both econs and strat pol sets

A company had a choice between Project X and Project Y. The net present value of Project X is $1,000,000, and the net present value of Project Y is $750,000. The company chose Project X. What is the opportunity cost of that decision? A. $250,000 B. $750,000 C. $1,000,000 D. $1,750,000

$750,000

A lender and a borrower signed a contract for a $1,000 loan for 1 year. The lender asked the borrower to pay 3% interest. Inflation occurred and prices rose by 2% over the next year. The borrower repaid $1,030. What is the amount worth in real terms, after inflation? A. $1,060.90 B. $1,050.60 C. $1,019.80 D. $1,009.80

$1,009.80

Carter Co. paid $1,000,000 for land 3 years ago. Carter estimates it can sell the land for $1,200,000, net of selling costs. If the land is not sold, Carter plans to develop the land at a cost of $1,500,000. Carter estimates net cash flow from the development in the first year of operations would be $500,000. What is Carter's opportunity cost of the development? A. $1,500,000 B. $1,200,000 C. $1,000,000 D. $500,000

$1,200,000

A hospital is comparing last year's emergency rescue services expenditures to those from 10 years ago. Last year's expenditures were $100,500. Ten years ago, the expenditures were $72,800. The CPI for last year is 168.5, as compared to 10 years ago when it was 121.3. After adjusting for inflation, what percentage change occurred in expenditures for emergency rescue services? A. 38.0% increase. B. 13.8% increase. C. 0.6% decrease. D. 18.1% decrease.

0.6% decrease

Below are the recent monthly unemployment figures for an economy: - Persons moving to a new city and seeking work: 100,000 - Persons out of work because their industry has just been rendered obsolete by technological change: 12,000 - Persons in all industries laid off due to general economic slowdown: 120,000 - Persons taking 2 months off from work to pursue education: 100,000 Applying the Bureau of Labor Statistics' guidelines for calculating the official unemployment statistics, what is the "natural" level of unemployment for this economy? A. 200,000 B. 212,000 C. 232,000 D. 320,000

212,000

The price elasticity of demand for a good is 2.0, and the quantity demanded is 5,000 units. The price increases by 10%. What is the new quantity demanded? A. 1,000 B. 4,000 C. 4,500 D. 6,000

4,000

Tuscan Bank is required to reserve $20 out of every $100 deposited, and it has $5,000,000 in deposits. What is the current money multiplier? A. .2 B. 5 C. 2,500 D. .5

5

What is the rate of inflation from one year to the next if the consumer price index was 110 in one year and 118 in the next year? A. 7.0% B. 7.3% C. 8.0% D. 18.0%

7.3%

Bank is willing to lend a business $1 million at an annual real interest rate of 6%. What is the nominal rate Bank will charge the firm if the rate of inflation is anticipated to be 2%? A. 2% B. 4% C. 6% D. 8%

8%

57) What aims to balance long-term with short-term concerns, financial with non-financial concerns, and internal with external concerns? A) Contingency planning B) The Balanced Scorecard approach C) Taking corrective action D) Benchmarking E) Consonance

Balanced Scorecard Approach

26) One difference between CPM and EFE is that A) CPM includes both internal and external issues .B) the weights and total weighted scores have different meanings. C) CPM ratings range from 1 to 10 .D) CPM is performed only for the company, whereas EFE is performed for both the company and its competitors. E) CPM is only used in small firms.

CPM includes both internal and external issues

Tennis rackets and tennis balls are A. Substitute goods. B. Independent goods. C. Inferior goods. D. Complementary goods.

complementary goods

15) Who is referred to as "the father of modern management?" A) Deming B) Peters C) Drucker D) McGinnis E) Smith

drucker

The change in total product resulting from the use of one unit more of the variable factor is known as A. The point of diminishing average productivity. B. Marginal product. C. Marginal cost. D. The point of diminishing marginal productivity.

marginal product

33) Burger King opening its first restaurant in Japan is an example of which type of strategy? A) Forward integration B) Backward integration C) Horizontal integration D) Market development E) Product development

market development

36) Adding new, related products or services for present customers is called A) forward integration. B) related diversification. C) backward integration. D) conglomerate diversification. E) unrelated diversification.

related diversification

The Federal Reserve System's reserve ratio is the A. Specified percentage of a commercial bank's deposit liabilities that must be deposited in the central bank or kept on hand. B. Rate that the central bank charges for loans granted to commercial banks. C. Ratio of excess reserves to legal reserves that are deposited in the central bank. D. Specified percentage of a commercial bank's demand deposits to total liabilities.

Specified percentage of a commercial bank's deposit liabilities that must be deposited in the central bank or kept on hand.

What can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives? A) Strategy formulation B) Strategy evaluation C) Strategy implementation D) Strategic management E) Strategic leading

Strategic Management

If the price elasticity of demand for a product is inelastic, A. A price decrease causes total revenue to increase. B. A price increase causes total revenue to increase. C. A price decrease leaves total revenue unchanged. D. A price increase leaves total revenue unchanged.

a price increase causes total revenue to increase

56) Which of these is a basic activity of strategy evaluation? A) Reviewing the underlying internal and external factors that represent the bases of current strategies B) Measuring organizational performance C) Taking corrective actions D) All of the above E) Only B and C

all of the above

In order for the Federal Reserve System to increase the money supply, the appropriate policy is to A. Encourage banks to increase their holdings of excess reserves. B. Increase the discount rate. C. Engage in open-market purchases of government securities. D. Raise margin requirements on stock market purchases.

engaged in open-market purchases of government securities

A good example of monopolistic competition is the A. Agriculture market. B. Fast food industry. C. Steel industry. D. Auto industry.

fast food industry

A concerted effort to avoid doing business with a particular supplier is known as a A. Cartel. B. Group boycott. C. Monopolistic competition. D. Monopsony.

group boycott

The argument in favor of minimum wage laws is that they A. Can raise wages above the equilibrium level. B. Reduce employment. C. Cause some people to lose their jobs. D. Improve the economic status of some workers.

improve the economic status of some workers

All of the following are true about perfect competition except that A. There is free market entry without large capital costs for entry. B. There are many firms participating in the market. C. In the long run, an increase in profit will have no effect on the number of firms in the market. D. Firms are price takers.

in the long run, an increase in profit will have no effect on the number of firms in the market

43) Which stage in the strategy-formulation framework focuses on generating feasible alternative strategies?A) Input B) Output C) Decision D) Throughput E) Matching

matching

A market with many independent firms, low barriers to entry, and product differentiation is best classified as A. A monopoly. B. Monopolistic competition. C. An oligopoly. D. Pure competition.

monopolistic competition

19) The I/O approach to competitive advantage advocates that external factors are ________ internal factors in a firm achieving competitive advantage. A) less important than B) as important as C) more important than D) more common than E) less common than

more important than

The amounts paid to laborers are A. Real wages. B. Nominal wages. C. Productivity wages. D. Minimum wages.

nominal wages

A supply curve illustrates the relationship between A. Price and quantity supplied. B. Price and consumer tastes. C. Price and quantity demanded. D. Supply and demand.

price and quantity supplied

If the price elasticity of demand for a normal good is estimated to be 1.5, a 10% reduction in its price would cause A. Total revenue to fall by 10%. B. Total revenue to fall by 15%. C. Quantity demanded to rise by 15%. D. Demand to decrease by 10%.

quantity demanded to rise by 15%

49) How would a division with a low relative market share position in a high growth industry be described? A) Question Mark B) Cash Cow C) Star D) Stuck-in-the-middle E) Dog

question mark

A business cycle is a record of the A. Currently hottest trends in consumer purchases. B. Duration of a company from its founding date to its dissolution date. C. Recurrent fluctuations that occur in time series data for key macro variables such as real GDP. D. Average duration of product cycles, from introduction to obsolescence.

