Intro to Business - Module 1: Exploring the World of Business and Economics
As a result of the recent drought in the U.S. Great Plains, the supply of spring wheat plummeted and prices skyrocketed 24%. According to the basics of supply and demand, what can be expected to happen to the demand for wheat?
It will decrease.
A large employer in a small community falls on hard times and is forced to close operations, putting hundreds of people out of work. Which concern about the impact of business on society does this best reflect?
Social disruption
The High-Performance Team identifies potential societal concerns related to your company expanding to China. Which of the below items is the biggest concern?
China has fewer regulations related to work hours and working conditions.
In a _____ economic system, all property and profits are owned by the state and production is centrally planned.
Communist
Volvo: The Volvo Group's vision is to become the world leader in sustainable transport solutions by creating value for customers in selected segments, pioneering products and services for the transport and infrastructure industries, driving quality, safety and environmental care, and working with energy, passion and respect for the individual. Businesses can benefit society by offering valuable products. Based on the above description what values does Volvo provide? Select all that apply.
Increasing value for money, Increasing quality, and Increasing safety and health.
The monetary value of all goods and services produced within a country's borders over a specific period of time is known as the:
Gross Domestic Product (GDP).
Burger King and McDonald's compete in which degree of competition?
Monopolistic competition
Match competitor pricing and differentiate product
Oligopoly competition
Minimize the cost of production
Perfect (pure) competition
In which form of competition does the seller have the LEAST control over pricing?
Perfect competition
Concerns have been raised about entry-level pay levels for McDonald's employees.
Social disruption
GM plant closures over the decades have led to chronically high unemployment in Detroit.
Social disruption
In a _____ economic system, key industries and resources are controlled by the government and production is planned in accordance with national goals.
Socialist
Comcast Cable is the only provider of cable TV services in our city. This is an example of:
a monopoly.
For the first time since Garrett opened his food truck business a few months ago, sales revenue exceeded expenses and the business has realized _______.
a profit
Healthy eating habits have become a high priority for Baby Boomers. Salmon has been identified as a heart healthy antioxidant rich fish.The price of fresh salmon has increased in each of the past ten years. a. According to the law of supply and demand, the quantity of salmon provided should
increase.
When prices keep going up, this indicates that:
inflation may be spiraling out of control.
Adam Smith propounded that every individual is entitled to the right to:
own private property and resources.
In 2007 the United States experienced a period of severe:
recession.
In a _____ economic system, production is entirely determined by market forces and most businesses and land is privately owned, with very limited government intervention.
Capitalist
In 2018, Facebook purchased Confirm Inc., a company that provides mobile ID authentication checks on government issued IDs. Confirm's mission was to "become the market's trusted identity origination platform." Experts believe Facebook may use Confirm's technology to allow users to confirm their identity if they are locked out of their Facebook account. Facebook had previously tested letting users take selfies to unlock their accounts. Based on the information above, which of the following statements is true about Confirm Inc.?
Facebook's purchase of Confirm was primarily a response to changes in technology that affect the business environment.
When a company in Indiana competes with a business in China, this can best be described as what kind of competition?
Global
A GM plant worker in Ohio was crushed to death by a piece of heavy equipment.
Health/Safety
Concerns have been raised about work conditions at meat-processing plants.
Health/Safety
As you prepare for work on the High Potential team, you are glad you studied business. Select the items that are a benefit of studying business:
Helps students to evaluate career choices, Provides a better understanding of consumer needs, and Provides opportunities to view business through the lens of an investor
In addition to paying taxes to support the infrastructure of the community, companies donate cash, products and employee time to many charities. Which of the benefits of business to society does this best reflect?
Improving quality of life
There are many benefits of studying business. Please select the choices below that represent benefits of studying business.
Increase ability of making better purchasing decisions by evaluating marketing claims, Ability to evaluate different career choices, and Potential success in a career in business.
Aflac's mission statement is as follows: To combine aggressive strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers. Businesses can benefit society by offering valuable products. Based on the above mission statement what values does Aflac provide? Select all that apply.
Increasing value for money and Increasing quality
The company is concerned about the possible obstacles to locating a factory in China, and wonders if China's economic model and low average income might be a concern. Which of the following countries should the team recommend as possible alternative expansion targets? Consult the chart in the introduction that provides alternatives to China.
Japan
GM adds Onstar® automatic crash response to cars.
Valuable products
McDonald's adds healthier items to menu, such as salads.
