Business Test #1 (Chapters 1, 3, 5, 7, 8)

What is the term used to describe a situation when increased demand leads to overly steep and often unwarranted price increases? A) price fixing B) price matching C) price stabilization D) price gouging E) price comparison

D. price gouging

Lucy has organized her craft shop as a sole proprietorship. Her sister has warned Lucy about the legal principle holding her responsible for paying off all of the debts of the business. What is the name of this principle? A) unlimited liability B) limited liability C) privity D) unrestricted debt E) accountability

A. unlimited liability

Which aspect of the management process involves determining what the organization needs to do and how best to get it done? A) organizing B) planning C) controlling D) processing E) monitoring

B. planning

Administrative law consists of: a) all law that affects a business's operation b) statutes enacted by state legislatures c) meeting notes of a local chamber of commerce d) regulations adopted by government agencies

D. regulations adopted by government agencies

When conducting a SWOT analysis of an organization, which question can help management brainstorm for the opportunities section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line?

A) What external changes present interesting possibilities?

Which of these behaviors BEST indicates good organizational citizenship? A) being willing to help new employees B) asking for a pay raise C) meeting job performance standards D) keeping regular hours E) using office supplies for business use

A. being willing to help new employees

What is the point at which the supply curve and the demand curve intersect on a graph? A) equilibrium price B) decision point C) surplus price D) perfect price E) parity point

A. equilibrium price

Which type of manager spends most of their time working with and supervising the employees who report to them? A) first-line managers B) information managers C) top managers D) chief executive officers E) operations managers

A. first-line managers

Which of the following is the MOST significant disadvantage of franchising? A) high start-up costs B) risk of failure C) difficulty in obtaining financing D) lengthy contracts E) high cost of operation

A. high start-up costs

Which of the following factors MOST contributes to small business failure? A) managerial incompetence or inexperience B) bad product design C) legal problems D) time spent raising capital E) personnel issues

A. managerial incompetence or inexperience

Which of these is one of the "big five" personality traits? A) openness B) logic C) creativity D) organization E) musical talent

A. openness

Which would an employee who is productive but refuses to help others or the organization be lacking in? A) organizational citizenship B) workplace aggression C) performance behavior D) personal productivity E) self-esteem

A. organizational citizenship

What does turnover refer to? A) people quitting their jobs B) managers reprimanding staff C) employers cutting down costs D) employees calling in sick E) benefits being improved

A. people quitting their jobs

What is the term for behavior that is related to doing a certain job? A) performance behavior B) interpersonal behavior C) disruptive behavior D) potential behavior E) assertive behavior

A. performance behavior

Which of the following types of businesses is MOST common in the United States? A) sole proprietorships B) general partnerships C) cooperatives D) corporations E) limited partnerships

A. sole proprietorships

In the city of Westminster, Christmas trees are being sold for $25. At this price, buyers are able to satisfy their demand, though some trees remain unsold. What is the term used to describe this market condition? A) surplus B) stoppage C) shortage D) demand deficit E) equilibrium price

A. surplus

Which level of management is responsible for the overall performance and effectiveness of the firm? A) top managers B) first-line managers C) middle managers D) supervisory managers E) human resource managers

A. top managers

Which description identifies the organizing function of the management process? A) guiding and motivating employees to meet organizational objectives B) determining how best to arrange an organization's resources into a coherent structure C) scanning the business environment for threats and opportunities D) monitoring an organization's performance to ensure that it is meeting its goals E) determining what an organization needs to do and how best to get it done

B) determining how best to arrange an organization's resources into a coherent structure

What is emotionality? A) the ability of a person to get along with others B) the degree to which someone tends to be positive or negative C) the number of things a person tries to accomplish at once D) the relative rigidity of an individual's beliefs E) the likelihood that a person will react aggressively

B) the degree to which someone tends to be positive or negative

Common law is a synonym for: a) administrative law b) case law c) statutory law d) all of the above

B. Case law

What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts? A) corporation B) partnership C) cooperative D) conglomerate E) nonprofit

B. Partnership

What does a planned economy rely on a centralized government to do? A) support free enterprise in every way possible B) allocate all or most factors of production C) encourage citizens to buy shares of stock in small companies D) keep its control activities to a minimum E) direct workers to start their own small businesses