recurrent fluctuations that occur in time series data for key macro variables such as real GDP

A decrease in the price of a complementary good will A. Shift the demand curve of the other commodity to the left. B. Increase the price paid for a substitute good. C. Shift the supply curve of the other commodity to the left. D. Shift the demand curve of the other commodity to the right.

shift the demand curve of the other commodity to the right

Which of the following is not a form of non-price competition typical under monopolistic competition? A. Advertising. B. Product differentiation. C. Product quality. D. Special discounts.

special discounts

50) When a division of an organization has a high relative market share and is in a fast-growing industry, it is called a A) Star. B) Cash Cow. C) Cat. D) Question Mark. E) Dog.

star

7) Which individuals are most responsible for the success and failure of an organization? A) Strategists B) Financial planners C) Personnel directors D) Stakeholders E) Human resource managers

strategist

All of the following are characteristics of monopolistic competition except that A. The firms sell a homogeneous product. B. The firms tend not to recognize the reaction of competitors when determining prices. C. Individual firms have some control over the price of the product. D. The consumer demand curve is highly elastic.

the firms sell a homogeneous product

Jackson Co. is considering a project that will use 2,000 square feet of storage space at one of its facilities to store used equipment. What will determine Jackson's opportunity cost? A. The net present value of the project. B. The internal rate of return of the project. C. The value of the next best use of the space. D. The depreciation expense on the space.

the value of the next best use of the space

The effect of a boycott on a firm's demand curve can be depicted as A. A movement up a given curve. B. A movement down a given curve. C. A leftward shift of the entire curve. D. A rightward shift of the entire curve.

a leftward shift of the entire curve

One of the measures economists and economic policy makers use to gauge a nation's economic growth is to calculate the change in the A. Money supply. B. Total wages. C. General price level. D. Real per capita output.

real per capita output

Diana has noticed that many of her coworkers at Bubble, Inc., have been laid off over the past year due to low profits. Also, prices were lowered recently due to economic conditions. Even though Diana is worried about her future at Bubble, she has noticed that employment has risen over the past month and that prices are slowly increasing. Because other companies have had the same experience, what phase of the business cycle is the economy currently in? A. Peak. B. Recession. C. Trough. D. Recovery.

recovery

30) Financial objectives involve all of the following except: A) growth in revenues. B) larger market share. C) higher dividends .D) greater return on investment .E) a rising stock price.

larger market share

A government price support program will A. Lead to surpluses. B. Lead to shortages. C. Improve the rationing function of prices. D. Encourage firms to leave the industry.

lead to surpluses

The money supply in a nation's economy will decrease following A. Open-market purchases by the nation's central bank. B. A decrease in the discount rate. C. An increase in the reserve ratio. D. A decrease in the margin requirement.

an increase in the reserve ratio

If a product's demand is relatively elastic and the price is lowered, the effect will be A. A decrease in total revenue. B. No change in total revenue. C. A decrease in total revenue and the demand curve shifts to the left. D. An increase in total revenue.

an increase in total revenue

27) All of the following are basic duties of a manager except: A) staffing. B) planning. C) consolidating. D) organizing. E) motivating.

consolidating

What does the consumer price index measure? A. Cost of capital. B. Average household income. C. Rate of inflation. D. Prime rate of interest.

rate of inflation

The elasticity of resource demand tends to be high when A. The elasticity of product demand is high. B. Substitutes are not available. C. The elasticity of product demand is low. D. The resource cost is a lesser percentage of total cost.

the elasticity of product demand is high

37) Qualcomm Inc.'s recent expansion beyond cell phones into desktop hardware is an example of A) backward integration. B) divestiture. C) retrenchment. D) unrelated diversification. E) forward integration.

unrelated diversification

The trough of a business cycle is generally characterized by A. Shortages of essential raw materials and rising costs. B. Increasing purchasing power and increasing capital investments. C. Rising costs and an unwillingness to risk new investments. D. Unused productive capacity and an unwillingness to risk new investments.

unused productive capacity and an unwillingness to risk new investments

14) Which type of statement should be created first and foremost? A) Strategic B) Vision C) Objectives D) Mission E) Competitive advantage

vision

Using the income approach, calculate the national income used to calculate GDP with the information provided below: - Interest: $8,000 - Salaries and wages: 50,000 - Net foreign factor income: 7,000 - Partnership income: 10,000 - Rents: 20,000 - Indirect business taxes: 1,000 - Corporate profits: 25,000 - Proprietor income: 4,000 A. $107,000 B. $117,000 C. $118,000 D. $124,000

$117,000

A small country that uses the U.S. dollar as its currency is measuring its GDP for the current year. Personal consumption expenditure was $69,000 last year, and it increased by 10% this year. Gross private domestic investment was $18,000, and it decreased by 5% this year. Government purchases was $19,000, and it increased by 20% this year. Net exports of $2,000 remained the same as last year. What is the current year's GDP based on the classic expenditure model? A. $117,800. B. $114,000. C. $108,000. D. None of the answers are correct.

$117,800

The full-employment gross domestic product (GDP) is $1.3 trillion, and the actual gross domestic product is $1.2 trillion. The marginal propensity to consume (MPC) is 0.8. When inflation is ignored, what increase in government expenditures is necessary to produce full employment? A. $100 billion. B. $80 billion. C. $20 billion. D. $10 billion.

$20 million

What is the amount needed to close the recessionary gap if the economy's full-employment real gross domestic product (GDP) is $1.2 trillion and its equilibrium real GDP is $1.0 trillion? A. $200 billion. B. $200 billion divided by the multiplier. C. $200 billion multiplied by the multiplier. D. $200 billion times the reciprocal of the marginal propensity to consume (MPC).

$200 billion divided by the multiplier

From the following information, calculate economic profit: - Total sales revenue: $600,000 - Total cost of sales: 200,000 - Selling expenses: 50,000 - General and administrative expenses: 25,000 - Forgone interest: 20,000 - Forgone entrepreneurial income: 15,000 A. $400,000 B. $325,000 C. $305,000 D. $290,000

$290,000

Fact pattern: The financial transactions for the country of Panglossia with values stated in billions of dollars are listed below. - Gross domestic product (GDP): $4,000 - Transfer payments: 500 - Corporate income taxes: 50 - Social Security contributions: 200 - Indirect business taxes: 210 - Personal taxes: 250 - Undistributed corporate profits: 25 - Depreciation: 500 - Net income earned abroad for the country: 0 Panglossia's disposable income is A. $3,500 B. $3,290 C. $4,500 D. $3,265

$3,265

Fact pattern: The financial transactions for the country of Panglossia with values stated in billions of dollars are listed below. - Gross domestic product (GDP): $4,000 - Transfer payments: 500 - Corporate income taxes: 50 - Social Security contributions: 200 - Indirect business taxes: 210 - Personal taxes: 250 - Undistributed corporate profits: 25 - Depreciation: 500 - Net income earned abroad for the country: 0 Panglossia's national income is A. $3,500 B. $3,290 C. $3,515 D. $3,265

$3,290

A bank with a reserve ratio of 20% and reserves of $1,000,000 can increase its total demand deposits by A. $5,000,000 B. $1,000,000 C. $800,000 D. $200,000

$5,000,000

If Tonya used $10,000 from her savings account, which was paying 5% interest annually, to invest in a coffee shop, the opportunity cost of this investment annually would be A. $500 B. The dividend paid by the coffee shop. C. $10,000 D. $10,500

$500

Investment figures are for planned investment. Amounts are in billions. Personal Consumption Real GDP Expenditures $510 $492 520 500 530 508 540 516 550 524 560 532 570 540 Assuming that taxes and net exports are zero, government purchases of goods and services are equal to $12, and gross private domestic investment is equal to $10, the equilibrium real gross domestic product will be A. $510 B. $520 C. $530 D. $570

$530

Assume that real gross domestic product (GDP), measured in Year 1 dollars, rose from $3,000 billion in Year 1 to $4,500 billion in Year 10. Assume also that the price index rose from 100 to 200 during the same period. The GDP for Year 1 expressed in terms of Year 10 prices is A. $1,500 billion. B. $3,000 billion. C. $4,500 billion. D. $6,000 billion.

