intro to business

What are the factors of production? How can economies grow when one or more of the factors is weak?

Factors of Production:Natural resources: All inputs that offer value in their natural state, such as land, fresh water, and wind Capital: The synthetic resources that a business needs to produce goods or services such as machines, information, and technology Human resources: The physical, intellectual, and creative contributions of everyone who works within an economy Entrepreneurship: People taking the risk of launching and operating their own businesses, largely in response to the profit incentive Economies can compensate for weak factors of production by buying or investing in other economies (e.g., purchasing technology from another country), or by developing their own weak factors (e.g., investing in the education of their workforce).

What are the 4 consumer rights originally outlined by President Kennedy in the early 1960s? How would you rank those rights in terms of importance? Why?

Four consumer rights:The right to be safe The right to be informed The right to choose The right to be heard Student answers will vary in terms of the relative importance of these rights, but they should all provide a rationale for their responses.

Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.

Macroeconomics is the study of a country's overall economic issues, such as the unemployment rate, the gross domestic product, and taxation policies. Microeconomics, on the other hand, focuses on smaller economic units such as individual consumers, families, and individual businesses. The two dimensions of economics clearly interrelate. For instance, if income taxes were to decrease by 50% (a macroeconomic shift), you might decide to go to Starbucks every day, rather than making your coffee at home (a microeconomics decision).

The balance of trade is also referred to as counter trade.

false

The key disadvantage of foreign outsourcing is dramatically higher labor wages.

false

Microeconomics focuses on:

individual businesses

Which of the following is a difference between inflation and deflation?

inflation is a period of rising average prices across an economy, whereas deflation is a period of falling average price across the economy

What are the fundamental elements of the free market economic system? How can businesses thrive within this system?

The fundamental elements of the free market system are private ownership, economic freedom, and fair competition. Key principles include the paramount importance of individuals, innovation, and hard work. The profit motive provides the incentive to achieve. To thrive in a free market system, companies must offer value to their customers—otherwise their customers will choose to go elsewhere. Businesses must also offer value to their employees and suppliers in order to attract top-quality talent and supplies.

Companies that step in with on-site day care programs for employees facing challenges such as caring for elderly parents are fulfilling their:

social responsibility

The obligation of a business to contribute to society is referred to as _____.

social responsibility

In the context of price levels, which of the following is used by the government to evaluate inflation?

the consumer price index

What factors contribute to the rapid pace of change in business? Is the pace likely to accelerate or decrease over the next decade? Why?

A number of factors contribute to the rapid pace of change in business, including cutthroat global competition, rapidly changing technology with plunging prices, better and cheaper global communication, and depleted resources. As these trends intensify, the pace of change will likely pick up even more speed in the decade to come.

Which of the following countries most likely has a comparative advantage?

An Asian country that produces quality automobiles with little opportunity cost compared to other countries

What is an ethical dilemma? Give 3 examples of ethical dilemmas that workers or managers might face in a business setting.

An ethical dilemma is a decision that involves a conflict of values—a decision in which every potential course of action has significant negative consequences. Here are 3 hypothetical examples:

Which of the following can be considered a business?

Davent, an online shopping portal that offers discounted prices on clothes

In the context of ethics and social responsibility, which of the following has become a core issue in the marketplace?

Doing business today without harming the ability of future generations to meet their needs

What role does entrepreneurship play in the economy? Who stands to gain from the success of individual entrepreneurs? How do other parties benefit?

Entrepreneurship fuels innovation and increases competition, which leads to more choices for consumers, higher quality products, and better prices. The success of individual entrepreneurs impacts those individuals, of course, but also affects other players in the community. A successful new business provides jobs, offers business to suppliers, pays taxes, and adds vitality to the community. As the entrepreneur accumulates wealth, he or she will spend, save, or invest that money, further boosting the economy.

What is the difference between fiscal and monetary policy? What role does politics play in shaping these policies?

Fiscal policy refers to government efforts to influence the economy through taxation and spending decisions that are designed to encourage growth, boost employment, and curb inflation. Monetary policy, managed by the Federal Reserve System (the Fed), refers to efforts to shape the economy by influencing interest rates and the supply of money. Politics plays a much stronger role in fiscal policy, since the president proposes a taxation and spending plan that Congress must approve, implement, and oversee. Both the president and Congress are elected, of course, and must answer directly to their constituents. The governors of the Fed, on the other hand, are appointed by the president and approved by Congress, but they serve single 14-year terms. Since their terms are staggered, no single president can appoint all of the members. This structure helps ensure that the governors act in the best long- term interests of the economy, and do not simply respond to the political pressures of the moment.

