Intro to Business- Exam One ( Set One )
Aaron Medford has invested $600 in the corporate stock of a manufacturer of offshore oil drilling equipment. If the company goes bankrupt, the most Medford could lose would be:
$600
Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?
A conglomerate merger is done to reduce risk.
What is the primary difference between a good and a service?
A good is tangible, and a service is intangible.
What are the benefits associated with free trade and globalization?
An open economy that spurs innovation
Of all forms of business ownership, corporations account for the largest share of both:
sales and profits
Before selling stock to the public, a corporation must register with the:
securities and exchange commission (SEC)
The first step to incorporating a company is to:
select the company's name
Wal-Mart ran a series of ads in trade journals with the following headline: "We're Looking for Quality Products That Are Guaranteed Not to Last." What Wal-Mart was in fact doing was asking its suppliers to develop more environmentally friendly products and to use material that could be recycled. This concern about the environment is one way that Wal-Mart practices:
social responsibility
The form of business ownership that is easiest to dissolve is the:
sole proprietorship
The most common form of business organization is the:
sole proprietorship
Tonya Thomas is tired of working for other people. She wants to start her own administrative services businesses and control her own work schedule. She wants to have sole responsibility for all business decisions. Thomas should form a(n):
sole proprietorship
For Lladro Comercial, S.A., the manufacturer of handcrafted porcelains, its employees, suppliers of the paints used to decorate its porcelains, retailers of its products, and people who benefit from its philanthropy are all:
stakeholders
_____ are all the individuals or groups to whom a business has a responsibility.
stakeholders
The Home Depot supplies all the materials and the labor expertise for Habitat Homes in various regions of the country where the retail giant has a store. Its top management believes that this type of philanthropy better reflects the company's commitment to the community than simple donations to the American Cancer Society and similar national charities. The Home Depot is using the practice of:
strategic giving
The quantity of a product or service that businesses will make available at various prices is called:
supply
China imposes a 45 percent tax on the market value of all chickens that are imported from the U.S. into China. Another name for this type of tax is a(n):
tariff
Fiscal policy is concerned with:
taxation and spending
The most fundamental reason for the growth in world trade is probably due to:
the need for businesses to expand their markets
Why do most large companies have outside directors on their boards?
to bring a fresh view to all of the corporation's activities
A country that imports more goods than it exports is said to have a(n):
unfavorable balance of trade
Multinational oil companies such as ExxonMobil, Royal Dutch Shell, or BP are active all the way along the supply chain from locating crude oil deposits, drilling and extracting crude, transporting it around the world, refining it into petrochemicals such as gasoline, to distributing the fuel to company-owned retail stations, where it is sold to consumers. To gain this complete control of the various resources needed to product oil and gas, the companies had to have engaged in _____ mergers.
vertical
The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a(n) _____ merger.
vertical
Rebecca Siddoway own and operate Country Candies. Siddoway specializes in making rich, creamy toffees that she packages in attractive gift boxes and sells through the mail. What would be the advantage to Siddoway if she decides to incorporate her business?
Corporations have an enhanced ability to attract financing.
_____ combine the inputs in the production of goods and services for what are intended to be profitable ventures.
Entrepreneurs
The most basic measure of economic growth is the:
Gross Domestic Product
Why do many people fear trade and globalization?
Many fear trade and globalization will lead to massive job losses.
_____ refers to a government's programs for controlling the amount of money in circulation.
Monetary policy
_____ move resources, goods, services, and skills across national boundaries without regard to the country in which they are headquartered.
Multinational corporations
Which of the following statements about human rights is true?
None of the above
Which of the following statements about the taxation of partnerships is true?
Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns.
How does the current boom in mergers and acquisitions differ from ones in earlier years?
There is a greater number of U.S. and foreign companies making cross-border acquisitions.
In perfect competition, there is:
a large number of sellers producing nearly identical products
Articles of incorporation do NOT include:
a list of all stockholders' names
Which of the following is an example of a demographic factor?
a person's age
IBM purchased MRO Software Inc. for $740 million. MRO was a niche provider of software and services to help customers including nuclear power plants and oil companies. IBM, plans to fold MRO into its software unit. This is an example of a(n):
acquisition
Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. The mushrooms are expensive, and there were other unexpected financial problems, so Nyami and Rice asked Bill Ng to become a limited partner. This means that Ng:
agrees not to participate in day-to-day management of the firm
Which of the following is an example of a business?
all of the above
Which of the following is an example of an unethical business activity?
all of the above
Which of the following statements about limited liability companies (LLCs) is true?
all of the above LLCs are legal in all states in the U.S. LLCs are like S corporations in that they appeal to small businesses. LLCs are not corporations. LLCs offer their owners the option of being taxed as either a partnership or a corporation.