$6,000 billion

The controller of Gray, Inc., has decided to use ratio analysis to analyze business cycles for the past 2 years in an effort to identify seasonal patterns. Which of the following formulas should be used to compute percentage changes for account balances for Year 1 to Year 2? A. (Prior balance - Current balance) ÷ Current balance B. (Prior balance - Current balance) ÷ Prior balance C. (Current balance - Prior balance) ÷ Current balance D. (Current balance - Prior balance) ÷ Prior balance

(current balance - prior balance) ÷ prior balance

54) Which of these is true about strategy implementation? A) It is positioning forces before the action. B) It focuses on effectiveness. C) It is primarily an operational process .D) It is primarily an intellectual process. E) It requires intuitive skills.

) It is primarily an operational process.

41) Under which condition would a cost leadership strategy be especially effective? A) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value .B) When buyer needs and uses are diverse .C) When few rival firms are following a similar approach D) When technological change is fast paced and competition revolves around rapidly evolving product features. E) When the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers.

) When the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers.

Assuming a required reserve ratio of 10%, the value of the monetary multiplier will be A. 4 B. 6 C. 8 D. 10

10

A characteristic of a monopoly is that A. A monopoly will produce when marginal revenue is equal to marginal cost. B. There is a unique relationship between the market price and the quantity supplied. C. In optimizing profits, a monopoly will increase its supply curve to where the demand curve becomes inelastic. D. There are multiple prices for the product to the consumer.

A monopoly will produce when marginal revenue is equal to marginal cost.

Aqua Co. manufactures and sells boats in San Francisco, California. Aqua Co. has hired a consultant to evaluate entry into the Fort Lauderdale, Florida, market. The consultant determined that at the projected level of output the price would be $90,000, the average variable cost would be $55,000, the average total cost would be $70,000, and the marginal cost would be $62,000. The consultant's recommendation would include the following remark: A. Aqua Co. should not enter the market. B. Aqua Co. should enter the market. C. Companies are leaving the market. D. None of the answers are correct.

Aqua Co. should enter the market

At what point in the industry life cycle should a firm in a monopolistic competitive market consider acquiring other firms? A. New entrants flood the market due to profitability in the industry. B. Firms begin to differentiate their products further, increasing their average total costs. C. Higher costs eliminate economic profits that attracted the new entrants. D. At no point in the monopolistic competition industry life cycle should the firm be looking to make an acquisition.

At no point in the monopolistic competition industry life cycle should the firm be looking to make an acquisition.

Under the income approach, gross domestic product (GDP) is measured as A. Depreciation charges and indirect business taxes + Wages + Rents + Interest + Profits - Net American income earned abroad. B. Wages + Rents + Interest + Profits. C. Depreciation charges and indirect business taxes + Wages + Rents - Interest + Profits. D. Wages + Rents + Interest - Profits + Net American income earned abroad.

Depreciation charges and indirect business taxes + Wages + Rents + Interest + Profits - Net American income earned abroad.

EM Co. is considering acquiring Chairy Co., which manufactures wooden rocking chairs. EM's accountant determined, at the projected output level, the following: - Price: $250 - Average variable cost: 125 - Average total cost: 160 - Marginal cost: 140 The accountant's report would include the following remark: A. EM Co. should acquire Chairy Co. B. EM Co. should not acquire Chairy Co. C. Companies are leaving the market. D. None of the answers are correct.

EM Co. should acquire Chairy Co.

A United States-based faculty member goes on sabbatical and works in Finland for a government-run university teaching classes for its International MBA program. The faculty member returns to the U.S. with a paycheck for $50,000 and spends $38,000 of it on a German manufactured car from a dealership in Miami, Florida. Using the classic expenditure model, how much does the GDP increase in each country? (Germany Finland United States) A. $38,000, $50,000, $50,000 B. $0, $0, $50,000 C. $38,000, $50,000, $0 D. None of the answers are correct.

Germany - $38,000 Finland - $50,000 United States - $0

A utility firm has enjoyed an oligopolistic market due to regulations. Starting next year, these regulations will be repealed. One should expect I. New firms in the market II. Consolidation III. Divestiture A. I only. B. II only. C. I and II only. D. III only.

I and II only

The monopoly firm has a patent that is about to expire. A new start-up firm has entered the market with a new method and has applied for patent protection. Which of the strategies below make the most economic sense for the monopoly firm? I. Acquire the start-up firm II. Continue production III. Divestiture A. I only. B. II only. C. I and II only. D. III only.

I and II only

The U.S. Bureau of Labor Statistics samples American households each month and publishes an official unemployment rate based on the following formula: Which of the following persons are excluded from the denominator of this calculation? I. A homemaker with a part-time job outside the home II. A landscaper in the underground economy III. A laid-off database administrator not actively seeking other employment IV. A 15-year-old, actively seeking other employment, who was laid off by an ice cream stand owner A. I, II, and III. B. I, II, and IV. C. I, III, and IV. D. II, III, and IV.

II, III, and IV

A firm employs 100 workers and has 2 divisions, each in perfectly competitive markets. Division A produces tape measures and Division B produces saws. How should the firm allocate its workers to maximize efficiency? I. Allocate workers between the divisions so the average cost of producing tape measures equals the average cost of producing saws. II. Allocate workers to the division with the lowest marginal product of labor and divest from the other division. III. Allocate workers so the marginal product of labor is the same in both divisions. A. I only. B. II only. C. III only. D. II and III only.

III only

A natural monopoly is A. Identified with a one-firm industry with significant economies of scale and in which unit costs are minimized. B. An important part of the analysis of monopolistic competition. C. Identified with an industry in which economies of scale are rapidly exhausted. D. Identified with an industry in which economies of scale are few and diseconomies are quickly incurred.

Identified with a one-firm industry with significant economies of scale and in which unit costs are minimized.

59) This time period was a particularly bad time for management A) Industrial Revolution B) World War I C) Roman Empire D) Roaring Twenties E) The Great Depression

Industrial Revolution

A corporation's net income as presented on its income statement is usually A. More than its economic profits because opportunity costs are not considered in calculating net income. B. More than its economic profits because economists do not consider interest payments to be costs. C. Equal to its economic profits. D. Less than its economic profits because accountants include labor costs, while economists exclude labor costs.

More than its economic profits because opportunity costs are not considered in calculating net income.

Monopolistic competition is characterized by a A. Relatively large group of sellers who produce differentiated products. B. Relatively small group of sellers who produce differentiated products. C. Monopolistic market where the consumer is persuaded that there is perfect competition. D. Relatively large group of sellers who produce a homogeneous product.

Relatively large group of sellers who produce differentiated products.

Which one of the following scenarios related to Music For You, Inc., who manufactures headphones, is not considered an illegal pricing practice? A. The company sells the same model of headphones at two different prices. A lower price is set for customers who live near low-priced retailers who sell other types of headphones. A higher price is set for customers who live in smaller towns. B. The company allows customers who spend over a hundred dollars to purchase another set of headphones for half the price. The price for other customers who don't spend over a hundred dollars remains the same. C. The company recently began selling its headphones overseas at extremely low prices to give international buyers a price reduction. D. The company works with Beats For You, Inc., to set prices together, causing all customers who purchase their headphones to pay higher prices.

