if the corporation owns any facilities within that state. D. taxed the same as a partnership.

A

Effective entrepreneurial teams combine A. creativity with marketing and production experience. B. venture financing, tax benefits, and production economies. C. scientific abilities, capital investment, and marketing skills. D. risk tolerance, debt financing, and international experience.

A

Entrepreneurs looking for a business that gives them the best opportunity to get rich should consider starting a business in A. the manufacturing sector. B. the food service industry. C. a low-risk industry. D. the agriculture sector.

A

Ethical behavior covers a __________ range of conduct than legal behavior. A. broader B. more limited C. smaller D. less demanding

A

For several years, Lanie has volunteered to play the piano and sing at a local nursing home. Now, Lanie has decided to get into the growing eldercare market. She created Music and Memories, a nonprofit corporation that would hire local talent to perform her own music productions directed toward this market. In order to write and produce several productions each year, Lanie needed start-up funds. An instructor at the local community college suggested that she begin by __________, because this effort would help introduce her idea to interested investors as well as suggest government grant applications that Lanie might pursue. A. preparing her business plan B. finding talented performers C. writing holiday- themed performances D. developing a list of start-up costs

A

For-profit businesses and nonprofit organizations are similar in that they both A. contribute to the welfare of society. B. seek to earn a profit. C. have a limited life. D. must be controlled by a board of directors.

A

Grace owns a dog-walking business that she started in high school. Her first goal was to earn money after school and supplement her allowance. Now that she has finished college and maintains a long client list, she plans to run the business full time. She keeps all the profits and has kept things simple by relying on word-of-mouth to obtain new clients. Grace's business is a(n) A. sole proprietorship. B. franchise. C. S corporation. D. partnership.

A

Hiroshi is a partner in a firm that specializes in producing vitamins and health food products. While the business is considered small by U.S. standards, he is attempting to persuade his partner to expand internationally. What would Hiroshi likely describe as an advantage of going global? A. Exporting can help sell excess inventory. B. Marketing programs benefit from the cultural similarities in prospective markets. C. Financing can easily be obtained to expand internationally. D. Selling your products in other markets reduces their life cycle, making them more attractive.

A

Honda and Hyundai have insourced for years to design and manufacture cars in the United States. What statement is accurate about this practice? A. Insourcing helps offset the number of jobs being outsourced. B. Insourcing increases the number of jobs being outsourced. C. Insourcing damages the United States economy. D. Insourcing causes jobs to be lost to overseas competitors.

A

In order to compete well and gain market share, contemporary businesses are changing to be more A. customer-driven. B. cash-driven. C. management-driven. D. production-driven.

A

In the box, "A World of Options Under the Arches," the textbook discusses one reason McDonald's has become a global powerhouse. Which statement best describes what led to McDonald's success? A. McDonald's was careful to include regional tastes along with its traditional burgers and fries. B. McDonald's kept to what it did best and only served its classic menu overseas. C. McDonald's licensed all its overseas restaurants. D. McDonald's participates in contract manufacturing.

A

Laws represent the standards of __________ behavior. A. ethical B. legal C. moral D. socially responsible

A

Many individuals today believe that ethical behavior is determined by what is best for them at the time. This is an example of A. situational ethics. B. moral absolutes. C. the Golden Rule. D. legal behavior.

A

Northwest PowerWasher Company recently entered into an agreement with a large Japanese retailer to distribute its power washers in Japan. What scenario would be the most favorable for Northwest PowerWasher Company? A. The yen is gaining strength compared to the U.S. dollar, making it cheaper for Japanese customers to buy American products. B. The yen is down against the U.S. dollar, making it cheaper for Japanese customers to buy American products. C. There are high tariffs on all mechanical products imported into Japan. D. There are several companies already operating in Japan that offer a similar product.

A

PepsiCo entered into a long-term contract with a South African beverage company. The contract calls for the South African firm to produce and market Pepsi products in the country. PepsiCo will receive royalties on each case of sodas sold. This is an example of A. licensing. a joint venture. a foreign subsidiary. foreign direct investment.

A

Robin recently purchased 100 shares of stock in Champs Tennis Gear Inc. Robin is a(n)________ of this company. A. owner B. manager C. creditor D. partner

A

Simon, a citizen of Indiana, says that his laptop was made in the Philippines. Simon purchased a(n) A. imported item. B. exported item. C. protected good. D. generic good.

A

Studies have found a strong relationship between academic dishonesty and A. later dishonesty at work. B. academic failure. C. future managerial downfall. D. financial success.

A

The U.S. government, responding to pressure from political lobbyists representing the U.S. steel industry, will impose a tax on steel products imported from South America. This is an example of a(n) A. protective tariff. B. revenue tariff. C. quota. D. embargo.

A

The boxed material entitled "Reaching Beyond Our Borders" that told the story about Joe, the telecommunication employee, suggests that U.S. firms operating overseas are A. not as flexible on social issues as local employees would like them to be. B. exploiting employees by working them long hours at low pay. C. complying with the ethical standards of the people they employ, in the countries in which they are operating. D. responding to their stockholders' desire for profits.

A

The danger in writing new laws to correct behavior is that A. people may begin to think that any behavior that is legal is ethically acceptable. B. people will see the difference between ethics and legality. C. legal behavior will become unsustainable. D. there will not be enough jails to house those who break the law.

A

The faculty and administration staff at your local community college are trained to ask about your career preferences, instead of suggesting courses that may not benefit your future goals. Even though it would be tempting to advise students to take extra courses just to increase the college's enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with A. an integrity-based ethics code. B. a compliance-based ethics code. C. a response to a government mandate. D. a personal responsibility commitment.

A

The president of Reliable Tires Inc. just testified before Congress. He urged them to limit the flow of imported automotive tires into the country, as these imports were priced lower than foreign producers were charging for them in their own countries. He believes foreign producers are A. dumping. B. increasing the trade deficit. C. promoting free trade. D. licensing.

A

The president of Secure Home Monitoring wants to create a corporate ethics code which will benefit both employees and management. After studying successful companies, he determines the best strategy is to focus on A. fairness and honesty. B. strict penalties for illegal activities. C. a full-time compliance officer closely monitoring employee behavior. D. watchdogs and whistleblowers.

A

The theory of __________ states that a nation should produce and sell goods to other countries that it produces most efficiently, and buy goods from other nations that they produce more efficiently. A. comparative advantage B. absolute advantage C. mercantilism D. bilateral advantage

A

Wearable Technology, an American retail store, buys most of its inventory from Asian countries. Wearable Technology would benefit if the value of the dollar __________ relative to the currencies of the countries from which it imports. A. rose B. fell C. remained constant D. floated unpredictably

A

What is a benefit of owning your own business? A. freedom to keep the profits from your business B. government-supplied health insurance C. extended paid vacation time D. shorter work hours

A

What is an advantage of offshore outsourcing? A. Companies can create efficiencies by hiring low-wage employees. B. Wages increase in the home country. C. Product quality improves permitting firms to charge more for their products. D. Communication between the company and its customers improves.

A

What policies would tend to foster entrepreneurship? A. Minimize taxes and regulations. B. Promote more regulations to protect the environment. C. Develop policies to reduce corruption between individuals. D. Encourage government ownership of businesses.

A

What pricing strategy are foreign firms required by law to use according to U.S. anti-dumping policies? A. Prices must include 10% overhead costs and an 8% profit margin. B. Prices must meet or exceed those for similar U.S. products. C. Prices must fall below those charged in the producing nation by 8%. D. Prices must include a profit margin of at least 10%.

A

What statement best describes the outlook for small businesses in international markets? A. The world is a larger, and potentially a more lucrative, market than the U.S. domestic market. B. The threat of terrorist activities prevents small businesses from competing internationally. C. Most foreign buyers prefer to deal with large, well-known corporations rather than small businesses. D. Higher business costs eliminate the profit opportunities in global markets

A

When a firm undertakes corporate social initiatives, it is A. making donations that are directly related to a company's competency. B. making long-term commitments to one cause. C. hiring a diverse workforce. D. creating safe products.

A

Which individual would likely be most interested in participating in a business organized as a cooperative? A. Ethan is interested in the idea of combining his time and resources with others to operate a business providing a good or service that they all will use. B. Renee looks to be an owner of a business and share in its profits, but does not want to take an active role in managing the company or participating in its daily operations. C. Mauricio wants to work for a government-owned business because he believes government ownership ensures a more equitable distribution of income and wealth. D. Isadora prefers to work for a charitable organization that emphasizes helping people who are less fortunate than she is.