A corporation:
all of the above: is a taxable entity is subject to the laws of the state in which it was formed can sue and be sued can own property
Since the balance of payments is the summary of a country's financial transactions with another country, a discussion of a nation's balance of payments will need to include a discussion of:
all of the above: its long-term overseas business investments its imports and exports its government loans its gifts and foreign aid
Restricted operating freedom in franchising means that the franchisee must conform to:
all of the above; operating rules facilities design a specific, defined territory franchise product standards
Members of millennial generation:
are not accurately described by any of these
Jayson Tully is contemplating the purchase of a Popeye's Chicken franchise. Tully has made a list of the disadvantages that he assumes he will face as a new business owner. Which of the following is actually an advantage?
assistance in building plans
Clarence Danvers is buying a Cinnabon franchise at the airport in Tulsa. Danvers knows that he will get all of the following benefits EXCEPT:
assistance in personal income tax preparation
The _____ is the total amount of money that flows in and out of a country.
balance of payment
Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:
business dies with her
A German law that prohibited the use of hops grown outside of the country in the production of German-made beer was overturned in the late 1980s. This law was an example of a(n):
buy-national regulation
Corporate philanthropy:
can be either a cash or a noncash donation
Individual ownership of property is a key element in:
capitalism
Canada is currently the second largest producer of nickel in the world. The reopening of the world famous Voisey's Bay mine, which has total resources estimated at 124 million tons of nickel-bearing ore, should give Canada a clear:
comparative advantage
Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers. When it comes to flowers, Venezuela has a(n):
comparative advantage
The Sara Lee Company sells the Hanes brand of hosiery in the United States. The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly. The Sara Lee Company is using _____ to broaden its global marketing base without investing in overseas plants and equipment.
contract manufacturing
_____ are organizations formed by individuals or businesses with similar interests to achieve greater economies of scale and economic power through collective ownership.
cooperatives
Bribery translates to kuroi kiri (black mist) in Japan, schmiergeld (grease money), and baksheesh (tip or gratuity) in the Middle East. This differing way of looking at bribes is descriptive of differences in:
culture
Laws relating to the alcoholic content of beer have required many imported brands of beer to be labeled malt liquor when it is sold in the United States. In addition, all beer sold in the U.S. must contain an expiration date or a "best-buy" date. These laws have made it difficult for small foreign breweries to enter the U.S. market. These laws are an example of:
customs regulations
When the economy is in a recession, many companies must lay off workers, which causes _____ unemployment.
cyclical
_____ is the quantity of a good or service that people are willing to buy at various prices.
demand
_____ inflation is inflation that occurs when the demand for goods and services is greater than the supply.
demand-pull
Which of the following is a disadvantage of sole proprietor ownership?
difficulty raising capital
Double taxation in a corporation means:
earnings of the corporation and dividends of the shareholders both are taxed
A retailer that allowed its employees to handle a customer complaint without having to ask for permission or direction from management would have:
empowered its employees to help customers
Summer Dean was walking through the mall and found a gym bag lying on the ground. The decision Dean must make as to whether to keep the gym bag and its contents for herself or turn it into the mall's lost and found department involves:
ethics
_____ are laws that require a company earning foreign currency from its exports to sell the foreign currency to a control agency, usually a central bank.
exchange controls
When Ted Giovanni was preparing for his trip to Brazil, he found that he could go to his bank and trade his 10 U.S. dollars for 37.11 Brazilian real (the nation's currency). In this instance, the _____ was one U.S. dollar to 3.711 Brazilian real.
exchange rate
Botswana produces diamonds, copper, nickel, soda ash, meat, and textiles, which it sells to the members of the European Union. To Botswana, the diamonds, copper, nickel, soda ash, meat, and textiles it produces are examples of:
export
The Northwest Cherry Growers (headquartered in the state of Washington) sells much of its locally grown produce to Taiwan. _____ was the easiest and least expensive way for the growers' association to sell to global markets.
exporting
_____ are goods and services that are made in one country and sold to other countries.
exports
A(n)_____ occurs if a country's total expenditures are higher than the revenues received from the taxes it gathers.