Valuable products
Monopolies maintain their hold on a market when there are barriers to other firms entering the industry. Which of the following statements describe barriers to entry? Select all that apply.
When the government highly regulates an industry it creates barriers to other firms entering that industry and When a massive investment is required to start a business it creates barriers to other firms entering that industry.
The price at which the quantity demanded of any good or commodity equals the quantity supplied is known as the _______ price.
equilibirum
The price of coats drops from $200 to $100
supply down, demand up
The price of jeans drops from $50 to $40
supply down, demand up
The price of shoes increases from $75 to $100
supply up, demand down
The price of socks increases from $12 to $15
supply up, demand down
Over a series of business cycles, one might find a peak, a trough, a period of expansion, and a period of contraction. Which of the following statements is true?
A recession is a period of contraction that follows a peak.
Which of the following industries is an example of an oligopoly?
Automobiles
As a result of studying business, Jamika has a much better understanding of profit/loss and income/expenses and realizes that these principles apply to his personal life as well. What advantage of studying business does this best reflect?
Become a better-informed informer consumer and investor
The next concern that the High Potential Team examines is the effect of skyrocketing real estate prices on businesses. Check all of the boxes that describe a potential impact of this increase in real estate prices.
Businesses cut production and lay off employees, Potential customers pay higher rent and have less money to spend on household items, Businesses produce fewer products because of a lack of demand, and Businesses pay higher rents for their retail stores.
You are excited about the possible international expansion, but still wonder about your company's stock price. Which of the following statements best explains why the stock price dropped?
CNBC reported that your company will undergo a round of layoffs in the near future.
Which of the following describes how your company's products bring value to customers? Check all that apply.
Cribs reduce the possibility of injuries to children while they sleep, Baby carriers come in a wide range of prices and features, and High chairs provide a stable surface for children when seated in restaurants.
GM has 225,000 employees worldwide.
Employment
McDonald's has 1.5 million employees worldwide.
Employment
GM settles with federal authorities for pollution to New York's Onondaga Lake.
Environment
Prior to changing to paper, McDonald's used nonrecyclable, polystyrene cotainers.
Environment
A pulp and paper mill moves into the area. While it results in jobs for hundreds of people, the mill discharges a steady stream of hydrogen sulfide, both in the air and in the water. Which concern about the impact of business on society does this best reflect?
Environmental damage
Advanced Auto Parts: It is the Mission of Advance Auto Parts to provide personal vehicle owners and enthusiasts with the vehicle related products and knowledge that fulfill their wants and needs at the right price. Our friendly, knowledgeable and professional staff will help inspire, educate and problem-solve for our customers. Businesses can benefit society by offering valuable products. Based on the above description what values does Advanced Auto Parts provide? Select all that apply.
Increasing value for money, Increasing choice, and Increasing convenience
Which statement best reflects Adam Smith's theories of capitalism?
Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for them.
The unemployment rate in the U.S. decreased from 4.7% in April to 4.1% in January. Which of the benefits of business to society does this best reflect?
Providing employment
A few sellers that are interdependent are found in a(n):
oligopoly.
Differentiate product
Monopolistic competition
When fewer people apply for unemployment benefits, this means:
a larger percentage of the nation's labor force is currently employed.
In a(n) _______ economy, the government decides what goods and services will be produced, how they will be produced, for whom they will be produced, and who owns and controls the factors of production.
command
Black Opal is a skincare and makeup brand designed for women of color. This reflects the need for companies to be cognizant of _______ factors if they want to be successful in a diverse population.
social
When a government owns and controls the key industries but allows for private ownership of smaller businesses, this is best described as a _________ system.
socialist
In a _____ economic system, production planning is largely determined by market forces and most businesses are privately owned with various levels of government regulation (depending on industry).
Mixed
Greg and a couple of college friends have opened a small pizza restaurant near campus. There are several other pizza restaurants in town, so to set themselves apart, they claim that their pizza sauce recipe has been handed down and perfected over three generations and it is the absolute best in town. Based on this information, what type of competitive situation does the pizza restaurant face?
Monopolistic competition
Ensure market entry is even possible, ensure you can afford other barriers to entry, and achieve large market share quickly
Monopoly competition
Which of the following is a characteristic of perfect competition?
No one buy or seller can influence the market
If your company enters the Chinese market, the proposed strategy would be to sell online versus building physical stores. By minimizing costs you can keep prices lower for consumers, which you hope will maximize consumer demand. Which of the following statements uncovered in your research would support this online-only strategy for China? Check all that apply.