A

Which situation would most likely involve ethical concerns? A. overstating an expense report B. forecasting sales for the next year C. developing the marketing plan for the next year D. improving working conditions

A

Which statement best describes how firms must treat their frontline workers in order to remain competitive? Frontline workers must be A. empowered with the authority to respond quickly to the unmet needs of customers. B. closely supervised to reduce the risk of product liability and discrimination lawsuits. C. eliminated and replaced with automated equipment whenever possible. D. relieved of any burden to make a customer decision.

A

Which statement best describes recent job growth in the service sector? A. The service sector has generated almost all new jobs in the American economy since the mid-1980s, but the rate of job growth in services has slowed in recent years. B. Jobs in the service sector have increased slowly over the past decade, but most new jobs are created in the manufacturing industries. C. Employment in the service sector has declined in recent years, and this decline is expected to continue. D. There has been little change in the number of jobs in the service sector in recent years; however, employment is expected to increase rapidly.

A

Which statement best describes the main difference between B2B and B2C transactions? A. B2B transactions involve transactions where the buyers and sellers are both businesses, while B2C involves transactions between businesses and consumers. B. B2B transactions focus on financial transactions while B2C e-commerce focuses on the sale of manufactured goods. C. B2B transactions refer to business between nonprofit organizations while B2C e-commerce is carried out by business firms seeking to earn a profit. D. B2B transactions involve sales in foreign markets while B2C e-commerce is restricted to domestic markets.

A

a benefit corporation is A. a mission-based company judged by how well it meets its own set of socially or environmentally beneficial goals. B. a nonprofit organization. C. a corporation without the possibility of double taxation because it's tax exempt. D. a special corporation type for crowdfunding sites.

A

what is an ongoing challenge for small businesses which use Amazon's platform for online sales? A. The broad reach of Amazon creates a perfect environment for counterfeiters, who can be difficult to stop. B. Amazon customers are limited to the United States, and small businesses need to expand globally to survive. C. Few customers turn to Amazon when sourcing a small company's products. D. Amazon collects an enormous royalty on all online sales, making it impossible for small businesses to compete.

A

A good reason why partners should spell out the details of their partnership arrangements in writing is A. the partnership is not a legally recognized business unless they do so. B. a written agreement will help reduce misunderstandings and disagreements among the partners. C. putting the agreement in writing will limit the liability of each partner to a specified level. D. doing so will make it easier to convert the business to a corporation at a later date.

B

A major concern voiced by U.S. critics of the North American Free Trade Agreement (NAFTA) was that it would result in A. higher prices for consumer goods. B. loss of jobs in the U.S. economy. C. national security problems. D. increased illegal immigration from Mexico.

B

A nation progresses socially when it has good schools, clean air and water, and more. Which statement accurately addresses conditions for social progress? A. Social progress will evolve when capital is apportioned to everyone in equal amounts. B. A city, state, or nation's social progress needs the right business environment. C. The foundation for social progress is a handful of wealthy entrepreneurs willing to spread the wealth. D. Social progress can only improve when there is a strong labor pool to draw from.

B

After checking the receipt after leaving the restaurant, you notice the server failed to charge your group for several drinks. Everyone else says it is not a big deal, but you worry that the server may have to reimburse the charges out of her own paycheck. Which ethics-based question would be most helpful in evaluating this situation? A. Is it legal? B. Is it balanced? C. Who agrees with me? D. Will I get caught?

B

Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business, which requires you to A. pay income tax only one time each year. B. pay self-employment taxes. C. pay for the right to get an employee identification number. D. file an income tax return for the business.

B

Although the details are still being negotiated, the expected successor to NAFTA is A. the ASEAN Economic Community. B. the United States-Mexico-Canada Agreement. C. Mercosur. D. the Central American Free Trade Agreement.

B

An ethical dilemma refers to a situation where you must A. treat someone unfairly. B. choose between equally unsatisfactory alternatives. C. choose between a correct and an incorrect option. D. balance the concerns of profit and legality.

B

An evaluation of franchising would conclude that this type of arrangement A. has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages. B. appeals to people who want to own a business, but are not comfortable starting a company from scratch. C. has a much higher risk of failure than independent companies. D. has little appeal outside the United States.

B

Apple's legendary smart team is an example of a company that succeeded by A. encouraging each manager to focus on a well-defined area of the business and build his own specialized department. B. bringing together a group of talented and experienced managers to conceive, develop, and market products. C. emphasizing a low price and low-cost strategy right from the beginning. D. assembling a group of employees whose inexperience was a plus, because they did not come with the baggage and institutional ideas of larger companies.

B

As a recent college graduate, Eli started working for an export trading company. His job has already taken him around the globe on several occasions. He was amazed to see the difference in working conditions in the developing nations he visited, as opposed to similar operations in the United States. The expectations of workers were not the same. Eli's experience is an example of A. corporate philanthropy differences in different countries. B. social responsibility differences between similar firms, but in different countries. C. differences in corporate social initiatives in foreign nations. D. the need for whistleblowers abroad.

B

Before it was publicly known that IBM was going to take over Lotus Development, an IBM secretary told her husband, who told two co-workers, who told friends, relatives, business associates, and even a pizza delivery man. A total of 25 people received the information and traded on this tip to make a profit. These people were A. acting really smart. B. participating in insider trading. C. stealing from IBM. D. acting fairly.

B

Belgium, Hungary, Sweden, and Germany are all members of the EU. What statement is an accurate description of trade between these nations? A. Belgium and Germany are permitted to engage in free trade due to their proximity to each other, however, Sweden only has free trade with Finland, and Hungary only has free trade with Switzerland, Austria, and Croatia. B. The EU has abolished internal tariffs for these and other member nations and put in place a uniform system for taxing imports. C. Customs officers that collect tariffs have increased at the internal borders of all EU member nations. D. Belgium, Hungary, Sweden, and Germany conduct free trade between their nations, but not with other members of the EU.

B

Certain industries of the U.S. economy, such as farming and heavy equipment manufacturing, have experienced a significant decline in employment. Which statement best explains this job loss? A. The cause is a decline in the productivity of labor in these industries. B. Workers lost these jobs because technological advances increased productivity. C. The U.S. economy cannot compete in these industries any longer. D. Government regulations have eliminated profit opportunities in these industries.

B

Charlie remembers his grandfather telling him, "If you can find something you like to do, and somebody is willing to pay you to do it, that's the secret to a great life." The way Charlie saw it, this was his chance. For the past five years, he's been splitting his time between school and working at a local tree farm. The owner recently announced he was ready to retire. As Charlie began creating a business plan, he contemplated what the business might be worth. How much will he need to buy this business? What step should Charlie take next? A. Charlie needs to find a government database that outlines what nursery businesses are worth, on average, across the country. B. Charlie should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage. C. Charlie should determine the assessed value of the acreage that the business owns, and then bid competitively. D. Charlie needs to understand that it's difficult to buy an existing business, rather than start your own. The key will be to meet with the company's accountant, and explain your interest. The accountant will have all the answers.

B

Companies may have several reasons for creating joint ventures. Which statement is one reason why firms may decide to form a joint venture? A. They may wish to contract manufacture with each other. B. They will save time to market if they pool their technological know-how. C. These arrangements are always less risky than strategic alliances. D. These arrangements rely solely on local marketing and management expertise.

B

Current trade data shows that one wealthy country in Europe exports far more to other nations than it imports. This country has A. an unfavorable balance of trade. B. a trade surplus. C. a trade deficit. D. a low balance of trade.

B

Essence Energy refines and markets its energy products in different nations around the world. In addition, Essence Energy's stockholders and managers come from many different nations. If some of the nations where it operates decided to take over the assets of the company, this act would constitute A. patent infringement. B. expropriation. C. illegal activity. D. hostile takeover.

B

Following an ethics-based approach to decision making will normally lead to higher A. profits. B. trust and cooperation. C. prices. D. employee turnover.

B

Fran and her siblings created a design company called Bright Home LLP. Although key business functions are centralized, each sibling is a licensed architect that designs, builds, and installs residential and commercial buildings for his/her own clients. Unfortunately, an installation of Fran's resulted in water damage to the basement of the client's new home. The limited liability partnership A. guarantees that none of the company's partners will lose more than the amount they invested in the company. B. guarantees that only those partners who were directly involved in designing and building this home face unlimited liability for claims against the firm. C. protects the partners from any suit by the client. D. will enable the firm to quickly reorganize with only minor financial losses.

