intro to business

Because of small-business competition, large companies must become more efficient and responsive to consumers' needs.

True

The purchase of one corporation by another is called a merger.

True

Jessie's business sells souvenirs and craft items to tourists in Myrtle Beach, South Carolina. This is an example of a ____ business.

distribution

Personal Wellness ​ Jackie has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped. Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness. ​ Jackie's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would put things into perspective to help the company do better. After creating the plan, Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company. Jackie wants to make sure that her leaving does not become the cause of the company going under. Refer to Personal Wellness. A business plan should answer all of the following questions except

"Which accounting firm will audit the company?"

Service industries account for approximately what percentage of all small businesses?

48

conflict of interest

A large computer manufacturer forbids its executives and managers from serving as directors or officers for Hewlett-Packard or any other corporations from which it might purchase component parts. The company is trying to prevent

False

Adam Smith developed the concept of the invisible hand to explain how all economic activity should be based on a nation's needs and not the individual's needs.

monopolistic competition.

Although all casual clothing ultimately provides the same purpose, companies such as The Gap strive to make their brand seem unique from the many other brands available on the market. The market for casual clothing can best be characterized as

The right to safety and the right to be informed

An instruction pamphlet detailing steps for the care and use of a new electric appliance would fulfill which provisions of Kennedy's Consumer Bill of Rights?

true

As the founder of an American business firm, Peter Jenkins can, within certain limits, produce and/or sell any product he chooses and sell it at any price it sets.

Recession

Economists define a ____ as two consecutive three-month periods of decline in a country's gross domestic product.

Which of the following would least likely be started as a small business?

Electricity company

false

Gross domestic product is a loose, subjective measure of how well a society can satisfy its people through goods and services.

The price decreases

If the demand for a product declines, what happens to the price of the product?

True

If the owner of a sole proprietorship retires or dies, the owner's heirs may take over the business and either sell it or continue to operate it.

true

In our free-enterprise system, federal and state governments decide what products and services to provide.

Zoe, geologist, has discovered a new mineral which she named brellio. She believes that it can be used to generate clean energy. The mineral is much like uranium and can be used to create energy without the harmful radiation side-effects. What factors of production will she use to mine the mineral and establish her energy business?

Land and natural resources, labor, capital, and entrepreneurship.

Which of the following best describes the trend in social responsibility models used by companies?

More companies have been bypassing the economic model in favor of the socioeconomic model in recent years.

Celina has owned a small coffee shop at the corner of a tourist area in her town for several years. The shop offers coffee, coffee drinks, tea, fresh scones, cinnamon rolls, and other pastries, breakfast, and sandwiches made on fresh bread with fresh ingredients. All breads and pastries are made on the premises. Celina has several regular customers who eat at the same time on the same days each week. One week, one of her regulars did not eat breakfast but the customer's companion ate without him. Celina inquired about the customer by name and when she discovered that he was quite ill, put together a basket of goods from the store and sent them to him. When a fire threatened the town and the firefighters were up all night trying to extinguish the blaze, Celina made pots of coffee and baskets of baked goods and took them to the firefighters' staging area. Because of her contributions, Celina has been awarded a Friends of the Community award. Which of the following best demonstrates Celina's relationship with her customers and community?

Owners of small businesses get to know many of their customers by name and deal with them on a personal basis. Through such relationships, small-business owners often become involved in the social, cultural, and political life of the community.

Tiffany's Dilemma ​ Tiffany graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Martha owned and operated a small business that she started about twenty years ago. Martha, an individual owner of her business, informed Tiffany that she could work for her. On one hand, Tiffany thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retires. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Tiffany had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States. ​ After much consideration, Tiffany decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hardworking she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself. Refer to Tiffany's Dilemma. What type of company does Tiffany's friend operate?

Partnership

S-corporation

Phillip and Dwight have sold stock to eight of their friends and have enough money to expand the business and to open another store. During a shareholders' meeting, Phillip, Dwight, and the eight other shareholders unanimously agreed that it would be better to pass through the company's profits and losses like a partnership. All of the shareholders are individuals and United States citizens. The shareholders could vote to change the corporation into a(n)

false

Productivity is the total output per worker per year.

False

Recently, consumers and the government have been losing an increasing number of product liability lawsuits against sellers of defective products.

Your friend, Linda, started a graphic design firm about a year ago. The business has done well, but it needs a lot more equipment, computers, and employees to continue expanding. Linda does not see any problem because she thinks she can easily get all the money she will need from her local bank. What advice might you give her?

She should consider alternative sources of financing because banks provide only about one-fourth of the total capital to small businesses.

No, even though she has saved this money, the bank will in turn invest the money back into the circular flow.

Sherry Garcia begins her first job after graduating from college and starts putting money away in a savings account. She believes she has removed this money from the circular flow between buyers and sellers that she studied in Introduction to Business. Is Sherry correct?

ethics.

The study of the morality of choices made by people is known as

Echo Air Company (EAC)Echo Air Co. is a well-known establishment in the airline business. It is currently one of the top firms in the industry. The company prides itself on good customer service and being concerned with the broader societal good. EAC management is not only concerned with doing things right, but also with doing the right things. Many of their decisions reflect this philosophy. Initially, the company had a problem with employees reporting their suspicions about unethical behavior to the press instead of to EAC management. As a result, the company made sure its employees knew the firm's guidelines on fixing ethical issues. EAC also developed a code of conduct based on standards that continue to be upheld within the company. Since the code of conduct has been put in place, there have been fewer ethical violations.Although employee salaries at EAC are not as high as those at competing firms, the company experiences very low employee turnover. The firm has created a corporate culture that not only makes its employees want to stay, but that also results in higher profits. If EAC can maintain the relationship it has built with its employees and customers, it will have little difficulty keeping up its remarkable success. ​ Refer to Echo Air Company. Initially, employees were not willing to go to EAC management with ethical issues but would instead report them to the press. This is an example of

Whistle Blowing

true

Within a firm, social responsibility begins with management's attitude.

A corporation is perhaps the easiest form of business to organize.

false

Before the 1930s, the average work week prescribed by law was forty hours; however, workers were dissatisfied because there was no minimum wage

false

The purchaser of a franchise is called the franchisee.

false

In all states besides the one in which it is incorporated, a business is known as a(n)

foreign corporation.

Lance is looking for ways to get more capital for his appliance sales and service business. He is very protective of his company's information and fears that it will get into the wrong hands. Lance would probably not want to

incorporate his company.

An individual's desire to create a new business is referred to as

the entrepreneurial spirit.

A common tactic of corporate raiders is to start a proxy fight.

true

A voluntary association of two or more people acting as co-owners of a business is known as a partnership.

true

Small firms have traditionally added more than their proportional share of new jobs to the economy.

true

Unlike a person, a corporation exists only on paper.

true