Which of the following statements is true of foreign outsourcing?

It drives down the cost of production.

Identify a true statement about foreign licensing.

It is especially common in the food and beverage industry.

In the context of the strategies for reaching global markets, which of the following statements is true of exporting?

It is the most basic level of international market development.

Who among the following is most likely to benefit when the dollar is strong and the euro is weak?

Ron is an American who is touring Europe.

Explain how to calculate the balance of trade. How does the growing United States trade deficit impact the economy? Why?

The balance of trade is the difference between the value of a nation's exports and the value of its imports over a set period of time. The growing United States trade deficit reflects the wealth of an economy that can afford to buy huge amounts of foreign products. But it may eventually destabilize the U.S. economy, since money flows out of the country as products flow in.

In the context of monitoring ethics and social responsibility, which of the following statements is true of a social audit?

The threat of government legislation keeps some industries motivated to self-regulate.

Which of the following statements is true of successful firms?

They deliver unsurpassed value to their customers.

In the context of social responsibility, which of the following statements is true of benefit corporations?

They do not have profits as their first priority.

Which of the following is a difference between corporate philanthropy and corporate responsibility?

Unlike corporate philanthropy, corporate responsibility focuses on the actions of the business itself rather than donations.

Which of the following statements is true of productivity?

a higher level of product growth

Nonprofit organizations:

account for more paid workers than the entire construction industry.

Which of the following statements is true of ethics? Group of answer choices

actions that are completely legal can still be unethical

When the government takes steps to reduce the risks of starting and running a business, it is most likely to result in:

an increase in free enterprises.

The economic system of the United States is called _____.

capitalism

One of the ways by which companies can show their responsibility toward the environment is by reducing their _____.

carbon footprint

In the context of economic systems, the two key phases of a business cycle are:

contraction and expansion

In the context of globalization, one of the most challenging issues faced by companies and individuals that are involved in international business is _____.

corruption

_____ is a form of unemployment that involves layoffs during recessions.

cyclical

In _____, firms either acquire foreign firms or develop new facilities from the ground up in foreign countries.

direct investment

A capitalist system depends on fair competition among businesses to:

drive higher quality and lower prices

The management of a steel manufacturing company decides to set up a new plant in a rural area. However, this would create waste management issues for the company. On the other hand, the company would incur higher costs if it sets up the plant in another area. The management thus finds itself in a situation where both the actions will have a negative consequence. This scenario exemplifies a(n) _____.

ethical dilemma

In a business cycle, the _____ is a period of robust economic growth and high employment.

expansion

An ethical dilemma involves clear misconduct at the workplace.

false

Capitalism is an example of a planned economy.

false

Gross Domestic Product (GDP) measures the total value of all the imports and exports of a nation on a quarterly basis.

false

In the context of monetary policy, the money supply includes credit cards.

false

Which of the following strategies for reaching global markets allows firms to expand into foreign markets with little or no investment?

foreign licensing

_____ refers to the unrestricted movement of goods and services across international borders.

free trade

In the context of the legal and ethical dimensions of business conduct, providing rock-bottom prices only to distributors in under-served areas is _____.

illegal but ethical

_____ means buying products domestically that have been produced or grown in foreign nations.

importing

Which of the following statements states a core principle of capitalism?

individuals,innovation, and hard work should be of paramount importance.

Which of the following is one of the core purposes of the Fed?

influencing the size of the money supply

In the context of the legal and ethical dimensions of business conduct, rewarding integrity is an example of _____.

legal and ethical behavior

_____ refers to Federal Reserve decisions that shape the economy by influencing interest rates and the supply of cash.

monetary policy

Which of the following is the most costly form of foreign direct investment?

offshoring

_____ is a market structure with only a handful of competitors selling products that can be similar or different and has high barriers to entry.

oligopoly

In the context of the free market system, which of the following market structures has a low barrier to entry?

pure competitions

In a business cycle, the _____ is the transition period between contraction and expansion.

recovery

To bring inflation under control, the Fed:

reduces the money supply

In the context of the relationship era, leading-edge firms believe that:

satisfied customers can promote their business with more speed than promotional campaigns.