B

Gabby is working as a marketing trainee for a streaming video company. Her boss called a meeting for next week with one thing on the agenda: "Bring with you your ideas about how we can gain a competitive advantage." Knowing the current competitive environment, what should Gabby suggest? A. Create a management-driven environment with lots of employee training. B. Create a customer-driven environment where we constantly try to create customer value. C. Restructure the organization so that there is always a manager on duty to chat with online customers who are having problems with their orders. D. Always match the promotions of our competitors; price is the only thing customers care about.

B

Given the ethical lapses that are prevalent today in our businesses, what can be done to restore trust in the free-market system and leaders in general? A. Business leaders that have broken the law should be given another chance. B. New laws making accounting records transparent may help restore trust. C. Making the government accountable for business leader behavior will restore trust. D. Government must take over all businesses displaying ethical lapses.

B

Henry is a stockholder in Vintage Amusements Inc., a C corporation that designs and manufactures merry-go-rounds. The company recently lost a major court decision and is being forced into bankruptcy. In fact, the damages being awarded are so large that, even if all company assets are sold and the proceeds are used to pay its debts, Vintage Amusements is likely to still owe money to its creditors. If Vintage Amusements goes bankrupt, Henry and the other stockholders will A. be personally responsible for all remaining debts. B. lose their investment but nothing else. C. be entitled to full reimbursement of any investment losses. D. automatically qualify for federal reimbursement for any losses suffered by the firm.

B

Hyun and her three college friends enjoy perfumes. As a special gift to each of them last holiday season, Hyun found a way to make scented candles with each friend's favorite perfume scent. The three friends loved her gift idea and encouraged Hyun to create more and sell them online. Recently, she is filling orders from her website, and turning a profit. Hyun is proof that A. personalized products will always be successful. B. when you successfully fill a market need, you can make money. C. the Internet is a way to distribute just about anything. D. the cost of supplies to make candles is relatively cheap.

B

If global trade experts predict that the value of the dollar will soon fall, it will result in A. both the prices of imported goods rising and prices of U.S. goods sold overseas rising. B. prices of imported goods rising, but prices of U.S. goods sold overseas falling. C. both the prices of imported goods falling and prices of U.S. goods sold overseas falling. D. prices of imported goods falling, but prices of U.S. goods sold overseas rising.

B

If you were to discuss and analyze the social changes affecting the future of business, which statement should be part of that conversation? A. It is becoming more difficult to provide expert prenatal care for women, resulting in a negative impact on the future of childbirth. B. The increase in older citizens may impact an employee's take-home pay if programs such as Social Security will need to be funded at a higher level. Skilled employees may require higher wages to make up the shortfall. C. With less money to spend, older Americans over 65 will no longer require transportation, entertainment, education, and lodging. This is highly likely to negatively impact these industries. D. Business taxes are likely to spike due to the fact that welfare laws are making it relatively easy for single parents to stay home with their children, rather than find jobs.

B

In 2010, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a provision permits whistleblowers to A. remain at their jobs, after reporting a securities violation. B. receive up to 30% of the penalty funds that exceed $1 million that the courts recover from companies proven to be in violation. C. represent securities violations only in the companies where they are employed. D. automatically receive up to a $1 million dollar reward for reporting a securities violation, as well as retain their job.

B

In order to level the playing field in trade between the United States and China, U.S. policymakers have called upon China's government to allow the yuan to float freely, as other world currencies. Through government regulation, China maintains an undervalued currency, which results in A. more buying power for Chinese consumers who want to purchase U.S. goods and goods from other countries. B. maintaining robust Chinese exports and a favorable balance of trade for China. C. developing better relations with industrialized countries who want to increase the value of their exports. D. stability and strength of the Chinese yuan against the U.S. dollar and the euro.

B

In some countries it is customary to pay government officials to secure necessary business contracts and permits. American businesses must follow U.S. law and cannot make these payments according to the A. Foreign Antitrust Act. B. Foreign Corrupt Practices Act. C. Multinational Collusion Law. D. U.S. Consumer Product Safety Commission.

B

Jeremy was called by one of his regular customers asking if he had time to repair some broken sprinkler heads on that customer's underground sprinkling system. Although it was already 6:00 p.m. and he already put in a full day of work, he turned his car around and headed for the customer's house. As a small business owner, Jeremy demonstrates A. his need for additional cash flow. B. his ability to easily adapt and respond to his customer's needs. C. the fact that it is difficult to find employees willing to go the extra mile for a small business because benefits are nonexistent. D. his need for better oversight of his business to avoid emergency customer calls

B

Last week, Citizens' Greener Evanston sent a formal letter to the city requesting that it measure its carbon footprint and publicly disclose the amount of fertilizer and other carbon-emitting substances it is using on its public parkways and community parks. Citizens' Greener Evanston is an example of A. a socially conscious investor group. B. a watchdog group. C. a disgruntled nonprofit organization that has a beef against the city. D. a public employee group demonstrating social responsibility.

B

Last year, a Central American nation reported that it had a favorable balance of trade even though it imported $9 billion worth of goods. This indicates that A. it exported $9 billion worth of goods. B. it exported more than $9 billion worth of goods. C. it overpriced the value of its exports. D. it exported less than $9 billion worth of goods.

B

Licensing is a popular strategy because A. it boosts domestic market revenues. B. the licensee has incentive to work hard and succeed because they have borne the cost. C. licensees spend little or no money to produce and market their products. D. there are seldom any long-term contractual requirements.

B

Management's philosophy at Nike has often been that a fit body contributes to more productivity at work. Nike provides exercise facilities at its headquarters in Beaverton, Oregon, and lets employees use work time each day to relieve stress through exercise. This serious position on physical fitness is part of Nike's A. corporate philanthropy. B. corporate policy. C. community mediation services. D. social justice promotion.

B

Many businesses have developed internal procedures to enforce their ethical policies. What is an example of an outside group urging ethical behavior in businesses? A. management teams B. union officials C. suppliers D. sales representatives

B

Many toys sold in the United States are imported from Taiwan because the Taiwanese can produce these products more efficiently than U.S. companies. This is an example of A. bilateral advantage. B. comparative advantage. C. absolute advantage. D. unilateral advantage.

B

Mason is a CPA for a large company. Recently, he noticed that the company's accounting records significantly overstated the amount of inventory on hand, leading to an overstatement of assets the company holds. Initially, Mason brought it to the attention of his supervisor, but when nothing was done to correct the mistake, he decided to report it to the appropriate government official. Mason was counting on current law, under the __________, to protect him against company retaliation. A. Cellar-Kefauver Act B. Sarbanes-Oxley Act C. Robinson-Patman Act D. Sherman Act

B

Miranda wants to operate a small catering business out of her home, located in a quiet residential neighborhood. She asks for input from her neighbors, the homeowner's association, her suppliers, and the zoning commission about issues including parking, noise, safety concerns, and operating hours. Before officially opening, Miranda adjusts her business plan based on the feedback she received. Miranda has discovered that A. her new business will definitely be successful. B. stakeholder considerations are important if you want your business to thrive. C. town politics is more important than company profits. D. consulting various stakeholders eliminates any risk.

B

Olivia is looking into opening a day care in her community. She is aware of many single-parent families that need a place for their children to stay while they work, but she is concerned about the long-term prospects for such a business. Olivia thinks the future of her day care will depend on whether birth rates and the number of single-parent families keep growing. These concerns illustrate how businesses can be affected by __________ trends. A. econometric B. demographic C. geographic D. psychometric

B

One factor causing businesses to vigorously enforce ethical standards is the A. desire to eliminate employee turnover. B. fear of negative publicity. C. focus on criminal penalties. D. evasion of social audit measurements.

B

One reason we have seen continued growth in home-based businesses is A. the location offers a more secure operational environment. B. affordable technology makes it easier to compete. C. people need something to do while they wait to return to work for a large corporation. D. it is less risky to start a home-based business than other types of entrepreneurial ventures.

B

Oscar lives in Mexico City and is a Mexican citizen. He has several friends who are U.S. citizens and own shares in an S corporation. Oscar would like to invest in this company. Which statement is most accurate? A. Oscar can invest in this company, but must pay both U.S. and Mexican taxes. B. Oscar cannot become a shareholder since he is not a citizen or permanent resident of the United States. C. Oscar can become a shareholder but cannot become a manager, and his income must be paid in pesos. D. Oscar needs approval from the Mexican government before he can invest.