The company allows customers who spend over a hundred dollars to purchase another set of headphones for half the price. The price for other customers who don't spend over a hundred dollars remains the same.

Which of the following statements is correct regarding the variety and price of products produced under monopolistic competition as compared to production under perfect competition? A. The monopolistically competitive industry produces a greater variety of products at a lower cost per unit. B. The monopolistically competitive industry produces a greater variety of products at a higher cost per unit. C. The monopolistically competitive industry produces a smaller variety of products at a lower cost per unit. D. The monopolistically competitive industry produces a smaller variety of products at a higher cost per unit.

The monopolistically competitive industry produces a greater variety of products at a higher cost per unit.

In national income terms, aggregate demand is A. Demand for money by the community in a period of full employment. B. Total expenditure on capital goods by entrepreneurs during a period of full employment. C. Demand that is needed if a country's economy is to operate at optimum level and the level of investment is to be raised. D. Total expenditure on consumer goods and investment, including government and foreign expenditure, during a given period.

Total expenditure on consumer goods and investment, including government and foreign expenditure, during a given period.

The creation of deposit money by U.S. commercial banks increases the A. Real wealth of the United States. B. Real U.S. national income. C. U.S. money supply. D. Purchasing power of the U.S. dollar.

US money supply

60) Systems Management was developed by: A) Taylor B) Drucker 'C) McGregor D) Weber E) von Bertalanaffy

Von Bertalanffy

An oligopolist faces a "kinked" demand curve. This terminology indicates that A. When an oligopolist lowers its price, the other firms in the oligopoly will match the price reduction, but if the oligopolist raises its price, the other firms will ignore the price change. B. An oligopolist faces a non-linear demand for its product, and price changes will have little effect on demand for that product. C. An oligopolist can sell its product at any price but, after the "saturation point," another oligopolist will lower its price and therefore shift the demand curve to the left. D. Consumers have no effect on the demand curve, and an oligopolist can shape the curve to optimize its own efficiency.

When an oligopolist lowers its price, the other firms in the oligopoly will match the price reduction, but if the oligopolist raises its price, the other firms will ignore the price change.

In which of the following situations would there be inelastic demand? A. A 5% price increase results in a 3% decrease in the quantity demanded. B. A 4% price increase results in a 6% decrease in the quantity demanded. C. A 4% price increase results in a 4% decrease in the quantity demanded. D. A 3% price decrease results in a 5% increase in the quantity demanded.

a 5% price increase results in a 3% decrease in the quantity demanded

A normal profit is A. The same as an economic profit. B. The same as the accountant's bottom line. C. An explicit or out-of-pocket cost. D. A cost of resources from an economic perspective.

a cost of resources from an economic perspective

If a group of consumers decide to boycott a particular product, the expected result would be A. An increase in the product price to make up lost revenue. B. A decrease in the demand for the product. C. An increase in product supply because of increased availability. D. That demand for the product would become completely inelastic.

a decrease in the demand for the product

Each of the following describes one of the functions of money except A. A means of storing value over a long period of time. B. A common basis for measuring stored accounts. C. A hedge against inflation. D. A tool for facilitating the exchange of goods and services.

a hedge against inflation

In an analysis of long-run costs of production, "long run" means A. More than 1 year but less than 5 years. B. Five or more years. C. A period of time long enough to turn over top management. D. A period of time long enough for the firm to make all resource costs variable in nature.

a period of time long enough for the firm to make all resource costs variable in nature

Which of the following individuals would be most hurt by an unanticipated increase in inflation? A. A retiree living on a fixed income. B. A borrower whose debt has a fixed interest rate. C. A union worker whose contract includes a provision for regular cost-of-living adjustments. D. A saver whose savings was placed in a variable rate savings account.

a retiree living on a fixed income

Which of the following results could be expected from an open market operation of the Federal Reserve? A. A sale of securities would lower interest rates. B. A purchase of securities would raise interest rates. C. A purchase of securities would lower security prices. D. A sale of securities would raise interest rates.

a sale of securities would raise interest rates

An improvement in technology that in turn leads to improved worker productivity would most likely result in A. A shift to the right in the supply curve and a lowering of the price of the output. B. A shift to the left in the supply curve and a lowering of the price of the output. C. An increase in the price of the output if demand is unchanged. D. A decrease in real wages.

a shift to the right in the supply curve and a lowering of the price of the output

If the federal government regulates a product or service in a competitive market by setting a maximum price below the equilibrium price, what is the short-run effect? A. A surplus. B. A shortage. C. A decrease in demand. D. No effect on the market.

a shortage

All of the following are stages of the business cycle except A. Peak. B. Trough. C. Recovery. D. Acceleration.

acceleration

Which of the following definitions best describes a business cycle? A. Activity where the decline in the economy's real gross domestic product (GDP) persists for at least a half-year. B. Activity marked by a relatively high level of real GDP, full employment, and inflation. C. Activity that alternates periods of growth and decline in an economy's GDP. D. Activity where real GDP declines, inflation moderates, and unemployment increases.

activity that accelerates periods of growth and decline in an economy's GDP

In microeconomics, the distinguishing characteristic of the long run on the supply side is that A. Only supply factors determine price and output. B. Only demand factors determine price and output. C. Firms are not allowed to enter or exit the industry. D. All inputs are variable.

all inputs are variable

17) Which group would be classified as stakeholders?A) Governments B) Creditors C) Suppliers D) Employees E) All of the above

all of the above

63) The primary principles in the Christian Worldview of Management are: A) Free-Will B) Private Property C) Individualism D) A & B E) All of the above

all of the above

66) Under which branch of management is strategy? A) Financial Management B) Marketing Management C) Operations Management D) Human Resource Management E) All of the above

all of the above

A country recently experienced a drop in consumer purchases and a rise in business inventories of durable goods. Wages grew slowly and unemployment increased. Business investment in plant and equipment dropped sharply and profits fell. Both interest rates and stock prices fell. Which of the following statements best represents the country's current economy? A. Entering an economic "stagflation". B. Exiting an inflationary period. C. Exiting a depression period. D. Amidst an economic recession.

amidst an economic recession

Which of the following may provide a leading indicator of a future increase in gross domestic product? A. A reduction in the money supply. B. A decrease in the issuance of building permits. C. An increase in the timeliness of delivery by vendors. D. An increase in the average hours worked per week of production workers.

an increase in the average hours worked per week of production workers

Fact pattern: Karen Parker wants to establish an environmental testing company that would specialize in evaluating the quality of water found in rivers and streams. However, Parker has discovered that she needs either certification or approval from five separate local and state governmental agencies before she can commence business. Also, the necessary equipment to begin costs several million dollars. Nevertheless, Parker believes that, if she is able to obtain capital resources, she can gain market share from the two major competitors. The market structure Karen Parker is attempting to enter is best described as A. A natural monopoly. B. A cartel. C. An oligopoly. D. Monopolistic competition.

an oligopoly

18) ________ is not part of an external audit. A) Analyzing competitors B) Analyzing financial ratios C) Analyzing available technologies D) Studying the political environment E) Analyzing social, cultural, demographic and geographic forces

analyzing financial ratios

8) An organization's vision statement A) is a constant reminder to its employees of why the organization exists. B) broadly charts the future direction of an organization. C) addresses the basic question: "What is our business?" D) answers the question: "What do we want to become?" E) none of the above

answers the question what do we want to become

A privately owned subchapter S corporation increases its inventory of paper towels held for sale by 35% this year. How will this be reflected in the GDP calculation? A. As a reduction of personal consumption expenditure. B. As an increase in gross private domestic investment. C. As a government transfer payment. D. As an increase in net exports.

