Business last final
A couple constructs a decision matrix to select which charity will receive a $500 donation. Since "helping children" is the most important criteria to the couple, which of the following weights should it be assigned? .325 .25 .60 .100
.60. The most favored criteria gets the highest weight. Therefore, it is more likely to be the alternative with the highest score and, therefore, chosen. All other numbers are lower than .60. SOURCE: PD:270 SOURCE: The decision matrix. Retrieved October 18, 2010, from http://http-server.carleton.ca/~gkardos/88403/Decision/Matrix/MATRIX3.html
Which of the following might cause supply of a good to decrease: Advertising Sales skills Inelastic demand Government regulations
Buying power. Consumer buying power is the amount of cash or credit a consumer has available to spend. Regardless of the price, if a consumer does not have buying power, there will be no demand for the product by that consumer. Labor, other production costs, and competition often affect the price of products. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks: Excess demand Relative price Inflated price Incentives
Relative price
The highest level of labor union organization is the state. federation. national. local.
federation
The value of a country's currency declines when it implements policies that restrict trade. The primary factor affecting the change in value of the currency in this situation is cultural differences. civil unrest. demographics. isolationism
isolationism
The formula that is generally used to measure productivity is goods divided by time. labor divided by resources. outputs divided by inputs. inputs divided by labor.
outputs divided by inputs
A country's standard of living can be calculated by dividing the goods and services its people have by social services. population. output. total production.
population
The overall objective of workers who form labor unions is to obtain reasonable working hours. promote better working conditions. obtain fair wages. strengthen their bargaining power
stregthen their gargaining power
Dividing the dollar value of total sales by the cost of making those sales is one way that businesses often measure their accountability. profitability. liability. productivity.
Productivity
In some states, it is against the law to sell alcohol on Sundays. This law was created to honor the Christian religious belief that Sunday is a special day of rest. This is an example of culture impacting the __________ of goods.: production distribution pricing packaging
Distribution. Distribution is the movement of goods and services through a distribution channel from the producer. Under this law, the distribution of alcohol to the final consumer is prohibited on Sundays. Production is not affected by this law. Manufacturers are still able to produce alcohol on any day of the week. The price and packaging of the good are not affected by when the product can be sold. SOURCE: EC:123 SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (pp. 86-89). Woodland Hills, CA: Glencoe/McGraw-Hill.
When changes in a product's price cause corresponding changes in consumer demand, the product has elastic demand. usefulness. utility. inelastic demand.
Elastic demand. The nature of a product determines its elasticity. Consumers continue to buy a necessity, such as milk, even when its price increases. Milk, therefore, has fairly inelastic demand, whereas a nonessential product, such as a boat, has elastic demand. Product utility is the perceived usefulness of a good or service to consumers. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
The U.S. government is offering a decrease in taxes to citizens who install solar panels on their homes. Using economic terms, how would you describe this incentive? Financial and positive Non-financial and positive Non-financial and negative Financial and perverse
Financial and positive. Since the citizens will pay lower taxes, they will save money, which makes this incentive financial. The incentive (tax decrease) is intended to motivate citizens to do something (buy solar panels), so it is a positive incentive. Negative incentives are intended to discourage certain actions. Perverse incentives occur when the incentive's results are exactly the opposite of its intended purpose. Non-financial incentives are not related to money (an example might be posting the names of solar panel users on a national website). SOURCE: EC:124 SOURCE: Sexton, R.L. (2002). Exploring economics (2nd ed.) [pp. 34-37]. Mason, OH: South-Western.
What is a likely result when workers' wages rise throughout the economy while productivity decreases? Lower prices Inflation Prosperity Increased Sales
Inflation. Inflation is a rapid rise in prices that may occur when demand exceeds supply or when productivity declines and costs of labor go up. A drop in productivity can cause inflation because as productivity drops, labor costs go up and prices rise. When productivity increases, the economy usually prospers, prices are lower, and sales increase. SOURCE: EC:013 SOURCE: EC LAP 18—Make the Most of It (Productivity)
Which of the following is an economic activity: Following the stock market Reading a bank statement Balancing a checkbook Purchasing a candy bar
Purchasing a candy bar
What is the effect on society of a falling growth rate in productivity? Resources are used more efficiently. The standard of living drops. Inflation is prevented. Increased labor disputes may occur.
The standard of living drops
Why are resources considered limited?