B

Public schools, charities, and government agencies generally A. have the same goals as for-profit businesses. B. do not seek to earn a profit. C. provide goods rather than services. D. do not have any stakeholders.

B

Some critics of corporate social responsibility view spending money on CSR as A. a necessary evil. B. stealing from investors. C. important for globalization. D. moving toward capitalism.

B

State and city governments have promoted facilities where new businesses can open up shop and share common services such as secretarial, accounting, and legal services. Due to their remarkable success rate, these __________ continue to grow in popularity. A. enterprise zones B. incubators C. intrapreneurial development centers D. venture farms

B

Successful small business owners are A. not good sources for information on starting your own business because they generally do not understand failure. B. valuable sources for information since you can learn from their experiences. C. good sources of some information but likely to tell you to jump right in without much funding. D. potential competitors who should be avoided.

B

Tariq is a franchisee with a chain of regional hotdog shops. He was doing well until several other franchisees got in trouble over cleanliness issues and were forced to close their shops. Soon afterward, Tariq's business declined and was also forced to close. This is an example of A. an economic shakeout at work. B. the coattail effect. C. the law of diminishing returns. D. management by exception.

B

Taylor recently started selling her invention: A bed that looks like it floats in mid-air. The bed is actually suspended by magnetic forces. Taylor is a(n) A. arbitrageur. B. entrepreneur. C. speculator. D. account manager.

B

Terrell is a recent hire at a sporting goods store. On his first day, the store manager handed him a small booklet listing company rules. He was asked to read it and sign and submit the last page, before starting his work. Among other things, the rules explicitly discussed punishments for grievous behavior and firing if the firm could prove that the employee was stealing product from the store. This booklet represented the __________ of the store. A. company-based ethics B. compliance-based ethics C. integrity-based ethics D. whistleblowing-based ethics

B

The Peak Pack Company wants to begin exporting its rock-climbing products. The company needs advice about how to get started, as well as trade-finance support. The federal government has established __________ to help companies like Peak Pack. A. the World Trade Commission B. Export Assistance Centers C. export-trading companies D. Federal Reserve Banks

B

The executive summary section of the business plan contains A. computerized information that readers can access interactively. B. information that will capture the attention of bankers and other investors who receive many business plans every day. C. qualifications, experience, and education of the entrepreneur and prospective employees. D. a financial summary prepared by the business's accountant.

B

The green movement is A. a trend that started with the U.S. government. B. concerned with depletion of natural resources. C. developing more green food products to feed the world's poor. D. our concern with the fact that everywhere we look, things are remaining green for longer periods of time.

B

The management staff at Andy's Service Center believes the company has a social responsibility to its community. They believe that the company can have the greatest impact in this area through cash contributions to local nonprofit organizations. This is an example of A. graduated payments. B. corporate philanthropy. C. structure and strategy. D. short-run profit maximization.

B

The organizational structure of a corporation permits A. the company management to elect the board of directors. B. stockholders to elect the board of directors. C. stockholders to elect the officers and management team. D. employees to elect the officers of the company.

B

The strategy of investors who are attempting a leveraged buyout is to A. shape up the company for quick resale. B. use debt to finance the buyout of the firm's stockholders and gain control of the firm themselves. C. secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock. D. use investment tax credits from the government to acquire all of the physical assets owned by the firm.

B

To implement a policy of empowerment, the organization will restructure so that A. managers have more responsibility and employees learn to follow directions. B. employees assume more responsibility. C. workers agree to work overtime without extra pay. D. an entire level of management is removed from the organization.

B

Trade experts' concerns about trading with China include its A. young average age and small population size. B. one-party political system, counterfeiting activities, and human rights abuses. C. ties with organized labor unions. D. economic philosophy that has changed from free market to command economy.

B

Traders in the seventeenth and eighteenth century were encouraged to focus on selling their nation's goods in the global market to create a favorable balance of trade. Nations attempted to sell more goods to other nations than they bought from other nations. This approach to global trading is called A. ethnocentrism. B. mercantilism. C. protectionism. D. isolationism.

B

Using the analogy of boulders vs. sand for filling a hole, the textbook points out that A. small businesses are employing a record number of employees because they have to work twice as hard at producing the same amount of output as a large competitor. B. small businesses can serve niche markets that larger firms do not serve well. C. the sand represents the small businesses that start and fail each year, while the boulders represent the large companies whose resources permit them to stay the course. D. large companies serve market niches so much better than small companies.

B

What describes a unique focus of an integrity-based ethics code? A. increased control over employee actions B. shared accountability among employees C. increased penalties for code violators D. improved awareness of the relevant laws

B

When Blake Mycoskie started TOMS, he took the concept of __________ to a new level. With its well-known "one for one" shoe giving program, TOMS social causes are directly related to the firm's expertise of selling shoes. A. social auditing B. corporate social initiative C. corporate policy D. corporate philanthropy

B

When it comes to social responsibility, some people feel that "before you can do good, you must do well." This reflects a firm's primary responsibility to its A. customers. B. investors. C. employees. D. community.

B

Which statement about buying a franchise is most accurate? A. One of the advantages of buying a franchise is that franchisors are so closely regulated that there is virtually no chance for scams to succeed. B. Before purchasing a franchise, the buyer should carefully evaluate the franchise, the franchisor, his or her own situation, and the nature of the market. C. Franchise agreements are simple to evaluate, since federal law requires that all such agreements must be written in plain English with no need for attorney review. D. Buying a franchise is the simplest and least expensive way to set up a business, since the franchisor has already worked out all of the details for setting up and running the business.

B

Which statement explains one of the reasons that people in the United States take the entrepreneurial challenge? A. It's all about profits, and the chance to make a lot of money. B. It's about independence and the opportunity to share in the American dream. C. It's about power and fame. D. It's about a lot of things, but it does not include personal achievement.

B

Which statement is the best description of comparative advantage? A. The best way for a nation to ensure full employment is to be completely self-sufficient and not at all reliant on trading with other nations. B. Each nation should produce those goods that it can produce more efficiently and effectively than other nations, and buy the goods it cannot produce as efficiently as the nations that can. C. The nation that has the largest reserves of gold and other highly valued natural resources will enjoy a position of comparative advantage in trade relationships. D. A nation should produce those goods for which domestic demand is comparatively strong, and should import those goods for which domestic demand is comparatively weak.

B

Daniel owns a lawn irrigation system business. When he started the business 10 years ago, he promised to always operate within the legal limits of the law, but lately, the competition is eating him alive. Large competitors hire undocumented workers to perform the manual labor, and they do not pay taxes on these employees—they just pay them in cash at the end of the week. Daniel does not want to hire illegal workers, but employment taxes are decreasing his profits. There is a risk if you permit an illegal worker to drive a truck, or, if they have an accident on the job. You have just studied business ethics in your class. You inform Daniel that A. taxes only need to be paid for the owners. B. he is not only taking a chance that a bigger problem may occur, he is indirectly setting the ethics code for his business. C. small businesses do not need to worry about ethics codes. This concern is better suited for big business. D. it is not unethical to try to provide jobs.

B.

A distinguishing feature of a cooperative is that it A. maintains a distinct separation between ownership and management. B. is only intended to operate for a limited period of time. C. is owned and operated by the people who use it. D. can have no more than 75 owners, all of whom must be citizens of the United States.

C

A firm's carbon footprint is A. the number of employees it hires in a specific community. B. its legacy in terms of how much public good it dispersed over its lifetime. C. the amount of carbon it releases in its effort to do business. D. the measurable level of carbon within its facilities.

C

A market consists of potential buyers of a good or service. However, for a market to exist A. the business requires wholesalers and retailers. B. one firm must dominate in sales and product development. C. people must have unsatisfied wants and needs as well as a willingness and ability to buy. D. the product must be laboratory tested and approved by the Food and Drug Administration (FDA).

C

A nation recently reported that its imports for the previous year were $7 billion greater than its exports. During the same period, the country reported a favorable balance of payments. What might this information indicate? A. The country has misstated information in its report. It must have had a balance of payments deficit since more money flowed out for imports than flowed into the country for its exports. B. The country's gold and other precious metal reserves increased in value. C. Money inflows from tourism, foreign aid, foreign investment, and other sources more than offset the nation's trade deficit. D. This country devalued their currency to obtain a more favorable exchange rate.

C

A small firm specializing in appliances designed for RVs has a manufacturing plant in Ohio, although it ships its products to dealers through out the United States, Canada, and Mexico. This firm participates in the global market through A. importing. B. dumping. C. exporting. D. balancing trade.