as an increase in gross private domestic investment

Price discrimination is accomplished most effectively in markets with which of the following characteristics? A. Fairly distinct segments of customers. B. High competition that generates many price changes. C. Advanced technology capabilities that determine optimal pricing. D. Excess capacity that meets high demand at different price levels.

fairly distinct segments of customers

24) If suppliers are unreliable or too costly, which of these strategies may be appropriate? A) Horizontal integration B) Backward integration C) Market penetration D) Forward integration E) Concentric diversification

backward integration

22) What is not one of Michael Porter's five competitive forces? A) New entrants B) Rivalry among existing firms C) Bargaining power of unions D) Bargaining power of suppliers E) Bargaining power of buyers

bargaining pattern of unions

Providing an adequate supply of money to accommodate the needs of U.S. business is the task of the A. United States Treasury. B. Controller of the Currency. C. Bureau of Printing and Engraving. D. Federal Reserve System.

federal reserve system

Which of the following would indicate that the economy is in an expansionary phase? A. Businesses increase capital investment. B. The economy's resources are underused. C. Potential national income will exceed actual national income. D. Building up of inventories is in excess of consumer demand.

businesses increase capital investment

A government is most likely to reduce taxes on investments when A. The real exchange rate is expected to be unusually high. B. Inflation is expected to be unusually low. C. The gross domestic product is expected to be unusually high. D. Capital spending is expected to be unusually low.

capital spending is expected to be unusually low

When compared with firms in perfectly competitive markets, monopolists ordinarily A. Use more advertising to increase sales. B. Charge a higher price and produce a higher rate of output. C. Use more capital and less labor to avoid problems with workers. D. Charge a higher price and produce a lower rate of output.

charge a higher price and produce a lower rate of output

Which of the following pricing policies results in establishment of a price to external customers higher than the competitive price for a given industry? A. Collusive pricing. B. Dual pricing. C. Predatory pricing. D. Transfer pricing.

collusive pricing

48) The BCG Matrix is designed specifically to enhance which type of firm's efforts to formulate strategies? A) Companies with more than one division B) Large companies C) Companies with annual sales greater than $1 million D) Companies with annual sales of less than $1 million E) All companies

companies with more than one division

The primary purpose of the consumer price index (CPI) is to A. Establish a cost-of-living index. B. Identify the strength of an economic recovery. C. Help determine the Federal Reserve Bank's discount rate. D. Compare relative price changes over time.

compare relative price changes over time

5) Anything that a firm does especially well compared to rival firms is referred to as A) competitive advantage. B) comparative advantage. C) opportunity cost. D) sustainable advantage. E) an external opportunity.

competitive advantage

21) A systematic and ethical process for gathering and analyzing information about the competition's activities and general trends to further a business's own goals is called A) unethical business practice. B) artificial intelligence. C) competitive intelligence .D) information sharing. E) competitive advantage.

competitive intellegence

The primary mechanism of monetary control of the Federal Reserve System is A. Changing the discount rate. B. Conducting open market operations. C. Changing reserve requirements. D. Using moral persuasion.

conducting open market operations

The measurement of inflation that is a calculation based on a monthly pricing of items on a typical household shopping list is the A. Consumer price index. B. Wholesale price index. C. GDP deflator. D. Demand-pull index.

consumer price index

Which of the following concepts compares the price of goods in a given year to a base year? A. Consumer price index. B. Consumer confidence index. C. Gross national product. D. Net national product.

consumer price index

Which of the following indicators is used by the federal government to measure inflation? A. Dow Jones index. B. Consumer price index. C. Consumer confidence index. D. Corporate profits.

consumer price index

10) Long-term objectives should be all of the following except A) measurable. B) continually changing. C) reasonable. D) challenging. E) consistent.

continually changing

Mr. Johnson is hired as a consultant to a firm in a perfectly competitive industry. At the current output level, the price is $60, the average variable cost is $50, average total cost is $75, and the marginal cost is $70. In order to maximize profits in the short-run, Mr. Smith will recommend that the firm should A. Continue to operate. B. Shut down. C. Raise the price of its product. D. Reduce the size of its plant to lower fixed costs.

continue to operate

In the short run, a purely competitive firm operating at a loss will A. Shut down. B. Continue to operate as long as price exceeds average variable costs. C. Raise the price of its product. D. Reduce the size of its plant to lower fixed costs.

continue to operate as long as price exceeds average variable costs

29) Which function of management includes all of those activities undertaken to ensure actual operations conform to planned operations? A) Planning B) Organizing C) Motivating D) Staffing E) Controlling

controlling

Each of the following is a pair of substitute resources except A. Automobile assembly workers and robots. B. Data entry clerks and optical scanners. C. Colombian coffee beans and Nigerian coffee beans. D. Court bailiffs and judges.

court bailiffs and judges

Price ceilings A. Are illustrated by government price support programs in agriculture. B. Create prices greater than equilibrium prices. C. Create prices below equilibrium prices. D. Result in persistent surpluses.

create prices below equilibrium prices

Demand for a product tends to be price inelastic if A. The product is considered a luxury item. B. More substitute products become available in the market. C. The population in the market area is large. D. Few good substitutes are available for the product.

few good substitutes are available for the product

For a given level of tax collections, prices, and interest rates, a decrease in governmental purchases will result in a(n) A. Increase in aggregate demand. B. Increase in aggregate supply. C. Decrease in aggregate demand. D. Decrease in aggregate supply.

decrease in aggregate demand

Price tends to fall in competitive markets when there is a(n) A. Increase in demand for the product. B. Decrease in demand for the product. C. Decline in available labor. D. Increase in interest rates.

decrease in demand for the product

In relation to the laws of supply and demand, an increase in supply will A. Increase the equilibrium price and the equilibrium quantity exchanged. B. Decrease the equilibrium price and the equilibrium quantity exchanged. C. Increase the equilibrium price and decrease the equilibrium quantity exchanged. D. Decrease the equilibrium price and increase the equilibrium quantity exchanged.

decrease the equilibrium price and increase the equilibrium quantity exchanged

An increasing federal deficit implies which of the following conditions? A. Increased tax revenues and decreased entitlement payments. B. Decreased tax revenues and increased entitlement payments. C. The U.S. is importing more than it is exporting. D. The economy is in an inflationary phase.

decreased tax revenues and increased entitlement payments

47) What type of strategy would divestiture be classified as? A) Aggressive B) Defensive C) Competitive D) Offensive E) Conservative

defensive

Which of the following economic terms describes a general decline in prices for goods and services and in the level of interest rates? A. Expansion. B. Inflation. C. Deflation. D. Recession.

deflation

If the average household income increases and there is relatively little change in the price of a normal good, then the A. Supply curve will shift to the left. B. Quantity demanded will move farther down the demand curve. C. Demand will shift to the left. D. Demand curve will shift to the right.

demand curve will shift to the right

If the price of apples declines and total revenue received by the firm increases, the A. Demand for apples is elastic. B. Demand for apples is inelastic. C. Elasticity of demand for apples is 1.0. D. Elasticity of demand for apples is less than 1.0.

demand for apples is elastic

A city ordinance that freezes rent prices may cause A. The demand curve for rental space to fall. B. The supply curve for rental space to rise. C. Demand for rental space to exceed supply. D. Supply of rental space to exceed demand.

demand for rental space to exceed supply

The phrases "too many dollars chasing too few goods" and "supply shock" are associated with, respectively, A. Cost-push inflation and demand-pull inflation. B. Demand-pull inflation and cost-push inflation. C. Stagflation and cost-push inflation. D. Cost-push inflation and deficient-demand inflation.

demand-pull inflation and cost-push inflation

How does inflation distort reported income? A. Wages are not reflective of current labor rates. B. Sales are not reflective of current product prices. C. Depreciation is not reflective of current fixed-asset replacement costs. D. Interest expense is not reflective of current borrowing rates.