There are not enough available so that everyone can have as much of them as desired
Which of the following factors affects consumers' decisions to buy goods or services: Buying power Competition Labor costs Production costs
Buying power. Consumer buying power is the amount of cash or credit a consumer has available to spend. Regardless of the price, if a consumer does not have buying power, there will be no demand for the product by that consumer. Labor, other production costs, and competition often affect the price of products. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
What is the ratio of a pound of yellow squash @ $ .40 a pound and a pound of butternut squash @ $1.20 a pound? 1 to 4 1 to 3 1 to 2 1 to 1
1 to 3. It will cost three times as much to buy one pound of butternut squash as it will to buy one pound of yellow squash. By comparing relative prices of goods and services, people choose the combinations that are most advantageous for them to buy. Likewise, owners of resources can determine where they can most advantageously sell their resources by comparing relative prices in different markets. SOURCE: EC:006 SOURCE: Keeler, J.P. (2001, November 17). Relative prices and the business cycle. Retrieved August 27, 2009, from http://mises.org/journals/scholar/Keeler.pdf
Mary is a bagger at Glen's Market. On a weekly average, she works 30 hours and fills 876 bags of groceries. Her productivity is ___________ bags of groceries per hour. 29.2 26.2 28.6 22.8
29.2. Productivity is determined by dividing the outputs of the employee by the inputs. To determine Mary's productivity per hour, divide the total number of bags of groceries by the number of hours she worked (876 ÷ 30 = 29.2). SOURCE: EC:126 SOURCE: EC LAP 18—Make the Most of It (Productivity)
f three employees each work 35 hours a week and produce a total of 9,765 items, what is their total hourly productivity level? 31 93 67 105
93. Productivity is measured by dividing output by input. Outputs are goods and services produced as the result of combining inputs, or resources, which include the amount of time required to do the work. In order to measure the total hourly productivity of three employees producing 9,765 items (outputs) in a 35-hour week (inputs), first determine the total number of hours worked (35 x 3 = 105). Then, divide the number of items produced by the number of hours (9,765 ÷ 105 = 93). The three employees have a productivity level of 93 items per hour. SOURCE: EC:126 SOURCE: EC LAP 18—Make the Most of It (Productivity)
The amount of a product that is produced is most directly affected by labor unions. product utility. product value. consumer demand.
Consumer demand. Consumer demand is the quantity of a good or service that buyers are ready to buy at a given price at a particular time. Producers will continue to provide a product in direct proportion to the demand for it, as long as it is profitable for them to do so. Producers must carefully watch for fluctuations in consumer demand in order to produce what is wanted by consumers—not necessarily what is demanded by producers. Product utility, or usefulness, and the value of products to consumers are factors that determine demand. Not all products are produced by members of labor unions. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
Which of the following is a true statement about currency exchange rates: The value of a nation's currency increases when it experiences rapid inflation. World events do not usually impact currency exchange rates. Currency exchange rates change frequently. When the demand for a nation's currency increases, its currency's value decreases.
Currency exchange rates change frequently. Because many factors affect the value of a nation's currency, currency exchange rates are constantly fluctuating. For example, if a nation's inflation rate rapidly increases, the nation's currency value will likely fall because it will cost more money to buy goods and services. Or, if a nation experiences political instability, its currency value decreases because the nation's future is uncertain. In this instance, world events impact currency-exchange rates. When the demand for a nation's currency increases, the value of its currency increases. SOURCE: EC:100 SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2009). Marketing essentials (p. 167). Woodland Hills, CA: Glencoe/McGraw-Hill.
When union members of Local 654 arrived at work today, they found a sign on the door stating that the business had closed temporarily and the employees were not allowed to work. This is a pressure strategy known as a(n) injunction. lockout. boycott. strike vote.
Lockout. A lockout normally occurs when contract negotiations break down, and company officials want to force the union to bargain. An injunction is a court order forbidding the carrying out of certain acts. A strike vote is taken by union officials to determine whether union members should strike, i.e., stop working in order to force management to meet their demands. A boycott is a strategy in which union members refuse to buy a company's products. SOURCE: EC:015 SOURCE: EC LAP 5—Get United (Organized Labor)
Why should productivity be measured? To find new ways to meet customer needs To see whether the business's objectives are being met To determine the best ways to invest company profits To locate new sources of inputs
To see whether the business's objectives are being met. Productivity may be measured to see whether a business's goals and objectives are being reached. Productivity doesn't aid in the location of new sources of inputs. Members of the finance department are responsible for determining the best ways to invest company profits. Research and development may find new ways to meet customer needs. SOURCE: EC:013 SOURCE: EC LAP 18—Make the Most of It (Productivity)
The use of thorough job orientation helps to increase productivity through mass production. participative decision making. training and education. quality of work life.