B. allocate all of most factors of production

Which type of business is legally considered a separate entity from its owners and is liable for its own debts? A) sole proprietorship B) corporation C) limited partnership D) cooperative E) general partnership

B. corporation

American Business Machines is organized as a corporation. Its income will be taxed at the corporate level and also on shareholder returns as dividends. What is this situation known as? A) dual costs B) double taxation C) regulatory costs D) double ownership E) financial balancing

B. double taxation

What term denotes a nation's basis for allocating its resources among its citizens? A) capital structure B) economic system C) ownership processes D) distribution network E) national regulations

B. economic system

What identifies performance targets used by organizations and their managers to measure success or failure at every level? A) tactics B) goals C) strategies D) mission statements E) promotions

B. goals

Which business constituents analyze their competitive environments and plan, organize, direct, and control the operations of their organizations? A) stockholders B) managers C) regulators D) agents E) customers

B. managers

Which type of manager is responsible for implementing the strategies, policies, and decisions made by top managers? A) first-line manager B) middle manager C) supervisory manager D) office manager E) financial managers

B. middle manager

When conducting a SWOT analysis of an organization, which question can help management brainstorm for the weaknesses section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line?

C) What necessary skills do the organization's employees currently lack?

Which of the following would not be considered personal property: a) a copyright b) a diamond ring c) farm land d) all of the above are personal property

C. Farm land

Which economic system emphasizes the private ownership of most factors of production? A) socialism B) communism C) capitalism D) Marxism E) federalism

C. capitalism

Behaviors that detract from, instead of contribute to, organizational performance are known as what? A) inclusive B) negative reinforcement C) counterproductive D) turnover E) associative

C. counterproductive

What are specific locations of Ramada, McDonald's, and Subway examples of? A) government entities B) university sponsored businesses C) franchises D) networking businesses E) cooperatives

C. franchises

Jordan is a recent college graduate with a degree in computer programming. He has just begun his first full-time job and is excited to apply the skills that he worked so hard to acquire. Though he excelled as a student, Jordan is anxious about how successful he will be as an employee. When an opportunity unexpectedly presents itself to take credit for a brilliant software program that someone else wrote, Jordan does not resist and claims the program as his own. Which of the following statements must be true about Jordan's decision? A) It was made with careful thought. B) It does not reveal anything about his beliefs or character. C) It raises questions about his personal ethics. D) It will strengthen his professional skills. E) It will not benefit him professionally

C. it raises questions about his personal ethics

Starbucks has established itself as the premier marketer of the finest coffee in the world while maintaining its uncompromising principles and continuing to grow. This statement illustrates what aspect of Starbucks' organization? A) its strategy B) its tactic C) its mission D) its diversity E) its profitability

C. its mission

Shirley is opening a flower shop and has decided to operate as a sole proprietorship. Which of the following is NOT an advantage Shirley will have in operating her business? A) freedom B) simplicity of operation C) limited liability D) low start-up costs E) choice of location

C. limited liability

Which of the following exists when an industry or market has only one producer? A) competition B) oligopoly C) monopoly D) communism E) socialism

C. monopoly

Kent and Patrick have decided to start a landscaping business. One of the first things that they do is sign a document that describes the investments and responsibilities of the partners and makes provisions for the allocation of profits and dissolution of the business. What is the name of this document? A) articles of incorporation B) partnership charter C) partnership agreement D) corporate charter E) financial proposal

C. partnership agreement

What is the MOST important source of money for new business start-ups? A) banks B) the SBA C) personal resources D) government grants E) venture capital

C. personal resources

. Increasing sales by 4 percent in the next eight months is an example of what kind of goal? A) tactical B) strategic C) short-term D) intermediate E) long-term

C. short-term

Who are the owners of a corporation? A) board of directors B) financial officers C) stockholders D) top managers E) entrepreneurs

C. stockholders

What are shares in a business that the business sells called? A) bonds B) profits C) stocks D) dividends E) loans

C. stocks

Which administrative agency sets standards for radio communications: a) the Consumer Product Safety Commission b) the Internal Revenue Service c) the Federal Communications Commission d)the Radio Broadcast Bureau

C. the Federal Communications Commission

What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal? A) the going rate B) the margin rate C) the market price D) the optimum price E) the cost price

C. the market price

Three friends want to start a warehousing and distribution business in a major city. They know that they each want to be co-owners of the new business, with a stake in its profits. The new business will therefore be a corporation, but they need to determine which kind of corporation it should be so that it will best fit their interests in the business. Which of the following, if true about the owners' plan for the new business, would strengthen the case that it should be registered as an S corporation? A) They want their shareholders to be personally liable for the corporation's debts. B) They want to have an unlimited number of shareholders. C) They do not want the company to have to pay a corporate income tax. D) They do not want to have to meet any start-up requirements. E) They don't want to have a board of directors.