depreciation is not reflective of current fixed-asset replacement costs

The Federal Reserve Board most directly influences a corporation's decision whether or not to issue debt or equity financing when it revises the A. Corporate income tax rate. B. Prime rate at which the Federal Reserve Bank lends money to member banks. C. Discount rate at which the Federal Reserve Bank lends money to member banks. D. Discount rate at which member banks lend money to their customers.

discount rate at which the federal reserve bank lends money to member banks

Personal income is equal to A. Gross domestic product minus net domestic product. B. Net domestic product plus transfer payments to individuals. C. Disposable income minus personal tax payments. D. Disposable income plus personal tax payments.

disposable income plus personal tax payments

2) Cadbury PLC selling its Australian drinks business to Asahi Breweries Ltd. of Japan is an example of which type of strategy? A) Related diversification B) Unrelated diversification C) Retrenchment D) Divestiture E) Liquidation

divestiture

40) Which strategy should be implemented when a division is responsible for an organization's overall poor performance? A) Backward integration B) Divestiture C) Forward integration D) Cost leadership E) Related diversification

divestiture

20) Which of the following is not a characteristic that describes the most competitive companies in America? A) Divestiture is essential to growth. B) People make a difference. C) Innovate or evaporate .D) There is no substitute for quality and no greater threat than failing to be cost-competitive on a global basis. E) Whether it's broke or not, fix it.

divestiture is essential to growth

The demand curve for a normal good is A. Upward sloping because firms produce more at higher prices. B. Upward sloping because higher-priced goods are of higher quality. C. Vertical. D. Downward sloping because of the income and substitution effects of price changes.

download sloping because of the income and substitution effects of price changes

Variations between business cycles are most likely attributable to which of the following factors? A. The law of diminishing returns. B. Comparative advantage. C. Duration and intensity. D. Opportunity costs.

duration and intensity

Which one of the following is not a key assumption of perfect competition? A. Firms sell a homogeneous product. B. Customers are indifferent about which firm they buy from. C. The level of a firm's output is small relative to the industry's total output. D. Each firm can price its product above the industry price.

each firm can price its own product above the industry price

When long-run average cost is declining over a range of increasing output, the firm is experiencing A. Increasing fixed costs. B. Technological efficiency. C. Decreasing returns. D. Economies of scale.

economics of scale

Fact pattern: Karen Parker wants to establish an environmental testing company that would specialize in evaluating the quality of water found in rivers and streams. However, Parker has discovered that she needs either certification or approval from five separate local and state governmental agencies before she can commence business. Also, the necessary equipment to begin costs several million dollars. Nevertheless, Parker believes that, if she is able to obtain capital resources, she can gain market share from the two major competitors. The large capital outlay necessary for the equipment is an example of a(n) A. Entry barrier. B. Minimum efficient scale. C. Created barrier. D. Production possibility boundary.

entry barrier

Any business firm that has the ability to control the price of the product it sells A. Faces a downward-sloping demand curve. B. Has a supply curve that is horizontal. C. Has a demand curve that is horizontal. D. Will sell all output produced.

faces a downward-sloping demand curve

Mr. Smith is hired as a consultant to a firm evaluating entry into a perfectly competitive industry. Mr. Smith determined that at the projected level of output the price would be $100, the average variable cost would be $50, average total cost would be $80, and marginal cost would be $70. Mr. Smith's report will include the following remarks: A. Firms are leaving the industry. B. Firms should enter the market. C. Firms should not enter the market. D. None of the answers are correct.

firms should enter the market

During what stage of strategic management are a firm's specific internal strengths and weaknesses determined? A) Formulation B) Implementation C) Evaluation D) Feedback E) Goal-setting

formulation

31) Microsoft opening its own retail stores is an example of which type of strategy? A) Forward integration B) Backward integration C) Horizontal integration D) Related diversification E) Unrelated diversification

forward integration

Macroeconomic stability theory includes the concepts of full employment and price stability. Which of the following are usually considered unavoidable factors preventing the achievement of 100% employment? A. Frictional and structural unemployment. B. Effects of demand-pull and cost-push inflation. C. Decisions of employable persons to voluntarily remain unemployed or to cease seeking employment. D. Some workers working part-time.

frictional and structural unemployment

Which of the following concepts can best be used to understand oligopoly behavior? A. Concentration ratio. B. Interindustry competition. C. Game theory model. D. Herfindahl index.

game theory model

52) What analytical tool has four quadrants based on two dimensions: competitive position and market growth? A) Competitive Profile Matrix B) Internal-External Matrix C) SPACE Matrix D) Grand Strategy Matrix E) QSPM

grand strategy matrix

Which one of the following components of gross domestic product (GDP) has the greatest fluctuation from year to year? A. Personal consumption expenditures. B. Gross domestic private investment. C. Government spending. D. Net exports.

gross domestic private investment

The level of aggregate demand will decline if the level of A. Imports decrease. B. Gross private domestic investment decreases. C. Personal consumption expenditures increase. D. Government purchases increase.

gross private domestic investment decreases

6) The fact that Apple has no manufacturing facilities of its own A) has caused it to build up massive debt on its balance sheet. B) has enabled it to remain financially lean with virtually no long-term debt. C) has been problematic for Apple in terms of debt. D) illustrates that having more fixed assets than rival firms can provide major competitive advantages in a global recession. E) means that it is in the same position as Sony.

has enabled it to remain financially lean with virtually no long term debt

Which of the following methods may the Federal Reserve use to reduce inflationary pressures? A. Decrease reserve requirements. B. Increase margin requirements. C. Increase the money supply. D. Decrease the target interest rate.

increase margin requirements

In any competitive market, an increase in both demand and supply can be expected to always A. Increase both price and market-clearing quantity. B. Decrease both price and market-clearing quantity. C. Increase market-clearing quantity. D. Increase price.

increase market-clearing quantity

When markets are perfectly competitive, consumers A. Are able to avoid the problem of diminishing returns. B. Have goods and services produced at the lowest cost in the long run. C. Do not receive any consumer surplus unless producers choose to overproduce. D. Must search for the lowest price for the products they buy.

have good and services produced at the lowest cost in the long run

Which of the following segments of the economy will be least affected by the business cycle? A. Commercial construction industry. B. Machinery and equipment industry. C. Residential construction industry. D. Healthcare industry.

healthcare industry

34) What refers to a strategy of seeking ownership of, or increased control over a firm's competitors? A) Forward integration B) Conglomerate diversification C) Backward integration D) Horizontal integration E) Concentric diversification

horizontal integration

62) The Hawthorne Studies opened the era of: A) Scientific Management B) Empathy Management C) Systems Management D) Human Management E) Theory Management

human managment

During which of the following periods will prices generally increase the fastest? A. Deflation. B. Recession. C. Inflation. D. Hyperinflation.

hyperinflation

25) What is the first step in designing an EFE Matrix? A) Identifying key external factors in the industry B) Summing the weighted score for each competitor C) Calculating the sales of each competitor D) Drawing the horizontal and vertical lines for the matrix E) Determining four competitors

identifying key external factors in the industry

Which one of the following statements about supply and demand is true? A. If supply increases and demand remains constant, equilibrium price will rise. B. If demand increases and supply decreases, equilibrium price will fall. C. If demand increases and supply increases, equilibrium quantity will fall. D. If demand increases and supply decreases, equilibrium price will increase.

if demand increases and supply decreases, equilibrium price will increase

Disposable income is equal to A. All earned income received. B. Earned income minus unearned income. C. Income after taxes have been removed. D. National income minus personal income.