Training and education
What kind of strike occurs when the members of a union local stop work without the consent of their national organization? Sympathetic Limited Jurisdictional Wildcat
Wildcat. Local members may elect to have a wildcat strike if they feel that company representatives are not bargaining in good faith, and the national union won't call a strike. When the members of one union stop work in order to support the striking members of another union, a sympathetic strike occurs. A jurisdictional strike arises from conflict between two competing unions over which union should be permitted to do a particular kind of work. Limited is a distractor. SOURCE: EC:015 SOURCE: EC LAP 5—Get United (Organized Labor)
Which of the following is an example of excess supply: Price = $500, demand = 500, supply = 300 Price = $700, demand = 300, supply = 500 Price = $600, demand = 400, supply = 400 Price = $400, demand = 600, supply = 200
Price = $700, demand = 300, supply = 500. Excess supply is the situation that exists when supply is greater than demand. When the price is $600, supply and demand are equal. At the prices of $500 and $400, demand is greater than supply, and excess demand exists. SOURCE: EC:006 SOURCE: EC LAP 12—When More Is Less (Functions of Prices)
Why are human resources limited?
Some people are unable to work. (Some people are unable to work. Human resources are limited for many reasons. Only some of the world's people are willing and able to work. Others are too young, too old, disabled, or not interested in working. Also, some people lack the training or skills needed to do the job, or they may not live where the jobs exist. Natural resources are limited by a country's lack of technology to tap them and by the growing population that needs them. Capital resources are limited by a company's inability to purchase equipment to produce them. SOURCE: EC:001 SOURCE: Clayton, G.E. (2005). Economics: Principles & practices (pp. 5, 15-17). New York: Glencoe/McGraw-Hill.)
When management and union leaders negotiate but cannot reach an agreement, either one may call for a(n) grievance. injunction. arbitrator. probation.
arbitrator
To reduce the chance of investigations and orders to cease production, businesses should adhere to government regulations. specialize. purchase the most up-to-date technology available. lobby members of Congress.
Adhere to government regulations. Businesses can reduce the chance of investigations and orders to cease production by obeying laws. Purchasing up-to-date technology is a form of capital investment used to improve productivity. Specializing means making the best use of resources in the production of goods and services. Lobbying members of Congress may result in legislation favorable to a business, but it won't necessarily reduce the chance of investigations. SOURCE: EC:013 SOURCE: EC LAP 18—Make the Most of It (Productivity)
A U.S. company begins selling its products in France. Despite brisk sales, the company doesn't make enough profit to cover its expenses. When setting prices, the company simply used the same prices in both countries. For example, $5.99 = 5.99 French francs; $2.89 = 2.89 French francs. What risk of international business did the company not consider? Language variations Currency fluctuations Differences in laws Opportunity costs
Currency flutuations
A group of entrepreneurs is trying to decide which of five new product ideas to select. Which tool can be used to help make the decision? Decision matrix Entrepreneurial discovery process Business processes Opportunity cost analysis
Decision matrix. A decision matrix is used to systematically determine the best alternative from a list of several. The entrepreneurial discovery process is used to find new ideas by systematically scanning the environment. Those ideas may then become alternatives in a decision matrix. Business processes are a sequence of activities followed to achieve business goals, such as quality management, risk management, etc. Opportunity cost analysis means determining the cost of the next-best alternative. A decision matrix selects one idea from a list of several alternatives. SOURCE: PD:270 SOURCE: The decision matrix. Retrieved October 18, 2010, from http://http-server.carleton.ca/~gkardos/88403/Decision/Matrix/MATRIX3.html
When customers buy the exact amount of goods that producers are selling at a specific price, the __________ price exists. market equilibrium unit production
Equilibrium. Equilibrium price is also called market-clearing price because that is often the result of reaching the equilibrium point. Market price is the actual price that prevails in the marketplace at any particular moment. Unit price indicates the price of products by the ounce, pound, or other measurement to enable customers to compare product values. Production price is the total amount of money spent on materials, labor, taxes, etc., to produce economic goods and services. SOURCE: EC:006 SOURCE: AmosWEB (n.d.). Equilibrium price. Retrieved August 11, 2009, from http://www.amosweb.com/cgi-bin/awb_nav.pl?s=gls&c=dsp&k=equilibrium+price
Which of the following might cause supply of a good to decrease: Advertising Sales skills Inelastic demand Government regulations
Government regulations. Government controls, such as taxes, limits on prices, and limitations on the use of resources, all tend to increase production costs and limit the opportunity to make a profit. Manufacturers are less willing to produce under these circumstances, therefore, they decrease supply. Sales skills and advertising would increase demand, which would increase supply. Inelastic demand is a form of demand in which changes in price do not affect demand. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
Which of the following is a negative economic incentive: Tax reductions on fuel-efficient cars High taxes on cigarettes A 1% decrease in city taxes for residents who recycle Free flu shots for all citizens
High taxes on cigarettes. A negative economic incentive either reduces the benefits or increases the costs of a product, resulting in a decreased level of the related activity or behavior. In this case, the increase in taxes makes cigarettes more expensive, which leads to a decrease in smoking. The remaining choices are all positive economic incentives: they either increase benefits or reduce costs and thus result in an increased level of the related activity or behavior. SOURCE: EC:124 SOURCE: Sexton, R.L. (2003). Essentials of economics (pp. 31-32). Mason, OH: South-Western.