C. they do not want the company to have to pay a corporate income tax

Which level of management sets general policies, formulates strategies, approves all significant decisions, and represents the company in dealings with other firms and with government bodies? A) operations managers B) production managers C) top managers D) middle managers E) first-line managers

C. top managers

Which of the following legal forms of business is owned and usually operated by a person who is responsible for its debts? A) cartel B) corporation C) general partnership D) sole proprietorship E) limited partnership

D. sole proprietorship

What is meant by the term capital?

Capital is the financial resources needed to start a business

Which administrative agency would have the authority to adopt regulations to govern the manufacture and sale of toxic chemicals: a) the Consumer Product Safety Commission b) the Equal Employment Opportunity Commission c) the Securities and Exchange Commission d)the Environmental Protection Agency

D. the Environmental Protection Agency

What is a major drawback of sole proprietorships? A) short-term focus of shareholders B) work flexibility C) low start-up costs D) unlimited liability E) structured hours

D. unlimited liability

. Which of the following is one of the elements required in private enterprise? A) adequate representation in the government B) freedom from foreign competition C) the opportunity for market leadership D) the right to ownership of property E) numerous regulatory agencies

D. the right to ownership of property

Three friends want to start a warehousing and distribution business in a major city. They know that they each want to be co-owners of the new business, with a stake in its profits. The new business will therefore be a corporation, but they need to determine which kind of corporation it should be so that it will best fit their interests in the business. Which of the following, if true about the owners' plan for the new business, would strengthen the case that it should be registered as a limited liability corporation (LLC)? A) They want the company to be able to issue stock and offer stock benefits to employees. B) They want to form the company quickly and inexpensively. C) They don't want owners to have to pay personal taxes on company profits. D) They want the company's profits to be distributed however they choose. E) They want to operate consistently in multiple states

D. they want the company's profits to be distributed however they choose

When conducting a SWOT analysis of an organization, which question can help management brainstorm for the strengths section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line?

D) What does the organization offer that makes it stand out from other organizations?

Which of the following BEST describes a mission? A) an objective that a business hopes and plans to achieve B) a broad set of organizational plans for implementing decisions made for achieving organizational goals C) the shared experiences, stories, beliefs, and norms that characterize an organization D) an organization's statement of how it will achieve its purpose in the environment in which it conducts business E) an organization's competitive standing in the marketplace

D) an organization's statement of how it will achieve its purpose in the environment in which it conducts business

Which description defines the planning function of the management process? A) guiding and motivating employees to meet organizational objectives B) discussing how best to arrange an organization's resources into a coherent structure C) scanning the business environment for threats and opportunities D) determining what an organization needs to do and how best to get it done E) monitoring a firm's performance to make sure that it is meeting its goals

D) determining what an organization needs to do and how best to get it done

Which description identifies the controlling function of the management process? A) guiding and motivating employees to meet organizational objectives B) determining how to arrange a firm's resources into a coherent structure C) scanning the business environment for threats and opportunities D) monitoring a firm's performance to ensure that it is meeting its goals E) determining what an organization needs to do and how best to get it done

D) monitoring a firm's performance to ensure that it is meeting its goals

Compensatory damages may be available to compensate for: a) hospital and medical expenses b) pain and suffering c) lost wages d)all of the above

D. All of the above

Sources of law include: a) a regulation issed by the EPA b) the United States Constitution c) a statute passed by the U.S. Congress and signed by the President d) All of the above

D. All of the above

Which of the following is a form of intellectual property: a) trademarks b) copyrights c) patents d) all of the above

D. All of the above

A tort is an example of: a) a statute b) criminal law c) contract law d)civil law

D. Civil law

. If PepsiCo sets out to increase its share of the snack food market by 10 percent during the next eight years, what kind of goal is the organization setting? A) a short-term goal B) an intermediate goal C) a tactical goal D) a long-term goal E) an organizational goal