C

A very critical last step in the process of establishing an ethics code is A. middle management support. B. training. C. enforcement. D. identification of the organizational ethics officer.

C

After spending several months developing a good relationship with a business client, Arjun's client is now purchasing substantial amounts of products from Arjun's company, resulting in high commissions for him. Noticing his success, a colleague of Arjun's started visiting the same client to try to capture some of this business. Although this colleague considers it "legal and fair game," other sales reps now avoid him because they consider it a violation of A. company-based ethics. B. compliance-based ethics. C. integrity-based ethics. D. whistleblowing-based ethics.

C

Alice and her four siblings are starting their own home design business. One of their primary goals is keeping the loving relationship they currently enjoy, so they are following the Model Business Corporation Act recommendations as they write their partnership agreement. What is an accurate recommendation of the Act? A. The business should be actively operating for an extended period before the partners decide who is responsible for what business functions. B. Family businesses never take on outside partners, so no discussion of this need take place. C. There should be discussion and well-understood ways that the partners will handle disagreements. D. Due to the fact that they are all under 40 years old and expect to work until they are 65, there is no need to decide what will happen to the partnership if one decides to leave the business or retire, or dies.

C

An important principle for firms desiring to export is A. sell to countries with high standards of living. B. keep in mind that American methods are probably always best. C. find a need in the global market and fill it. D. if your product sells well in the United States it will sell well globally.

C

As a sole proprietor, being your own boss means A. reducing your working hours. B. enjoying extensive vacations and benefits, particularly when just beginning the business. C. accepting accountability for the mistakes of the business. D. having limited financial resources to throw into the business.

C

As you consider the factors of production, what did management theorist Peter Drucker believe to be one of the most important contributing factors to increasing our nation's wealth? A. land B. labor C. knowledge D. capital

C

Bethany got a call yesterday from First Bank, the company that issued her credit card, inquiring about an $105.00 charge made in Jamaica. Upon learning that Bethany was at home in Minnesota and had not made this purchase, the bank quickly took steps to cancel the card and issue a new one. Given the circumstances that Bethany's credit card number had an illegal transaction, the best course of action is to A. check her computer's firewall to make sure it is working. B. cancel her account and eliminate credit cards from her life. C. change her passwords and store them in a password manager. D. diversify her spending habits by using one of several credit cards when making purchases.

C

Blake's Bookshop is interested in keeping employees, customers, and the general public aware of the activities and programs it has accomplished within the community this past year. The company might consider performing a A. competitor analysis. B. responsibility review. C. social audit. D. annual report.

C

Bree wants to compare the price of running shoes she saw at a sporting goods store with other retailers that may have the same shoes. She locates the product on three different websites, including Zappos. Bree's quest is an example of how customers are using __________ to solve problems. A. ad comparison B. databases C. information technology D. social networking

C

Businesses like Earth Angel and Bubbly Dynamics described in the "Adapting to Change" box reuse, redistribute, refurbish or recycle products instead of adding them to landfills. This circular economy strategy focuses on using technology to A. improve productivity. B. create empowerment. C. increase sustainability. D. develop customer responsiveness.

C

Charlie's Cookies Corporation purchased the Tasty Treats Cookie Company. Although this was initially an acquisition, the merging of these two businesses was a __________ merger. Charlie's Cookies went on to purchase several baking product companies. Joining forces with some of its suppliers would represent a __________ merger. A. conglomerate; horizontal B. vertical; horizontal C. horizontal; vertical D. conglomerate; conglomerate

C

China is a nation with a vast amount of land and a very large population. Another characteristic of this nation is its people's affinity for saving money. Referring to the five factors of production, if the government of China wanted to make progress in building its business environment by focusing on factors that needed improvement, its best strategy would be to A. increase the supply of labor. B. increase sources for capital. C. increase entrepreneurship. D. encourage neighboring nations to provide land for business development.

C

Considering the potential impact on others prior to making a decision is consistent with __________ behavior. A. legal B. anti-social C. ethical D. self-motivated

C

Enterprise zones are A. government-owned properties that are available for entrepreneurial ventures at a reduced cost. B. similar to incubator facilities but strictly run by city and state governments. C. blighted areas that contain toxic materials making them unsuitable for business operations. D. specific locations across the United States where entrepreneurs can set up shop and receive tax breaks for operating in these areas.

C

Entrepreneurs weigh the differences between the benefits of starting a business and those things that they are likely to forego because they choose to work for themselves. Such things they are likely to pass up on are A. the freedom to make their own decisions. B. local government benefits such as enterprise zone tax credits. C. employer-paid benefits such as paid vacation and health insurance. D. the opportunity to generate greater wealth.

C

Environmental quality is considered to be a public good. This means that A. ultimately it is the public that pays for environmental clean-up. B. businesses have a responsibility to minimize their environmental pollution. C. everyone enjoys a cleaner environment regardless of who pays for it. D. society places a higher value on private goods and services.

C

Foreign investment in U.S. companies continues to be strong. When Belgian-based In-Bev purchased the largest beer company in the United States, Anheuser-Busch, this action constituted a(n) __________ with a negotiated selling price of $52 billion. A. merger B. partnership C. acquisition D. unequivocal buy-in

C

Free trade between nations generally results in A. industrialized nations gaining at the expense of developing nations. B. an increase of jobs in developed nations. C. mutually beneficial exchange relationships. D. higher prices for imported goods.

C

Garry called in a food order to feed his sales team. When he arrived to pick up, it was not what he ordered. The store associate quickly made it right, and offered a substantial discount to make up for the mistake. There was no need to check with the supervisor, and Garry was satisfied with the result. What aspect of good customer service was in place? A. high-quality products B. employee empowerment C. good value D. management supervision

C

Green Earth Foods, a specialty grocery store, is considering a conglomerate merger with a company that makes storage solutions. A likely reason is A. to expand its market share. B. to develop spin-off companies. C. diversification. D. to meet the requirements to convert to a limited liability company.

C

In a small and poor nation, the current prime minister has a desire to improve conditions for her citizens. The prime minister has received recommendations from several of her advisors. Which recommendation is likely to create the most wealth for the country? A. Acquire more land by invading a neighboring country that is even poorer and weaker. B. Use foreign aid from other nations to purchase more tools and machinery. C. Establish a business environment that promotes and rewards entrepreneurship. D. Establish barriers to trade to protect local businesses from foreign competition.

C

In his effort to avoid domestic competition, the owner of Johnson Plumbing Fixtures sets his sights on the vast market of a developing country. Much to his surprise, most of the country's citizens do not yet have indoor plumbing and are accustomed to government-run communal baths. This company's global marketing effort might be hampered by A. legal and regulatory constraints. B. cultural constraints. C. physical and environmental constraints. D. the floating exchange rate.

C

Nathan is in charge of production for a family-owned company that makes and sells kitchen utensils. He has stated that speed of delivery is the most important factor for success in the competitive environment. Given what you know, what would be the best response to Nathan? A. You are right on target, Nathan. Time is money. B. As long as our price is competitive, speedy delivery will win in today's changing marketplace. C. Well Nathan, speed isn't everything. What would exceed our customers' expectations? Some consumers may put more importance on high quality and/or lower prices. D. You couldn't be more wrong. Quality is the name of the game. He who has the best product will win in the competitive environment.

C

Oleg's four employees have been with him since he opened Ready Recruitment Services nearly a decade ago. As he anticipates staffing his new branch office, he decides none of these four long-time employees are ready to manage the office. Faced with this difficult situation, what should Oleg do? A. He should appoint one of the three anyway to show that he appreciates their loyalty and commitment. B. He should run the new branch himself and appoint one of the three to take over the original office. C, He should hire a new qualified employee to manage the office since utilizing his unready employees could be detrimental to the business. D. He should appoint all three to the new branch and let them run it using a team approach.

C

One of the purposes of Export Assistance Centers is to A. help multinational corporations reach agreements with foreign governments. B. provide subsidies to domestic firms hurt by foreign dumping. C. provide trade-finance support for small and medium-sized firms involved in direct exporting. D. encourage domestic firms to enter into joint ventures.