income after taxes have been removed

Demand-pull inflation occurs when A. Incomes rise suddenly. B. There are excessive wage increases. C. There are rapid increases in raw materials prices. D. There are substantial changes in energy prices.

incomes rise suddenly

During a recession, the goal of government fiscal policy is to raise equilibrium output. An appropriate governmental action in this situation is to A. Decrease government spending. B. Increase government taxes. C. Increase government spending. D. Increase government taxes and decrease government spending by equal amounts.

increase government spending

The most effective fiscal policy program to help reduce demand-pull inflation would be to A. Decrease the rate of growth of the money supply. B. Increase both taxes and government spending. C. Decrease taxes and increase government spending. D. Increase taxes and decrease government spending.

increase taxes and decrease government spending

An increase in the market supply of beef would result in a(n) A. Increase in the price of beef. B. Decrease in the demand for beef. C. Increase in the price of pork. D. Increase in the quantity of beef demanded.

increase the quantity of beef demanded

A period of rising inflation A. Increases the price level, which benefits those who are entitled to receive specific amounts of money. B. Enhances the positive relationship between the price level and the purchasing power of money. C. Will not cause contracts that include the indexing of payments to change. D. Increases the price level, which is negatively related to the purchasing power of money.

increases the price level, which is negatively related to the purchasing power of money

Product demand increases and product supply decreases. Which of the following statements is correct regarding resulting market changes? (Price; Quantity) A. Decreases; Increases B. Uncertain; Increases C. Increases; Decreases D. Increases; Uncertain

increases; uncertain

Which of the following changes would most effectively halt a period of inflation? A. Decreasing interest rates by a large amount. B. Decreasing savings by a small amount. C. Increasing interest rates by a large amount. D. Increasing savings by a small amount.

increasing interest rates by a large amount

Which of the following actions is the acknowledged preventive measure for a period of deflation? A. Increasing interest rates. B. Increasing the money supply. C. Decreasing interest rates. D. Decreasing the money supply.

increasing the money supply

Because of the existence of economies of scale, business firms may find that A. Each additional unit of labor is less efficient than the previous unit. B. As more labor is added to a factory, increases in output will diminish in the short run. C. Increasing the size of a factory will result in lower average costs. D. Increasing the size of a factory will result in lower total costs.

increasing the size of a factory will result in lower average costs

45) Which stage of the strategy-formulation framework contains the Internal-Factor Evaluation Matrix? A) Input stage B) Analysis stage C) Matching stage D) Decision stage E) Output stage

input stage

The value of money varies A. Directly with the tax rates. B. Directly with government spending. C. Directly with investment. D. Inversely with the general level of prices.

inversely with the general level of prices

The long-run average total cost (ATC) curve A. Is horizontal and parallel to the demand curve. B. Is strongly influenced by diminishing returns. C. Is the same as the rising portion of the marginal cost curve. D. Is ordinarily U-shaped.

is ordinarily U-shaped

If a normal good competes with 30 similar goods and all 31 goods give the consumer equal satisfaction, the demand for the normal good A. Is relatively elastic. B. Is relatively inelastic. C. Responds as an inferior good. D. Is perfectly inelastic.

is relatively elastic

If oil producers and retailers were to increase the price of gasoline for cars during the summer season by $.05 per gallon, these suppliers anticipate that the demand for gasoline A. Is relatively elastic. B. Is relatively inelastic. C. Responds as an inferior good. D. Is perfectly inelastic.

is relatively inelastic

In addition to increasing the demand for lendable funds, government borrowing to finance large deficits has which of the following effects? A. It decreases the rate of inflation. B. It puts upward pressure on interest rates. C. It increases the supply of lendable funds. D. It exerts downward pressure on interest rates.

it puts upward pressure on interest rates

12) All of the following are guidelines for effective strategic planning except: A) it should be simple and nonroutine. B) it should be a learning process for all managers and employees. C) it should be a paper process more than a people process. D) it should not disregard qualitative information. E) it should not be a formal system for control.

it should be a paper process more than a people process

3) What is not a guideline given for effective strategic planning? A) Continually strengthen the "good ethics is good business" policy. B) It should not include jargon or arcane planning language .C) It should not be too formal, predictable, or rigid. D) It should welcome bad news. E) It should be controlled by "technicians."

it should be controlled by technicians

A country reduces its rate of monetary growth. Which of the following is the expected result for the country's economy? A. Higher net exports. B. Higher investment. C. Lower GDP growth. D. Lower interest rates.

lower GDP growth

If a government were to use only fiscal policy to stimulate the economy from a recession, it would A. Raise consumer taxes and increase government spending. B. Lower business taxes and government spending. C. Increase the money supply and increase government spending. D. Lower consumer taxes and increase government spending.

lower consumer taxes and increase government spending

To address the problem of a recession, the Federal Reserve Bank most likely would take which of the following actions? A. Lower the discount rate it charges to banks for loans. B. Sell U.S. government bonds in open-market transactions. C. Increase the federal funds rate charged by banks when they borrow from one another. D. Increase the level of funds a bank is legally required to hold in reserve.

lower the discount rate it charges to banks for loans

An employer is a monopsonist with respect to hiring labor, but it sells its product in a competitive market. Compared with a firm that must hire from a competitive labor market, the monopsonist will pay a A. Lower wage and hire fewer workers. B. Lower wage and hire more workers. C. Higher wage and hire fewer workers. D. Higher wage and hire more workers.

lower wage and hire fewer workers

In markets that are imperfectly competitive, such as monopoly and monopolistic competition, firms produce at an output at which A. Price equals marginal cost. B. Average costs are minimized. C. Price equals average cost. D. Marginal cost equals marginal revenue.

marginal cost equals marginal revenue

35) Which strategy seeks to increase market share of present products or services in present markets through greater marketing efforts? A) Market penetration B) Forward integration C) Market development D) Backward integration E) Product development

market penetration

A major problem arising from the use of fiscal policy to help stimulate an economy is that there A. Are too few fiscal goals that have wide public support. B. May be an expansionary and, therefore, inflationary bias to such policies. C. Is too short a lag between recognizing an economic problem and implementing a cure. D. Is a balanced budget that promotes cyclical fluctuations.

may be an expansionary and, therefore, inflationary bias to such policies

The competitive model of supply and demand predicts that a surplus can arise if there is a A. Maximum price above the equilibrium price. B. Minimum price below the equilibrium price. C. Maximum price below the equilibrium price. D. Minimum price above the equilibrium price.

minimum price above the equilibrium price

The distinguishing characteristic of oligopolistic markets is A. A single seller of a homogeneous product with no close substitute. B. A single seller of a heterogeneous product with no close substitute. C. Lack of entry and exit barriers in the industry. *D. Mutual interdependence of firm pricing and output decisions.

mutual interdependence of firm pricing and output decisions

Each of the following is a limitation of GDP's usefulness as a measure of a nation's prosperity except A. No practical means are available to compare real GDP from different time periods. B. GDP leaves out intermediate goods. C. Increases in GDP often involve environmental damage. D. Cash-only economic activity is not counted in GDP.

no practical means are available to compare real GDP from different time periods

Which of the following is an assumption in a perfectly competitive financial market? A. No single trader or traders can have a significant impact on market prices. B. Some traders can impact market prices more than others. C. Trading prices vary based on supply only. D. Information about borrowing/lending activities is only available to those willing to pay market prices.

no single trader or traders can have a significant impact on market prices

The velocity of money is generally measured as a ratio of the A. Nominal gross domestic product to the money supply. B. Value of domestic manufactured goods to the money supply. C. Total federal debt to the money supply. D. Value of imported and exported goods to the money supply.

nominal gross domestic product to the money supply

If both the supply and the demand for a good increase, the market price will A. Rise only in the case of an inelastic supply function. B. Fall only in the case of an inelastic supply function. C. Not be predictable with only these facts. D. Rise only in the case of an inelastic demand function.