Online sales in China will reach $1.7 trillion by 2020, The average cost of delivery is $1 versus the average US cost of $6, 23% of Chinese customers are price sensitive; most stores have frequent sales to attract customers, and Real estate prices are skyrocketing.
In which degree of competition is there no domination by any buyers or sellers?
Perfect competition
The degree of competition in your industry is usually described as monopolistic competition. Which of the following statements best addresses the key strategic consideration for this degree of competition?
Qingdao province has a baby product factory with operating costs that are average compared to the other factories in China. The factory there has design and production capabilities that the other factories in China do not have.
GM Global Corporate Giving focuses on global development and education in STEM programs.
Quality of life
McDonald's pays more than $2.5 billion in taxes each year.
Quality of life
Which of the following key activities are typically performed by the human resources function in a business?
Recruiting, training and developing employees
Which of the following equations would be used to determine if a business has earned a profit?
Sales revenue - expenses
Which of the following elements would identify a monopolistic competition environment?
Sellers must differentiate their products from competitors.
The number of dual-income households has increased dramatically in the U.S. over the past few decades, resulting in more income but less free time, and marketers have discovered that people are willing to pay for products and services that give them more free time, such as drop-off laundry services and home meal kits. This best demonstrates which factor in the business environment?
Social
Fear of diabetes, high blood pressure, and heart disease have prompted many Baby Boomers to develop healthy eating habits. As a result, they are willing to pay more for healthier food options, such as grass-fed beef. In the past, grass-fed beef has not been widely available. According to the law of supply and demand, what is the most likely outcome from this social change in the business environment? Supply will fall until the equilibrium price is met. Supply will remain the same because suppliers of grass-fed beef are able to make higher profit on the same number of cows. The price will increase until the equilibrium price is met. Supply will increase because higher prices make it more attractive for farmers to supply grass-fed beef. Supply will increase until supply meets demand at the equilibrium price. Supply will _____
Supply will increase.
As you review the challenges faced by your family printing business, you select five specific challenges of concern. Each of these challenges represents a change to one of the factors in the business environment. Identify the factor by choosing the correct factor that makes up a business environment from the drop-down menu. a. More and more individuals are able to print sophisticated products such as business cards and brochures using their home
a. More and more individuals are able to print sophisticated products such as business cards and brochures using their home computer. Technology b. Another printing company is opening an office several blocks away Competitive c. Printing companies from China have begun to aggressively market their services in the U.S. by offering very low prices and fast overseas shipping. Global d. The economy in your area is expected to be stagnant for at least the next 12-18 months. Economic e. Younger consumers do not seem to use your products as frequently as older consumers do. Social
You have just taken over your family's printing business. It is important to you that the business has a positive impact on your employees and society in general, while limiting any negative impacts. For each example above, identify the impact on society.
a. Some of your printing processes utilize chemicals that require press operators to wear masks during production. Health and safety risks b. Because of increased profits the last 5 years, you have been able to increase staffing levels by 25%. Increase employment c. The business is a member of the local Chamber of Commerce and supports local community charities. Improve quality of life d. The business is the only one in town to offer 48-hour turnaround on printing projects. Offer valuable products e. The business uses ink that is shipped in bulky, non-recyclable ink containers. Environmental damage
On April 20, 2010, an oil rig in the Gulf of Mexico experienced a blowout. As a direct result of the blowout, more than 200 million gallons of crude oil were pumped into the Gulf of Mexico for a total of 87 days, making it the biggest oil spill in U.S. history. The following are some of the results directly attributed to the oil spill. Choose the appropriate societal impact from the dropdown list provided.
a. The initial oil rig explosion killed 11 people and injured 17 others. Health and Safety Risks b. Of the 400 miles of Louisiana coast, approximately 125 miles were polluted by the oil spill. Environmental Damage c. 170 US Coast Guard vessels, 7,500 employees, and 2,000 volunteers were engaged in grassroots cleanup activities. Social Disruption d. 4,768 dead animals were collected as of August 2013. 4,080 of those were birds and 525 were sea turtles. Environmental Damage e. The fishing industry in the gulf lost $2.5 billion. Social Disruption f. The gulf coast tourist industry lost approximately $23 billion in revenue. Social Disruption g. 108 individuals working on the cleanup efforts reported symptoms including dizziness, vomiting, nausea, headaches, and chest pains, according to the Louisiana Department of Health. Health and Safety Risks h. Investors saw the value of their stock in the affected company drop by 54% in the three months following the oil spill. Social Disruption
You are six months from graduating college and begin to think about your future. Knowing that you'll soon be searching for a job increases your interest in the health of the economy. This is because jobs for students with your major are highly dependent on economic growth. Categorize the following hypothetical headlines as either good news or bad news by choosing the correct answer from the drop- down menu.