federal budget deficit
When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As a sole proprietor, McAnem:
found the business to be easy and inexpensive to form
The headquarters, seller, and supplier of the service or method of operation of a franchise is called the:
franchisor
A policy of permitting the people of a country to buy and sell where they please, without restrictions, is called:
free trade
Jarvis Washington recently quit his job as a veterinarian's assistant and is now trying to find a job with another veterinarian. This is an example of _____ unemployment.
frictional
Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. Nyami and Rice have recently abandoned their business because they could not pay its outstanding business debts. Since Nyami and Rice are both liable for the debts, their business was a(n):
general partnership
The growing popularity of bread machines has become a new business opportunity for Shelly Clemins and Jan Schoenbarr. The women make and sell bread machine covers and fabric gift bags to hold the bread loaves made in the machines. The women share the responsibilities of running the business (called Bread & Butter) as well as its profits equally. Bread & Butter would be an example of a(n):
general partnership
The World Trade Organization (WTO):
has emerged as the world's most powerful institution for reducing trade barriers and opening markets
Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses. As the sole proprietor of the business, he has unlimited liability, which means:
he is fully liable for all business debts
The franchisor generally does NOT provide the franchisee with:
help in employee selection
There are over 1,100 Corner Stores that market candy. When Valero Energy Corp. purchased the chain of retail stores, it was an example of a _____ merger
horizontal
The United States buys copper from Chile's Escondido copper mine. The copper is used to make wiring for the U.S. telecommunications industry and for many other purposes. For the U.S., the copper is an example of a(n):
import
_____ are limitations on the quantity of certain types of goods that can be imported over a period of time.
import quotas
The Blue Bird Bus Company in Georgia sells buses to the South African government. To South Africa, these buses are an example of:
imports
When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As the business grew, she realized that she did not want to be personally liable for the business's debts and wanted her business accounts to be separate from her personal accounts. Therefore, she should have:
incorporated Stirya
Imagine you are trying to gather the information needed to calculate the balance of payments for an Eastern European country. To do your calculations, you would need to have information on all of the following EXCEPT:
its corporate tax rates
A _____ is when two or more companies form a special entity to undertake a specific project, usually for a specific period of time.
joint venture
Capital Radio PLC, the United Kingdom's biggest commercial radio firm announced in 2002 that it would cooperate with Walt Disney Co. to create a radio network for children under the age of 16. The company will broadcast to a potential audience of 25 million under the name Capital Disney. This new radio network will be created as the result of:
joint venture
Hard Rock Cafe International and Sol Melia Hotels and Resorts have allied to develop a multimillion-dollar hotel. This relationship is a _____ because their alliance will end as soon as the hotel is completed.
joint venture
Another factor influencing business ethics is _____, or what is fair according to prevailing standards of society.
justice
_____ are corporate takeovers financed by large amounts of borrowed money.
leveraged buyout
Fred Pittman has invested $10,000 in his son's motorcycle repair shop, but he takes no part in its management. Pittman is a(n):
limited partner
The combination of two companies that join to form one company is called a:
merger
A market in which there are a large number of firms that differentiate their products is called:
monopolistic competition
The Ford Motor Company has investing $6 billion to build a "world car," the midsize Mondeo. The car was designed in the U.S., Germany, and the United Kingdom to be adaptable to any market in the world. Ford is a(n) _____ company.
multinational corporation
Ease of formation, flexibility, and diversity of management are advantages of the _____ form of business ownership.
partnership
Japan bans importation of rice to protect its domestic rice industry. This ban is an example of:
protectionism
A decline in real GDP that lasts for two consecutive quarters is called a(n):
recession
A company that has a global vision:
recognizes and reacts to international business opportunities
The Healing Garden is the manufacturer and marketer of organic beauty aids. Its annual $40,000 donation to The Nature Conservancy in support of the nonprofit organization's pledge to preserve the environment is an example of:
corporate philanthropy
_____ is the practice of charitable giving by corporations; includes contributing cash, donating equipment and products, and supporting the volunteers' efforts of company employees.
corporate philanthropy
Codes of ethics:
Social responsibility B. Business ethics C. Consumerism D. The marketing concept tE. Business morality
The unemployment rate is the percentage of the total work force that is not working but is:
actively looking for work
The government does not consider full employment to mean 100 percent of its citizens are employed because:
all of the above conditions can and do exist RATIONALE: The unemployment rate is the percentage of the total labor force that is actually looking for work but is not actually working.