C

One poor country produces nearly 97% of the quinoa consumed around the world, and most of it is sold to wealthy nations. Although there are other areas where the seed will grow, the majority of the quinoa sold is imported from this area. This country has a(n) __________ in the production of quinoa. A. absolute advantage B. comprehensive advantage C. comparative advantage D. tertiary advantage

C

Roman wants to invest some money that he just inherited. His friend Jon wants him to invest in his new food truck business, promising Roman a better return on his investment than a traditional savings account. Roman should keep in mind that to earn a higher return on his money he A. will have to invest overseas. B. should only invest in a long-standing business. C. will probably have to accept a higher level of risk. D. will probably have to engage in illegal activities

C

Sawyer plans to open three Primo Pizza franchises in the greater Phoenix area. He tells you that he plans to negotiate with the franchisor to get rid of the giant chef-hat mascot that sits on the roof of all Primo Pizza restaurants. Sawyer is likely to learn that A. the parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs. B. he is making a smart decision because this is an unnecessary business expense. C. it is nonnegotiable due to company rules. D. his failure rate will not increase or decrease because franchises traditionally have low failure rates.

C

Shortly after graduating college, Alec took his place in his family's company in Miami. Alec's father and uncle started a company that buys bauxite, copper, and other minerals from Chile, and brings them into the United States. Alec's job will be to broker trades with mines in Chile. Alecis a(n) A. exporter. B. quota manager. C. importer. D. domestic trader.

C

Small businesses often have advantages in international markets. Which best describes one those advantages? A. They have greater expertise in managing the paperwork required to sell goods in international markets. B. They have a better understanding of the cultural differences involved. C. They can provide individualized customer service as opposed to impersonal corporate bureaucracies. D. They have the ability to obtain financing through the International Monetary Fund.

C

The U.S. government announced a strict limit on unprocessed tuna imported from Asia. This type of trade restriction is called a(n) A. embargo. B. revenue tariff. C. import quota. D. export cap.

C

The difference between a merger and an acquisition is A. a merger does not combine the assets and liabilities of firms, whereas an acquisition combines assets and liabilities. B. a merger combines the assets of the two firms, but each company continues to assume its own liabilities, whereas an acquisition is a total buyout of one firm by another. C. a merger is the joining of resources of two companies which now become one company, whereas an acquisition is a buyout of one firm by the other. D. a merger is always something smaller tagging onto something larger, like a merging lane onto an interstate, whereas an acquisition is two firms that are relatively the same size agreeing to continue as one, more like two major interstates that come together and travel as one for several miles.

C

The immigrant population (both legal and illegal) is having the most dramatic effect on A. car and truck makers. B. the mining and minerals industry. C. schools, hospitals, and other services industries. D. the ice cream and confection industry.

C

The motivation behind trade protectionism is A. to limit accelerated growth of GDP that would cause inflation to escalate. B. to facilitate the belief that it will keep one's nation disease free. C. to increase the positive economic consequences of one's trade position. D. to reduce tariffs on desirable goods.

C

The only deposits of a rare and sought-after mineral are found in Ukraine. Since no other nation has similar deposits of this mineral, Ukraine has a(n) A. protected advantage. B. diversified benefit. C. absolute advantage. D. relative internal benefit.

C

The reason professionals such as lawyers or doctors would incorporate their business is to A. protect their management decision-making process from competitors. B. comply with the law because insurance companies require that they be corporations. C. protect their other assets with limited liability. D. protect their assets with unlimited liability.

C

The social audit is A. a company report that always includes a net social contribution. B. a government-mandated report required of all firms that have a business license. C. a company evaluation that measures the firm's social contributions inside and outside of the firm. D. a ratio developed to compare a firm's corporate philanthropy to its profits.

C

Titan Industries recently used intentional accounting irregularities to make the company look more profitable than it actually was. This means that Titan Industries A. provided its stockholders profit through a tax loophole. B. acted in an acceptable business manner. C. engaged in illegal behavior. D. executed its responsibility to its owners.

C

Tom and his dad combined their love of baseball with a business venture. They purchased a small cart and began selling memorabilia outside of their hometown stadium. Their first year went well, but the past two years have been quite a struggle. Due to poor economic conditions and the team's horrible record, ticket sales at the stadium are down, which has significantly hurt their sales as well. As a recent business graduate, you explain to them that A. this type of business is always high risk because it is seasonal. B. the business does not fill a sufficient need for most people. C. environmental circumstances are dynamic and tough to control. D. social entrepreneurs are currently getting most of the attention.

C

Tomasz, a prospective franchise owner, is looking to keep his monthly costs as low as possible. The franchisor he is checking out is advertising that royalty payments of 8% of sales could be as high as $300,000 per month. The franchisor is claiming that a franchisee can expect monthly sales to be as high as A. $3,125,000. B. $3,000,000. C. $3,750,000. D. $300,000.

C

U.S. consumers purchasing olives can choose from Spanish, California, or Texas-grown varieties. Imported olives are subject to protective tariffs. What is this most likely to mean for U.S. consumers? A. Domestically grown olives are of higher quality. B. Consumers will be unable to buy Spanish-grown olives. C. Domestically grown olives will cost less. D. Spanish-grown olives will only be available in specialty stores.

C

What best indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers? A. the establishment of the Equal Opportunity Employment Commission B. the decision of Walmart to open stores worldwide C. the decision of Nike to monitor labor conditions in its foreign contract factories D. the creation of the North American Free Trade Zone (NAFTA) between the United States, Canada, and Mexico

C

What is an advantage of utilizing technology in business? A. Technology increases the cost of production. B. Technology reduces the need for a marketing plan. C. Productivity increases. D. Management can distance itself from the demands of stakeholders.

C

When Carrie's Chicken Shack uses in-store recycling and composting, and cleans with nontoxic detergents, it is participating in corporate A. philanthropy. B. social initiatives. C. responsibility. D. policy.

C

When Mandy graduated with a degree in computer science, she started her software company. On her first day of operations, she posted a sign that read, "This company will always operate within the legal limits of the law." Posted where all employees could clearly see it each day, this demonstrated A. her commitment to high ethical standards of behavior. B. her commitment to the Golden Rule. C. her expectation that all employees follow the laws that apply to the business. D. her aversion to immorality.

C

When Mission Plumbing allows its employees paid time off to volunteer for the local food pantry, the company is participating in A. a corporate social initiative. B. corporate policymaking. C. corporate philanthropy. D. corporate responsibility.

C

When investors successfully take a firm private, the company's stock is A. converted into bonds. B. converted into cash. C. no longer sold to investors on the open market. D. combined and controlled by a single stockholder.

C

When studying abroad last year, Bradley found that his U.S. dollars did not stretch as far as he had expected. Each time he exchanged his dollars for euros, he had to give up more dollars in exchange for fewer euros. The exchange rate indicates A. the dollar has gained strength against the euro. B. the euro is weak against the dollar. C. the euro has gained strength against the dollar. D. the demand for dollars is stronger than the demand for euros.

C

Which government policies would be least likely to encourage entrepreneurship? A. passage of laws that enable businesspeople to write enforceable contracts B. establishment of a currency that is tradable in world markets C. establishment of strict regulations specifying exactly how products should be made to ensure safety and affordability D. passage of laws that eliminate corruption in government and business

C

Which statement about demography is most accurate? Demographic studies A. focus on factors that have great political relevance, but little relevance to business firms. B. suggest that the number of single-parent families is declining. C. provide businesses and individuals with insights into business and career opportunities for the future. D. are an important source of information about changes in health patterns.

C

Which statement about partnerships is most accurate? A. A partnership is a corporation with fewer than 100 owners. B. A major advantage of a partnership is that it offers all owners limited liability. C. A major drawback of a partnership is that it is difficult to terminate. D. Partnerships are taxed at the lowest corporate tax rate.

C

Which statement best describes the difference between an intrapreneur and an entrepreneur? A. Intrapreneurs start nonprofit organizations while entrepreneurs start profit-seeking businesses. B. Intrapreneurs are practical while entrepreneurs are creative. C. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business. D. Intrapreneurs limit their efforts to financial investments, while entrepreneurs are involved in the management of all areas of a business.

C

Which statement describes a recurring theme about today's ecological environment? A. Most people agree that there is strong evidence that the temperature of the planet is going down. B. Smart businesses know that green business is currently a trend and they should proceed with caution because most green initiatives are more costly than wars and terrorism. C. There is a strong incentive for businesses to develop products and services that clearly save energy. D. Clearly, the greening issue is an American trend that has not captured the attention of the international business community.

