Ch 2 & 3

What is the difference between the accounting and finance functional areas of business?

Accounting prepares financial statements and finance manages company funds.

Inflation is best described as

An increase in general price levels

Which of the following is the best example of a differentiated product?

Automobiles

To predict where the economy may be headed in the future, government analysts and economists use:

Both leading and lagging economic indicators

Which of the following is true of an oligopolistic market?

Changes in price by one seller influence prices of the other sellers

What are the two ends of the continuum of economic systems?

Communism; Pure Competition

Which stakeholder group would be most impacted by Apple's decision to get rid of headphone jacks?

Companies that make headphones that use jacks

Biketown is a 100-year-old manufacturer of bicycles. It has a loyal customer base who appreciate the workmanship of its bicycles and are willing to pay more for its products. In order to compete with lower priced manufacturers, Biketown has purchased a new automated machine to assemble bicycles that is more efficient and less costly than the existing manual assembly process. Select who would NOT be a stakeholder in this business decision.

Competitors

Which of the following, when tracked over time, is the best indicator of inflation?

Consumer Price Index (CPI)

Management involves planning for, organizing, leading, and _______________ a company's resources, so that it can achieve its goals.

Controlling

After Halloween, candy is marked 50% off because of reduced

Demand

Which external force includes business environment information such as unemployment rates, inflation, GDP growth, and oil prices?

Economic

Ms. Goodwin spends her day studying the production, distribution, and consumption of goods and services. Ms. Goodwin most likely works as a(n):

Economist for the government

Starbucks and American Airlines recently banned plastic straws for customer use in response to concerns from which of the following external factors:

Environmental

The intersection of the supply and demand curves is known as the _______________.

Equilibrium Price

Planning for, obtaining, and managing a company's funds are activities associated with what functional area of a business?

Finance

Imagine that the equilibrium price for a gallon of gas is $3.00. In order to make its citizens happy, the government imposes a price ceiling of $2.50. What is the expected result of this action?

Gas shortage

The broad goals of our economy include:

Growth, price stability, and high employment

The price of a bottle of Coca Cola remained the same from 1886 to 1959 despite Prohibition, The Great Depression, and two World Wars occurring during that time. When the price increased in the following years, even though the product had not changed, the increase could best be described as:

Inflation

When the expenses for a business exceed revenue, the business is operating at a

Loss

A business exert very little, if any, control over the _____________ environment

Macro

Mario is in charge of his department's planning and organizing. He also allocates resources for his department. Which function does he fill for his department?

Management

Perfect competition exists when:

Many sellers offer many buyers a standardized product

Which functional area at McDonald's would be most involved in pricing new menu items?

Marketing

_______________ consists of everything that a company does to identify customers' needs and designing products to meet those needs.

Marketing

Public utilities are an example of what kind of monopoly?

Natural

The shape of a typical supply curve would indicate which of the following?

None of the above

Elon Musk's decision to form a new automotive manufacturing company is unique because the automotive industry is one that has high start up costs, there are very few sellers in the industry, and the number of firms entering the market is low. Elon's company Tesla is competing in what type of market?

Oligopoly

Every business must have _______________, whose primary role is to invest money in the business.

Owners

A market where numerous sellers sell a standardized product to many buyers and no individual seller can influence prices is known as _________________.

Perfect competition

Generally speaking, economic systems can be divided into two broad categories. They are:

Planned systems and free market systems

Which term refers to the money you get to keep from your business activities once your expenses are paid?

Profit

Susie had just finished the first day of her lemonade stand business. After counting all of the money she had received for selling her cups of lemonade, she announced, ""I made $12.50""! Since Susie had not taken out the cost of her cups, the lemonade mix, etc., the $12.50 represented ______________.

Revenue

Ronald is seeking to purchase hamburger patties for his restaurant and is willing to buy 1,000 when the cost is $1.00 each, but he is only willing to buy 500 patties when the cost is $2.00 each. Ronald is probably willing to purchase hamburger patties in these different quantities because:

Ronald expects fewer customers to buy hamburgers as the price increases

The ultimate goal for any business, regardless of what product or service they offer, is to:

Satisfy customer needs and generate a profit for its owners

Several major car manufacturers have announced plans to increase production of SUVs and trucks, and to discontinue several models of cars. Their decision was most likely in response to a change in what external factor?

Sociocultural

Veronica is studying environmental engineering because she is interested in renewable energy. This major has become more popular among college students, and consumers are also looking for environmentally friendly products. This trend is due to which external force?

Sociocultural

Home Depot includes product information signs in both English and Spanish in its stores. It is responding to which environmental factor?

Sociocultural trends

Any person or group with a legitimate interest in the success or failure of a business and its policies can be called a(n):

Stakeholder

Groups or entities that have a legitimate interest in the success or failure of a business are called ____________________________.

Stakeholders

Insomnia Cookies' new baker accidentally baked too many cookies and wants to sell them before the end of the day. The store may need to offer customers a discount in order to sell the extra cookies since there is an increase in __________.

Supply

Which of the following is an example of a not-for-profit organization?

The American Red Cross

When Apple decides what price to charge for an iPhone, they have to consider the costs to make it. What macro-environmental force would most affect Apple's production costs?

The State of the Economy

Gross Domestic Product:

The market value of all goods and services produced in a given year

If the government sets a national maximum price that retailers can charge for gasoline and that is below the equilibrium price, what is a likely result?

There will be a surplus of gasoline in the market