The average price of construction materials increased by 8.1 percent in 2005. The head of the Home Builders Association said it was due totally to increases in lumber, metal, and labor costs. The 8.1 percent increase is probably an example of:
inflation
In a(n) _____, a few sellers can exert substantial control over prices.
oligopoly
Which of the following is an example of a natural trade barrier?
distance
In the chocolate market, Green & Black is acting at the _____ responsibilities level of the pyramid of corporate social responsibility when it makes a profit, does so by abiding by the laws, and helps cocoa farmers by agreeing to pay above-market prices for cocoa.
ethical
_____ is the set of moral standards for judging whether something is right or wrong.
ethics
When the Federal Reserve implements a(n) ______, it increases the growth of the money supply
expansionary policy
The implementation of an expansionary policy by the Federal Reserve would result in:
lower interest rates
Which of the following is the BEST example of a not-for-profit business?
the American Cancer Society
Which of the following statements about social responsibility is true?
The obligation that a business has to act socially responsible extends beyond the investors in the company to include workers, suppliers, consumers, and communities.
An enterprise in which two or more firms or investors (including governments) share ownership of a business and its property rights is called a(n):
joint venture
_____ is the amount of money remaining from a firm's sales revenue after it deducts production costs, interest costs, and taxes.
profit
Strategic giving:
refers to the practice of tying philanthropy closely to the corporation's mission or goals
Kraft Foods Inc. joined with the National Latino Children's Institute to announce Salsa, Sabor y Salud - a first-of-its-kind healthy lifestyles educational program designed by Latinos for Latinos. The program was created by NLCI in partnership with Kraft to support Hispanic families, a population particularly at risk for obesity and accompanying health problems. Kraft donated $2 million to the program's startup. This donation is an example of:
strategic giving
Seeds of Change manufactures and markets certified organic entrees. Its mission reads, "At Seeds of Change, we're committed to making delicious foods that are healthy for you as well as the planet." In support of this mission, the company donates money to support environmental protection activities. In other words, Seeds of Change engages in:
strategic giving
_____ is the practice of tying philanthropy closely to the corporate mission or goals and targeting donations to regions where a company operates.
strategic giving
Which of the following is the best example of a service?
the pleasure you derive from seeing a good play
Market equilibrium is:
the point at which quantity supplied equals quantity demanded
One of the keys to ethical business behavior is:
how the company's top management conducts themselves
A group of investors in a retirement fund removed their money from the fund when they learned the fund manager had invested in a gambling casino. The investors' religious beliefs lead them to believe in the fundamental evil of all forms of gambling. These investors were engaging in:
social investing
In a _____, the factors of production are owned collectively rather than individually, and no incentives to work harder or to produce quality products are provided.
communist economic system
When the Federal Reserve implements a _____, it tightens the money supply by selling government securities or raising interest rates.
contractionary policy
Alonzo Dwork will not buy stock in a company that sells bottled water because more than 1.5 million barrels of oil are used annually to make the plastic bottles used for water, and nearly 90 percent of these bottles are disposed of after one use. Dwork is a strong believer in environmental protectionism, and this _____ is his way of expressing that belief.
social investing
The situation in which the average of all prices of products is rising is called:
inflation
social investing
is the practice of limiting investments to companies that have ethical policies that match those of the investor
_____ refers to sending work functions to another country resulting in domestic workers losing their jobs.
outsourcing
Which of the following statements about the interaction of demand and supply is true?
At prices below equilibrium, demand exceeds supply.
The highest level of the corporate social responsibility pyramid is:
philanthropic responsibilities
Which of the following is an example of an ethical business activity?
The employee reported to his supervisors that a co-worker had misappropriated company funds.
Which of the following statements about ethics training is true?
all of the above: Ethical training does not have to be boring. The most effective ethics training begin with the techniques for solving ethical dilemmas. Ethics training is formal training to develop an awareness of questionable business behavior and to practice appropriate responses. Fewer than half of all American companies have some type of ethics training programs.
Social responsibility should extend beyond the shareholders to include:
all of the above: employees, customers, suppliers, community
The _____ for the Music Teacher's National Associations establishes a standard of conduct and recommends a set of responsibilities teachers should have toward students, colleagues and the public. These guidelines assist the professional music teacher in gaining the respect of peers and avoiding conflicts and complaints with students and others. It points out to members what are and what are not considered fair, honest and reasonable practice when dealing with students, colleagues and the public, it provides guidance for such aspects as advertising practices, appropriate relationships, and personal and professional integrity.
code of ethics
_____ contributes to an employee's self-worth, which, in turn increases productivity and reduces absenteeism.
empowerment
During a two-month period Lladro Comercial, S.A., the manufacturer of handcrafted porcelains, donated ten percent of its retail profits to the Susan G. Komen Breast Cancer Foundation. The action was legal and ethical and allowed the company to still be profitable. According to the pyramid of corporate social responsibility, it was acting at the _____ responsibilities level.
philanthropic
The _____ is an agreement that dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO).