C

While speaking with your sales team, your manager explains, "Anyone caught breaking a sales law will be fired." After reading about business ethics, you quickly identify this remark as a reference to the firm's __________ ethics. A. technology-based B. personal responsibility-based C. compliance-based D. integrity-based

C

Workers in Country A expect managers to forcefully tell employees what to do, how to do it, and when. On the other hand, workers in Country B prefer to take part in workplace decision making. This difference between workers represents a(n) __________ management challenge for firms trading in the global market. A. geo-political B. economic C. sociocultural D. regulatory

C

Zach recently graduated with honors from his college. He has bragged to his friends that his academic performance has prepared him so well for a successful career that he can find a job with ease and forget other training in his future. In evaluating the future of the workplace, Zach is A. exactly right. His past performance should carry him to success. B. completely wrong. Studies show that a college education has little to do with success. C. overconfident. Global competition means that continuous learning will be needed in the future to adapt to rapid changes. D. probably right. Specialized training today is a key to continued success in the future.

C

When we compare the factors of production in wealthy versus poor nations, we find A. poor nations have plenty of land and knowledge, but very little labor. B. poor and wealthy nations (both) have an abundance of knowledge; it is the land that varies, with rich nations always having more. C. wealthy nations have knowledge and entrepreneurial opportunities, while poor nations are often lacking in these areas. D. wealthy nations have land and labor, while poor nations have capital and entrepreneurship.

C.

A company in Mexico recently agreed to trade coal to an American importer in return for American-made cars. This arrangement is an example of A. a joint venture. B. a nontariff trade. C. arbitrage. D. barter.

D

A merger involving a software producer and a clothing manufacturer is an example of a __________ merger. A. vertical B. horizontal C. linear D. conglomerate

D

A small nation is extremely efficient in the mining of tin. However, its climate and terrain make it difficult to produce corn. According to the theory of comparative advantage, this nation should A. produce both tin and corn in order to remain self-sufficient. B. watch the global market to see which product is bringing the highest price. C. import the resources needed to produce corn. D. concentrate its production on tin and buy corn from an efficient producer.

D

Amir is a salesperson for Safe-T-Home Protection Services. He really appreciates the amount of freedom and authority the company gives its salespeople in order to better meet the needs of customers. Amir's experience suggests that Safe-T-Home practices A. centralized management. B. fast response theory. C. enfranchisement. D. empowerment.

D

Andreas owns a roofing business. He enjoys being his own boss, but it comes at a price. Often, his days are filled with organizing the activities of the employees and seeking out new customers. He often misses events with friends and family because of the obligations of running his own business. He also knows that he has unlimited personal liability for any of his firm's debts. Andreas' business is organized as a(n) A. joint venture. B. C corporation. C. S corporation. D. sole proprietorship.

D

Appliance repair firms, tax consultants, law firms, and insurance companies are all business firms that are part of the __________ sector. A. production B. management C. neo-industrial D. service

D

Community Hospital is looking into introducing a flextime program for its employees. A group of workers who would probably benefit from flextime is A. workers who do not have access to computers at home. B. workers who have little self-motivation to work eight-hour days. C. frontline workers who frequently go out to meet with home furnishing designers. D. single-parent families.

D

Compared to the C corporation, the limited liability company is an attractive form of business ownership because A. even though it is a little more expensive to form, it has a longer life than the C corporation. B. a limited liability company permits one owner to own all the stock of the company, whereas a C corporation requires several owners. C. once formed, the limited liability company is a legal form of business ownership worldwide, whereas the C corporation must file for corporate status in each state and country it elects to do business. D. once formed, the limited liability company has fewer requirements, and has the option to avoid double taxation.

D

Contemporary governments promote business development by A. increasing business regulations. B. encouraging government ownership of businesses. C. permitting businesspeople to conduct business without the use of contracts. D. establishing a currency that is tradable in world markets.

D

Corporate values are A. a personal matter to be determined by each employee. B. taught by attending company-sponsored seminars. C. instilled by outside consultants. D. learned by observing the actions of others in the organization.

D

Dave and Isabella own all Bella Corporation's stock. The stock of this corporation is not sold to the general public. Dave and Isabella own a(n) A. limited liability company. B. master limited partnership. C. alien corporation. D. closed corporation.

D

Denmark requires foreign companies that sell butter in Denmark to sell it in cubes, not tubs. This type of requirement is known as a A. protective tariff. B. revenue tariff. C. quota. D. nontariff barrier.

D

Employees at a start-up software company noticed that the owner overlooked certain questionable actions of a few high-billing associates. Other employees, who worked hard but only brought in an average number of new clients each month, were highly scrutinized. After you read this chapter about the ethical behavior of many Americans, which observation applies here? A. This story indicates that moral absolutes are very prevalent today in business settings. B. The owner will continue to operate this way until someone blows the whistle. C. We cannot expect people in the United States to all follow similar ethical patterns because there are too many cultures to deal with. Businesses are no different. D. As is often the case today, some leaders will look at each situation individually when making value judgments.

D

Ethical behavior will typically result in A. mistrust between employees and managers. B. agreements that create benefits only for shareholders. C. negative publicity from the news media. D. improved self-esteem, making us feel good about our decision.

D

In order to make an intelligent investment decision, entrepreneurs should A. limit their options to those business investments that are backed by the U.S. government. B. invest in businesses that have generated a stable rate of profit for at least the past 10 years. C. invest only in business opportunities where it is possible to take an active role in management. D. compare the risks of potential investments to their expected profits and find the right balance between profit and risk.

D

International issues of social responsibility and ethical behavior are A. the result of greed found in capitalist countries. B. found primarily in countries with a low standard of living. C. a concern only of business professors. D. difficult and not as clear-cut as U.S. firms would like them to be.

D

Jack, Jane, and Jarvis want to open a local cafe that serves a unique offering of coffee, weekend entertainment, and a limited menu of desserts. In one of the preliminary meetings, Jarvis presented a list of reasons that small businesses fail. Although many of the ideas on this list were applicable to many types of business, one challenge pertained specifically to the restaurant and bar business. The challenge he referred to was A. underestimating how much time it will take to build a market. B. borrowing money without planning just how and when to pay it back. C. carrying habits of personal extravagance into the business. D. some of the easiest businesses to start have the least growth prospects and greatest failure rates.

D

Japanese automobile producers sold more of their production overseas than they sold in Japan. Their business strategy emphasizes A. importing. B. licensing. C. dumping. D. exporting.

D

Jay sells custom bicycles. He buys bike parts from five different suppliers. Although several government-supported regulations help Jay in his business, regulations that make it easy for his business to enjoy good vendor relationships are A. lower taxes that business-to-business customers pay to each other. B. laws that permit minimal corruption in banking institutions. C. laws that permit small businesses to use the government as an intermediary when doing business with other small businesses. D. laws that support enforceable contracts between firms.

D

Midtown Community College received a government grant to create a business incubator. Once completed, Midtown Community College's facility will offer A. local government agencies assistance in obtaining funds for urban renewal. B. area businesses advice on employee benefits and ways to reduce taxes. C. venture capitalists an opportunity to identify new entrepreneurs. D. new businesses low-cost office space with basic business services.

D

New orders are coming in quickly for Data Boom, and management is confident that new contracts will take them through the next couple of years. The company has started investing again, but not in people. The number of employees is the same as when the company and its competitors faced recent economic downturns. Most likely due to __________, the company is producing more product and services with less people. A. the lack of skilled labor B. new competition C. social changes D. technological advancement

D

NextGen Industries __________ its products in foreign countries, where labor is less expensive and production sites are owned by other companies. This strategy allows NextGen Industries to experiment in new markets without incurring the large start-up costs involved with building its own production facilities. A. contract franchises B. pays governments to market C. globally licenses D. contract manufactures

D

One difference between partnerships and sole proprietorships is that partnerships A. take less effort to form. B. are managed by an elected board of directors. C. have the advantage of limited liability. D. have a greater chance of long-term survival due to the accountability of each partner to the other.

D

Prestige Presents specializes in expensive and unusual gifts for all occasions. It keeps a large file of information on all of its regular customers, including names, addresses, and type of gifts they have ordered in the past, and the size and frequency of their orders. The electronic file which stores this information is a(n) A. spreadsheet. B. MP3 file. C. PERT file. D. database.

D

Raj is a 37-year-old married businessman who runs a dry-cleaning business with three locations. He has many financial obligations: a home, the health care of his family, and his commitment toward saving for his three children's college educations. Raj knows that two of his locations require a large infusion of cash to pay for new and expensive dry-cleaning equipment. Although his wife's job provides the family with health insurance, it also places the family in a higher income tax bracket. Raj would certainly like to minimize his taxes. Which form of business ownership would you suggest for him? A. He should consider a sole proprietorship due to the fact that it pays its own taxes and it has limited liability. B. He should consider a sole proprietorship due to the fact that it has unlimited liability and it will protect the family's personal assets. C. He should consider a corporation because he can avoid the negative aspect of limited liability. Corporations are always taxed at a lower rate than individuals. D. He should consider a limited liability company because he will only be liable for what he has invested in the business. His personal assets will be protected, and he can be taxed like a sole proprietorship.