D. a long-term goal

Administrative agencies include the following: a) the Environmental Protection Agency (EPA) b) the Food and Drug Administration (FDA) c) the Securities and Exchange Commission (SEC) d) all of the above

D. all of the above

When the finance department aims for a 3 percent increase in return on investment in three years, what type of goal is the organization setting? A) a long-term goal B) a tactical goal C) a short-term goal D) an intermediate goal E) an organizational goal

D. an intermediate goal

What is the name of the document in which an entrepreneur summarizes his or her business strategy for a proposed new venture? A) success chart B) director's guideline C) financial blueprint D) business plan E) balance sheet

D. business plan

Which of the following should be the first step in assessing ethical behavior in a certain situation? A) Seek the advice of managers. B) Make a judgment based on the outcome of the activity. C) Consider appropriate moral values. D) Collect facts related to the situation. E) Gather a range of opinions on the effectiveness of the policy.

D. collect facts related to the situation

When conducting a SWOT analysis of an organization, which question can help management brainstorm for the threats section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line?

E) What external economic forces can affect the organization's bottom line?

What are profits? A) total money taken in by a corporation B) increases in income from year to year C) increases in a corporation's stock price D) revenue generated by goods and services. E) difference between revenues and expenses

E. difference between revenues and expenses

Shawna, a manager at AB Distributor, suggests that if the company's revenue had not increased, it would not have been able to increase its profits. Which of the following points out a flaw in Shawna's reasoning? A) Other similar companies have increased their profits, too. B) Revenue is not always relevant to figuring profitability. C) Profitability is not the only objective of the company. D) The company can increase revenue only by cutting costs. E) It is possible to increase profits by lowering costs.

E. it is possible to increase profits by lowering costs

True/False. An S corporation has stock that is widely held and available for sale to the general public.

False

True/False. Business ethics refers to ethical or unethical behaviors by employees in the context of their personal lives.

False

True/False. Corporations enjoy significant tax benefits when compared to sole proprietorships or partnerships.

False

True/False. Loans are the most important sources of money for new businesses.

False

True/False. The Small Business Administration is the government agency charged with owning small businesses.

False

True/False. The United States government manages the collection and spending of its revenues through monetary policy.

False

True/False. The board of directors of a corporation reports to the officers of the corporation

False

True/False. There is general consensus within the United States that social responsibility must take precedence over profits.

False

True/False: Compensatory damages are used to punish and deter the responsible party

False

True/False: The civil law is concerned with the prosecution by the state of persons accused of committing criminal acts

False

True/False: The criminal law is concerned with disputes between private parties

False

True/False: The rules enacted by a state legislature are called regulations

False

True/False According to expectancy theory, people are motivated to work toward rewards that they want and that they believe they have a reasonable chance of obtaining.

True

True/False. By law, each general partner is liable for all debts incurred in the name of the partnership.

True

True/False. Ethics are beliefs about what is right and wrong.

True

True/False. Goal setting helps managers assess performance.

True

True/False. Lending institutions are more likely to help finance the purchase of an existing business rather than the start-up of a business from scratch

True

True/False. Long-term goals are derived directly from a firm's mission statement.

True

True/False. Low start-up costs and tax benefits are advantages of sole proprietorships.

True

True/False. Performance behaviors contribute directly to company productivity

True

True/False. Stabilization policy is made up of both monetary and fiscal policy

True

True/False. Tax increases and decreases are a form of fiscal policy.

True

True/False. The Internal Revenue Service taxes partners as individuals

True

True/False. The government can influence the availability of capital by working through the Federal Reserve System.

True

True/False. The pursuit of profits is how a business differs from organizations such as most universities, hospitals, and government agencies.

True

True/False. The starting point in effective management is setting goals.

True

True/False: Contract law involves the law of enforceable promises

True

True/False: Law is a written rule of conduct that is created and enforced by the government

True

True/False: Real property (real estate) includes land and everything permanently attached to it

True

True/False: The U.S. Constitution is the supreme law of the United States

True

True/False: The basis of liability for negligence is the failure to exercise due care for the safety of other persons or their property

True

True/False: Under the doctrine of strict liability, a manufacturer may be liable if the product is considered defective, even if the manufacturer used due care

True