Uruguay Round
_____ is a philosophy that focuses on the consequences of an action to determine whether it is right or wrong. This philosophy holds that an action that affects the majority adversely is morally wrong.
Utilitarianism
In 1997, Russia and Ukraine exported carbon steel plate into the U.S. at a price much lower than the countries were found guilty of charging the identical steel in their home markets. Russia and Ukraine were engaged in:
dumping
A total prohibition against importing certain products is called a(n):
embargo
An argument in favor of protective tariffs is the "infant-industry argument," which states that:
infant-industries should be protected by tariffs from established foreign competition
Many weight-loss programs advertise that they can help individuals lose a great deal of weight without any changes in the individual's lifestyle. Typically when the person who has lost the weight leaves the program, he or she regains all the lost weight. This yo-yoing is almost as bad for the body as the excess weight. These weight-loss programs are engaged in _____ behavior.
legal but irresponsible
Peter Drucker, a well-known management scholar, has said that companies should be evaluated on two basic dimensions:
legality and responsibility
The implementation of a contractionary policy by the Federal Reserve would result in:
lower inflation
The standard of living in any country is:
measured by the output of goods and services people can buy with the money they have
Today companies are focusing on _____, which involves building, maintaining, and enhancing interactions with customers and other parties so as to develop long-term satisfaction through mutually beneficial partnerships.
relationship management
Which of the following is probably the MOST difficult environmental factor for owners and managers to forecast, influence, or integrate into business plans?
social change
_____ is the practice of limiting investments to securities in companies that behave in accordance with the investor's beliefs about ethical and social responsibility.
social investing
U.S. Steel has established an alcoholic rehabilitation program for the city of Pittsburgh. The company provides the facilities and the personnel to operate the program. U.S. Steel is practicing:
social responsibility
The original purpose of the _____ was to help build infrastructure in developing countries and to help relief the debt burden of these countries.
world bank
The laborers displaced due to assembly line automation at the textile plant may not have the skills needed to operate the computerized machines that replaced them. This is an example of _____ unemployment.
structural
In 1998, the Canadian Magazine Publisher's Association (CMPA) predicted the demise of many Canadian magazines because the World Trade Organization (WTO) made it legal for U.S. publishers to introduce product into the Canadian market, without incurring the start-up costs involved in launching a new magazine. By using split-run magazines (modifying the U.S. edition so they contain Canadian ads), U.S. magazine publishers could offer lower rates to advertiser and sell the magazines for less money than Canadian publishers could. According to the CMPA, the U.S. magazine publishers would be engaged in:
dumping
A homebuilder who disposes of asbestos shingles by burying them on his own property may please the home owner because it is a less expensive means of disposal but will be punished by various legal agencies if any become aware of his crime. At which stage of the social responsibility pyramid is the builder most likely operating?
economic
Which of the following statements about ethics training is true?
Ethics training is formal training to develop awareness of inappropriate behavior and to practice appropriate responses.
Criticism of South Africa's post-apartheid government contends that the new government has not extended liberties to its black majority population, but has instead concentrated on proving to a white minority that a black-run administration can govern a reasonably sophisticated economy and society. The belief that the new South African government is behaving unethically is an expression of the philosophy associated with:
utilitarianism
A country's _____ is the set of beliefs, values, and social norms shared by members of a society that determines what is socially acceptable.
culture
Which of the following is NOT a form of unemployment?
fiscal unemployment
Hudson Kling mows yards during the summer. Which of the following is an example of revenue for Kling?
the $10 tip Mrs. Pierre gave him for doing such a fine job of mowing her yard
When a single firm accounts for 100 percent of industry sales, it is an example of:
a pure monopoly
The _____ is defined as the difference in value of a country's exports and imports over a period of time.
balance of trade
Wal-Mart has announced that it will only sell fresh and frozen fish that come from environmentally sound sources and bear the label of the Marine Stewardship Council. Wal-Mart's size gives it a unique opportunity to improve the fishing industry. This concern for _____ is one of many initiatives Wal-Mart is introducing to improve our environment.
social responsibility