In the context of the competitive environment of business, which of the following can be a key source of competitive advantage?

speed-to-market

Which of the following is a key dimension of the business environment?

the technological environment

Resorto, a European country, exported sugar worth $600 million between 2015 and 2016 and imported tea worth $750 million during the same period. In this scenario, Resorto most likely had a _____ between 2015 and 2016. Group of answer choices

trade deficit

Which of the following is a difference between the supply curve and the demand curve?

unlike the supply curve, the demand curve for most goods and services slopes downward as it moves to the right.

In the context of monetary policy, which of the following statements is true of the discount rate?

when the Fed reduces it, interest rates on bank loans tend to fall.

Which of the following statements is true of codes of conduct?

They work best with monitoring.

Why do companies tend to thrive in global markets when their country of origin enjoys a comparative advantage in their industry?

A comparative advantage means that the firms in a given country can turn out goods in a specific industry for a lower opportunity cost relative to other countries. The opportunity cost of producing a good is the amount of other goods that must be given up to produce that good. Thus, a producer has a comparative advantage if it gives up a smaller value of other goods to produce a given product than other producers. This lower cost results in an efficient use of resources, allowing firms with a comparative advantage to compete successfully in the global marketplace. In fact, countries tend to specialize in the production of goods in which they have comparative advantages, developing powerful, world-class industries. Examples include the film industry in India and the electronics industry in South Korea.

Which of the following is a duty of a socially responsible organization toward its customers?

Following laws that prevent anti-competitive behavior such as predatory pricing

Why is outsourcing such an attractive way for firms to tap into foreign markets? What are the risks of foreign outsourcing?

Foreign outsourcing is an attractive way for firms to tap into foreign markets because production costs are typically a fraction of what they are in the U.S. But foreign outsourcing also involves significant risk in terms of quality control, delivery dates, and social responsibility.

When might the need for social responsibility conflict with the need to maximize profits? When the needs conflict, how should a firm decide which path to pursue?

The need for social responsibility might conflict with the need to maximize profits in a number of situations. For example, investing in pollution control equipment, paying foreign contractors a living wage, investing in the local community, providing workers with top-notch health insurance can all be costly, which impacts profitability. When social responsibility conflicts with profitability, firms should decide which path to pursue based on both their values and objectives. They should also consider the potential long-term payoff from investments in social responsibility. Socially responsible firms often benefit financially in terms of stronger sales and branding, stronger customer loyalty, and higher employee retention rates

In the context of monetary policy, when the economy contracts, the Fed typically decreases the money supply.

false

In the context of fiscal policy, which of the following actions by the government helps boost the economy in the long term?

investing in public assets, such as a national renewable energy grid

In the context of mixed economies, which of the following statements is true of the U.S. federal government?

it is part owner in a number of financial institutions

In the context of customer satisfaction, a product has value when:

its benefits to the customer are equal to or greater than the price that the customer pays.

Macroeconomics involves the study of:

the gross domestic product of a country

In the context of monetary policy, if the Fed decreases the reserve requirement, _____.

there will be more loans available

Identify a true statement about pure market economies.

they do not make sufficient provision for old, young, and the sick.

When the total value of a nation's exports is higher than the total value of its imports, that country has a(n) _____.

trade surplus

Balance of payments includes financial flows such as foreign investments.

true

Capital, one of the factors of production, includes machines, tools, buildings, information, and technology.

true

Foreign licensing helps circumvent government restrictions on importing in closed markets.

true

In a capitalist economy, private-sector businesses are free to decide how much they will charge for their products.

true

In the context of international trade, often countries with the highest trade barriers have the least competition.

true

In the context of the barriers to international trade, the infrastructural differences between two countries fall into the category of economic differences.

true

Planned obsolescence represents a clear violation of social responsibility.

true

Social security taxes are a source of revenue for the U.S. federal government.

true

The balance of trade plays a central role in determining the balance of payments.

true

The central banking system of the United States is the Federal Reserve.

true

Value is the relationship between the price of a good or a service and the benefits that it offers its customers.

true

When business drives up the standard of living for people worldwide, it contributes to a higher quality of life.

true