D

Randall owns a nursery. The trucks, handcarts, and forklift he purchased for the business are called A. natural resources. B. intangible resources. C. knowledge assets. D. capital investments.

D

Several small vineyard owners in the Napa Valley region of California banded together to market their grapes and wine in an attempt to get better prices. Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services. The arrangement established by these vineyard owners is an example of a A. closed corporation. B. joint venture. C. limited agricultural partnership. D. farm cooperative.

D

Stuart Johnson renewed his membership at Bargain Barn. Shortly after renewing the card, Stuart started receiving calls from collection agencies claiming that he owed money. He quickly learned that another Stuart Johnson also owned a Bargain Barn card and missed many payments. Bargain Barn had linked Stuart's personal information with the other Stuart Johnson's personal information. Stuart experienced A. buyer's remorse. B. database fraud. C. purchase tracking. D. identity theft.

D

The U.S. embargo against all trade with Venezuela, Iran, Syria, and North Korea most likely is the result of A. environmental limitations on trade. B. lack of business opportunities. C. currency fluctuations. D. political disagreements.

D

The United States and China continue to spar over sociocultural issues, such as human rights, and economic and financial issues, such as the value of the Chinese yuan against the U.S. dollar. U.S. diplomats assert that these differences continue to bolster China's favorable balance of trade and increase the U.S. trade deficit. The trade protectionist policy exhibited by the Chinese is similar to an economic policy known as __________ that was followed during the seventeenth and eighteenth centuries. This policy resulted in a flow of money to the country that sold the most globally. A. trade embargoing B. countertrading C. profiteering D. mercantilism

D

The benefits of protective tariffs are A. they increase the revenues of the government that has implemented them. B. they decrease the cost of imported products to the consumer (end user). C. they help develop friendlier trade relations with loyal trading partners. Both parties are protected. D. they protect domestic jobs by encouraging cost-sensitive consumers to purchase domestic products.

D

The value of goods imported into Spain exceeds the value of Spanish exports. This indicates that Spain A. has an exchange rate decrease. B. utilizes high tariffs. C. has a budget deficit. D. has a trade deficit.

D

Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of A. negotiated rate adjustments between the U.S. government and the World Trade Organization. B. decisions made by the Federal Reserve Board of Governors in order to implement monetary policy. C. fluctuations in the world price of gold. D. changes in the supply of and/or demand for dollars in the global currency market.

D

War and terrorism in many parts of the world often lead to A. a decrease in warring nations. B. consumers spending more because they feel more patriotic. C. an increase in prosperity and peace throughout the world. D. consumer and economic hardship due to increased military spending.

D

WebSure is an online company that provides support services for businesses that need help in setting up and maintaining their websites. WebSure is an example of a company that is engaged in __________ e-commerce. A. B2C B. C2C C. Y2K D. B2B

D

What is an attractive benefit of a corporation? A. Corporations can enjoy double taxation. B. Corporations can be formed quickly and inexpensively. C. Corporations can protect their owners with unlimited liability. D. Corporations can attract employees by offering stock options.

D

What is the benefit of employing an ethics officer? A. This professional serves as a law enforcement officer, with the authority to arrest employees who do not abide by the ethics code. B. This individual writes the ethics code and keeps this document current. He has sole authority to change the document as he sees fit. C. This professional has the responsibility to make certain that the ethics code remains a private company document; outside stakeholders should be excluded from ethical concerns. D. This individual's job is dedicated to objectively investigating ethics breaches. If necessary, employees feel comfortable with communicating confidentially to this professional.

D

What is the best example of a business whose goal is to earn a profit? A. a community college B. American Red Cross C. League of Women Voters D. Amazon

D

What is the most accurate statement about the impact of business on society? A. When businesses earn a profit for their owners, they usually do so at the expense of the rest of society, which proves it is never a win-win situation. B. While businesses often improve the standard of living within a society, they can do little to improve the quality of life. C. Businesses often improve the quality of life, but can do little to improve the standard of living for most people. D. Businesses can have a positive impact on both the standard of living and the quality of life within a society.

D

What should you keep in mind regarding cover letters? A. Send a generic cover letter ahead of your business plan. If it generates a response, then follow-up with the full plan and a personalized letter. B. Skip the cover letter, as the shortest business plans are far more attractive to investors. C. Include a cover letter which impresses investors with lengthy descriptions and extensive details. D. Include a cover letter which summarizes your project, and address the letter to the potential investor by name.

D

What statement accurately reflects how businesses connect with Generation Z, as described in the "Connecting through Social Media" box? A. Generation Zers do all their shopping online, so brick-and-mortar stores do not need to feature goods or services appealing to them. B. Retailers mostly ignore this group, as Generation Z is not a large enough demographic group to interest most businesses. C. Generation Zers avoid online shopping, so businesses focus on reaching them through traditional advertising and clever in-store displays. D. Businesses must be versatile in engaging Generation Z consumers, for example, by creating tools which can be used on the major social media platforms they are already using.

D

When Loreen was planning a Caribbean cruise, she decides to purchase all her souvenirs in the Bahamas because the exchange rate would be to her benefit. This means A. the currency in the U.S. is weak against the Bahamian dollar. B. the currency in the U.S. will be about equal to the Bahamian currency; otherwise it would not be a good exchange. C. the currency in the U.S. is devalued. D. the currency in the U.S. has strength against the Bahamian currency.

D

When managers disregard the company's ethical concerns, the likely result is A. a reduction in employee turnover. B. an improvement in overall manager morale. C. a reduction in lawsuits. D. a general mistrust between workers and management.

D

Which business policy would most likely help a single-parent family? A. requiring the employee to work regularly scheduled hours each day B. allowing sick leave to be used only if the employee is ill C. requiring education outside of regular business hours to help the employee advance D. allowing family leave and flextime

D

Which statement about factors of production is the most accurate? A. The five factors of production are energy, capital, labor, leadership, and money. B. Wealth creation in poor nations is slowed by chronic shortages of labor. C. Each of the factors of production is equally important in creating wealth. D. Entrepreneurship and knowledge are the most important in creating wealth.

D

Which statement about the competitive environment is most accurate? A. Firms that produce a quality product will always succeed in the competitive marketplace. B. Traditional firms will be unable to successfully compete against the new online firms unless they immediately create a way to reach customers through the Internet. C. Firms that empower their employees will continue to perform poorly in the competitive environment. D. Companies now have to offer both high-quality products and outstanding service at competitive prices.

D

Which statement best summarizes the experience of U.S. franchisors in foreign countries? A. Very few U.S. franchisors of any size have had success in international markets. B. Large franchisors have had success in other nations, but newer and smaller franchisors have lacked the financial strength and reputation to succeed in global markets. C. The only nations in which U.S. franchisors have achieved any success are Great Britain and Mexico. D. Both large and small franchises have found success in foreign countries by providing convenience and a predictable level of service and quality.

D

Which statement is a good prediction of future occurrences in global markets? A. Fortunately, safety issues will become less of a concern as developing nations begin to participate in global trade at a faster pace. B. It is doubtful that service and technical jobs such as accounting, legal representation, or financial management will become part of offshore outsourcing. C. China will continue to be the only viable global trader in Asia for several years to come. D. With the strong growth in technical talent globally, offshore outsourcing should continue to increase.

D

Which statement is the most accurate observation regarding multinational corporations? A. Rather than manage manufacturing and marketing facilities overseas, most multinational corporations attempt to enter global markets by exporting domestically produced goods. B. Most multinational corporations are small- to medium-sized firms. C. Because of political and economic concerns, most multinational corporations choose to ignore investment opportunities outside North America. D. Only those firms with a physical presence in different nations qualify as multinational corporations.

D

World trade has both benefits and costs. Which statement best attests to this fact? A. The U.S. economy and all businesses that participate in this economy were negatively impacted by recent wars. B. The standard of living for citizens in developing nations has significantly decreased due to globalization. C. Economists are convinced that global job creation will never occur if our politicians support world trade. D. Large companies and small companies agree that the green movement is a global issue. Firms are embracing opportunities to bring value to consumers by creating green products and services.

D