a. Unemployment rate drops to 5.6% from 6.1%, the third straight drop in the last three months. Good news b. GDP comes in at $17 trillion this quarter, compared to $16.5 trillion last quarter. Good news c. Prices, as measured by the CPI, increased by 10% last year and it could be even higher this year. Bad news d. GDP drops by 2% in the 3rd quarter, after growing at 5% in the 2nd quarter. Bad news
Based on each example, identify the degree of competition within the industry.
a. United and Delta recently cut their prices for flights between Los Angeles to Seattle to $199. In response, Alaska Airlines cut their price from $239 to $199 for flights between Los Angeles and Seattle in order to remain competitive. Based on this example, what degree of competition exists in the airline industry? Oligopoly b. Chipotle Mexican Grill refers to themselves as a "fast casual" restaurant in order differentiate themselves from "fast food" chains like McDonald's and Burger King. In addition, Chipotle also emphasizes their commitment to using naturally raised animals and buying ingredients from local, family farms - something that most of their competitors don't do. Based on this example, what degree of competition exists within this industry? Monopolistic Competition c. Oil-producing countries such as Saudi Arabia and Russia became concerned when the price of crude oil dropped 40% in January 2016. Since their oil is fundamentally the same as oil produced by other countries, they must accept the worldwide market price for crude oil. These lower prices favor countries and drilling projects that have a lower cost of production. Based on this example, what degree of competition exists in this industry? Perfect Competition
Adam Smith stated that Capitalism is based upon four principles: 1. The right to create wealth2. The right to own property and resources3. The right to economic freedom and the freedom to compete4. The right to limited intervention Today, the extent to which those rights exist varies from country to country. Choose the economic rights from the drop-down menu that best describes the governmental economic activities below.
a. Venezuela is a socialist country where the average tariff rate on imports is 8.6%. This rate is fairly high. Non-tariff barriers restrict imports of cars and agricultural products. It may take several weeks to import goods. This limits the ability of businesses to import goods at a reasonable price. The right to economic freedom and the freedom to compete b. Hong Kong is a mixed economy where the competitive regulatory regime aids business formation and innovation. North Korea is a communist country where entrepreneurial activity is non-existent because the state continues to regulate the economy heavily through central planning and control. The right to limited intervention c. The maximum individual tax rate varies from country to country. The lowest maximum individual tax rate is in the British Virgin Islands (0%). The right to create wealth d. The European Convention on Human Rights states "Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law". The right to own property and resources
In reviewing the financial records of your family printing business, you wonder what it would be like to expand overseas. As you consider that expansion, you recall from your college business class that there are four primary economic systems in the world today. They are: Communist Socialist Mixed Capitalist Review each of the following descriptions of a country's business environment below, then match the description to their economic systems by choosing your answer from the drop-down menu.
a. With no minimum capital standards, starting a company only requires some simple paperwork. Flexible labor regulations means you can hire employees as long as you follow certain guidelines and laws. Mixed b. On average, it requires over 100 days to incorporate a company, and obtaining necessary permits takes 400 days. And some key industries are owned by the state, so you would need to evaluate whether private businesses in your industry are even allowed. Socialist c. Only state enterprises can enter into economic agreements with foreigners as minority partners; ordinary citizens cannot participate. All means of production are owned by the state. Communist
To learn more about the competitive environment where your printing company operates, you hire a market research firm to survey your community. After several weeks, the market research firm reports finding numerous competitors in your community that offer similar products and services. Your industry can best be described as monopolistic competition. You have four options. They are: Minimize your cost of production Clearly differentiate product from competition Match competitor pricing and differentiate your product (if possible) Exploit your industry's natural barriers to entry and quickly achieve a large market share a. The strategy that best addresses your competitive situation is to
clearly differentiate from competition
According to a recent study, 79% of U.S. consumers shop on the web or on their phones, up from just 22% back in 2000. This trend is largely a result of _______ factors in the business environment.
technological
The U.S. economy has gone through many economic changes over the years, from expansion to contraction. This is called a(n):
the business cycle.