Ch 3 econ quizzes/exam questions

Which of the following is the final step in the decision-making process?

Reviewing and assessing

The aim of economic theory is:

To examine the supply and demand of goods and services

What is the most recommended way for business people to make decisions?

A mix of both rational and intuitive

Mark met with four physicians about having surgery on his foot. He has enough money saved to undergo surgery and is able to take off six weeks of paid leave from work. He has an additional two weeks of vacation time, and his mom will stay with him for the first two weeks to help out. Knowing this information, that he is being rational, and that he wants to be free of pain, which alternative should Mark choose?

A total foot reconstruction that has a 90% success rate, requiring 4-6 weeks of downtime, and costing $20,000 out of pocket

Determining the feasibility, while assessing the costs and benefits comes into play during which phase of the decision-making process?

Analyzing and weighing alternatives

In a college class of 100 students, the professor asks the students if they would prefer a candy bar or ball-point pen as part of an experiment. 50 students indicate a preference for candy bars. The other 50 students prefer a ball-point pen. He gives out 50 ball-point pens and 50 candy bars randomly to the students. Because the process is random some students receive their preferred item while others do not. According to the theory of rational choice, if students were given the option of trading what would we expect to see in terms of student trading candy bars and ball-point pens?

Because there is enough of the candy bars and ball-point pens to meet the exact preferences of every student, we would expect those students who didn't receive their preferred item to trade with each other. In the end everyone would receive their preferred item.

What type of entrepreneur may be involved with skunk works?

Corporate venturer

If Mark is considering having an experimental surgery on his foot to alleviate the pain he has while walking, which of the following is NOT part of the relevant information that he should collect in order to make an informed decision?

Does his best friend think he should go ahead with the surgery?

Read the scenario and identify which decision-making strategy was MOST likely utilized: A project manager must decide by the end of the day which colleague to move to an important project with a looming deadline. One candidate is still in training, but has proven to be a quick study who brings fresh ideas to the project. The second candidate has worked at the company for ten years and is a dedicated and knowledgeable employee. The project manager chooses the new hire for the project.

Intuition

John and Mark have opened a law firm through a general partnership agreement. They have been solid friends since law school. However, if times get tough and Mark runs out on the practice, is John protected by the partnership arrangement against the partnership debts?

No, since partners typically have joint and several liability, John can be held responsible for 100% of the partnership debts.

Read the scenario and identify which decision-making strategy was MOST likely utilized: A supervisor overhears some members of his team complaining about workplace issues. He decides to take a survey of his employees' attitudes about the workplace. Next, he analyzes the results, discusses the data with his assistant supervisor, and then begins the process to implement changes to some workplace policies.

Rational

What type of decision making uses analytics, facts and a step-by-step process to come to a solution?

Rational

From observing people's behavior, economists believe the best theory for why individuals make the economic decisions they do is that they make choices that are in their best self-interest. This theory is known as:

Rational choice theory

The theory that people make economic choices based on their own self-interest is called what?

Rational choice theory

What's the best explanation of entrepreneurship?

The ability and willingness to take a risk to develop a business

Which of the following BEST describes the importance behind the rational choice theory?

Understanding why people decide to make choices on how to spend their resources is an important building block for more complex economic theory.

Some business organizations are created as 'flow-through entities.' Others can elect for this type of arrangement. Which of the following best describes a 'flow-through entity'?

a business organization where the profits and losses flow through the business to its owners where it is taxed.

Which of the following factors of production is most relevant to entrepreneurship?

all of the answers are correct

An individual who utilizes a cognitive process to select a choice among several available options is engaging in a _____ process.

decision-making

Another phrase for intuition is _____.

gut instinct

Which business entity affords its owner(s) the limited liability benefits of a corporation and the flexibility of a general partnership?

limited liability company

Doug has found an attractive piece of land in a popular suburb north of Pittsburgh. He envisions developing the property into an area with many eateries and boutique shops surrounded by upscale townhomes, but he does not have the money to invest like his friend, James. Doug and James decide to form a _____, which will allow James to contribute his capital, receive a share of the profits, but limit his liability. Doug will manage the day-to-day operations.

limited partnership

What type of entrepreneur is required to invest all profits back into the enterprise?

non profit entrepreneur

Which type of entrepreneur is focused on getting a new business off the ground and then moving on to start a new one?

serial

Which of the following is NOT a major factor when an entrepreneur is choosing the type of business organization to form?

the state where the business is located