Which of the following is characteristic of a buyer's market: High demand Steady demand Low supply Low prices
Low prices. A buyer's market is the best time to buy, since consumers are able to conserve their money by purchasing products at reduced prices. High demand and low supply would indicate a seller's market. Steady demand is not a characteristic of a buyer's market. SOURCE: EC:005 SOURCE: EC LAP 11—It's the Law (Supply and Demand)
The market's way of rationing limited resources, goods, and services to consumers in a market economy is through commissions. profits. incentives. prices.
Prices. Generally, the higher the price of anything, the less of it people will buy. The lower the price, the more of it people will be willing and able to buy. In a market economy, the incentives that keep producers constantly changing and reallocating their resources are known as profits. Commissions are a form of income for salespersons that are calculated as a percentage of sales. SOURCE: EC:006 SOURCE: EC LAP 12—When More Is Less (Functions of Prices)
Which of the following does consumption rely on to provide goods and services:
Producers -Producers. Producers are the people who make or provide goods and services. Consumption relies on producers to provide goods and services. The relationship between consumption and production needs to be balanced so that enough goods and services are produced to satisfy consumers' wants, but not so many that producers lose money. A consumer is anyone who uses goods and services. Owners have possession of their resources. Deciders make decisions. SOURCE: EC:001 SOURCE: EC LAP 6—Are You Satisfied? (Concept of Economics)
One way for a business to increase productivity is to increase its imports. environmental concern. prices. research and development.
Research and development. Businesses should set aside some company profits for research and development efforts that will enable it to find better methods of production, new sources of resources, and more effective ways to combine resources. Such efforts contribute greatly to a firm's productivity, which is the amount and value of products produced from set amounts of resources. Increasing imports or concerns for the environment could have negative effects on productivity and are not methods for improving it. Increasing prices may reduce demand for the company's product(s), creating a need for more efficient production. SOURCE: EC:013 SOURCE: EC LAP 18—Make the Most of It (Productivity)
Which of the following is an example of a change in culture affecting the production of a good or service: `A shortage of chocolate chips causes a cookie company to stop production. ` Laws banning smoking in restaurants result in a decrease in demand for cigarettes. `An oil spill in the ocean causes local seafood restaurants to lose business. ` The "green movement" leads to an increase in demand for recycled products.
The "green movement" leads to an increase in demand for recycled products. The green movement is a shift in cultural values that has caused people to become more environmentally conscious, resulting in an increase in the demand for recycled goods. In response, companies are producing more recycled goods than in the past. Laws banning smoking are legal actions that affect demand and, therefore, production. An oil spill is an accident that can impact businesses that rely on the ocean—for seafood, for tourism, etc. It is not a cultural change. A shortage of an ingredient used in the production of a product, in this case, chocolate chip cookies, is a supply issue, not a cultural issue. SOURCE: EC:123 SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (pp. 86-89). Woodland Hills, CA: Glencoe/McGraw-Hill.
he young children's section of a U.S. amusement park features cartoon characters from a German TV show. Although the amusement park signed an agreement and paid a fee to display images of the cartoon characters, the TV show doesn't own or manage the park in any way. This is an example of a strategic alliance. franchising. licensing. Exporting exporting.
licensing
A country is experiencing civil unrest. What is likely to happen to the value of its currency? It will stabilize. It will increase. It will decrease. It will not be affected.
t will decrease. A country's economic and political stability can affect the value of its currency. If a country is experiencing civil unrest, its political environment is volatile. Because foreign business partners and investors are uncertain about the country's future, they are likely to decrease their business activities, causing the country's currency value to decrease. The value of the currency in a politically unstable environment is not likely to increase, stabilize, or remain unaffected. SOURCE: EC:100 SOURCE: Lowe, R.E., Malouf, C.A., & Jacobson, A.R. (2003). Consumer education & economics (5th ed.) [pp. 178-179]. New York: Glencoe/McGraw-Hill.