not be predictable with only these facts

Mr. Smith is hired as a consultant to a firm in a perfectly competitive industry. At the current output level the price is $20, the average variable cost is $15, average total cost is $22, and marginal cost is $20. In order to maximize profits in the short-run, Mr. Smith will recommend that the firm should A. Not change output. B. Decrease production. C. Increase production. D. Shut down.

not change output

9) Specific results an organization seeks to achieve in pursuing its basic mission are A) strategies. B) rules. C) objectives .D) policies. E) tenets.

objectives

The kinked demand curve is associated with the analysis of A. Agricultural markets. B. Monopolistic competition. C. Pure competition. D. Oligopoly.

oligopoly

Which type of market structure is most apt to demonstrate "price leadership" by a major firm followed by other firms in the industry? A. Pure competition. B. Monopoly. C. Monopolistic competition. D. Oligopoly.

oligopoly

Economic markets that are characterized by monopolistic competition have all of the following characteristics except A. One seller of the product. B. Economies or diseconomies of scale. C. Advertising. D. Differentiated products.

one seller of the product

Which of the following instruments of monetary policy is the most important means by which the money supply is controlled? A. Open market operations. B. Manipulation of government spending. C. Changing the discount rate. D. Changing tax rates.

open market operations

The measurement of the benefit lost by using resources for a given purpose is A. Economic efficiency. B. Opportunity cost. C. Comparative advantage. D. Absolute advantage.

opportunity cost

42) When companies take over functional operations of other firms, such as human resources, information systems, payroll, accounting, or customer service, this is called A) marketing. B) outsourcing. C) licensing. D) franchising. E) divestiture.

outsourcing

Economies and diseconomies of scale are important determinants of the A. Type of product demand faced by individual firms. B. Market demand curve. C. Pattern of costs in the long run. D. Law of diminishing returns.

pattern of costs in the long run

Which of the following options describes the phases of business cycle, in order of occurrence? A. Recession, recovery, trough, peak. B. Peak, recession, trough, recovery. C. Peak, recovery, trough, recession. D. Trough, recession, recovery, peak.

peak, recession, trough, recovery

If the coefficient of elasticity is zero, then the consumer demand for the product is said to be A. Perfectly inelastic. B. Perfectly elastic. C. Unit inelastic. D. Unit elastic.

perfectly inelastic

11) Which of the following is not included in the strategic management model? A) Measure and evaluate performance B) Perform internal research to identify customers C) Establish long-term objectives D) Implement strategies E) Develop mission and vision statements

perform internal research to identify customers

Which of the following indicates that the economy is in a recessionary phase? A. The rate of unemployment decreases. B. The purchasing power of money declines rapidly. C. Potential national income exceeds actual national income. D. There is a shortage of essential raw materials, and costs are rising.

potential national income exceeds actual national income

All of the following actions are valid tools that the Federal Reserve Bank uses to control the supply of money except A. Buying government securities. B. Selling government securities. C. Changing the reserve ratio. D. Printing money when the level of M1 appears low.

printing money when the level of M1 appears low

Compared with firms in a perfectly competitive market, a monopolist tends to A. Produce substantially less but charge a higher price. B. Produce substantially more and charge a higher price. C. Produce the same output and charge a higher price. D. Produce substantially less and charge a lower price.

produce substantially less but charge a higher price

The basic source of improvements in real wage rates and in the standard of living is A. Inflation growth. B. Aggregate capital stock growth. C. Labor force growth. D. Productivity growth.

productivity growth

Which of the following strategies would the Federal Reserve most likely pursue under an expansionary policy? A. Purchase federal securities and lower the discount rate. B. Reduce the reserve requirement while raising the discount rate. C. Raise the reserve requirement and lower the discount rate. D. Raise the reserve requirement and raise the discount rate.

purchase federal securities and lower the discount rate

The Federal Reserve wishes to conduct expansionary monetary policy. Which of the following policy approaches will be most successful? A. Sell government securities and raise the required reserve ratio. B. Sell government securities and lower the discount rate. C. Purchase government securities and raise the required reserve ratio. D. Purchase government securities and lower the discount rate.

purchase government securities and lower discount rate

Which of the following is not included in the gross domestic product (GDP)? A. Purchase of a new home. B. Investment in new computers. C. A doctor's fee. D. Purchase of common stock.

purchase of common stock

3) Which analytical tool determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized? A) BCG Matrix B) SPACE Matrix C) SWOT Matrix D) IE Matrix E) QSPM

qspm

44) Which strategy-formulation technique reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies? A) SWOT B) SPACE C) QSPM D) IFE E) CPM

qspm

If the price elasticity of demand for a normal good is estimated to be 2.5, a 5% reduction in its price causes A. Total revenue to fall by 5%. B. Total revenue to fall by 12.5%. C. Quantity demanded to rise by 12.5%. D. Quantity demanded to decrease by 5%.

quantity demanded to rise by 12.5%

X and Y are substitute products. If the price of product Y increases, the immediate impact on product X is that its A. Price will increase. B. Quantity demanded will increase. C. Quantity supplied will increase. D. Price, quantity demanded, and supplies will increase.

quantity demanded will increase

A company has a policy of frequently cutting prices to increase sales. Product demand is significantly elastic. What impact would this have on the company's situation? A. Quantity increases proportionally more than the price declines. B. Quantity increases proportionally less than the price declines. C. Price increases proportionally more than the quantity declines. D. Price increases proportionally less than the quantity declines.

quantity increases proportionally more than the price declines

The consensus of economic forecasts indicates that consumer prices are likely to increase because of increases in aggregate demand. Which of the following outcomes is most likely to occur as prices increase? A. Quantity of output increases if there is capacity to produce. B. Unemployment increases. C. Profits fall if all costs are fixed. D. Profits rise even if costs increase.

quantity of output increases if there is capacity to produce

The prime rate is the A. Size of the commitment fee on a commercial bank loan. B. Effective cost of a commercial bank loan. C. Effective cost of commercial paper. D. Rate charged on business loans to borrowers with high credit ratings.

rate charged on business loans to borrowers with high credit ratings

An economy is at the peak of the business cycle. Which of the following policy packages is the most effective way to dampen the economy and prevent inflation? A. Increase government spending, reduce taxes, increase money supply, and reduce interest rates. B. Reduce government spending, increase taxes, increase money supply, and increase interest rates. C. Reduce government spending, increase taxes, reduce money supply, and increase interest rates. D. Reduce government spending, reduce taxes, reduce money supply, and reduce interest rates.

reduce government spending, increase taxes, reduce money supply, and reduce interest rates

According to fiscal policy principles, a tax increase will A. Increase spending and increase aggregate demand. B. Increase spending and reduce aggregate demand. C. Reduce spending and increase aggregate demand. D. Reduce spending and reduce aggregate demand.

reduce spending and reduce aggregate demand

Which of the following Federal Reserve policies would increase the money supply? A. Change the multiplier effect. B. Increase reserve requirements. C. Reduce the discount rate. D. Sell more U.S. Treasury bonds.

reduce the discount rate

55) A firm uses information technology to break down functional barriers and create a work system based on business processes, products, or outputs rather than on functions or inputs in A) restructuring. B) benchmarking. C) reengineering. D) rightsizing. E) delayering.

reengineering

Entry into monopolistic competition is A. Blocked. B. Difficult, with significant obstacles. C. Rare, as significant capital is required. D. Relatively easy, with only a few obstacles.

relatively easy, with only a few obstacles

If a product has a price elasticity of demand of 2.0, the demand is said to be A. Perfectly elastic. B. Perfectly inelastic. C. Relatively elastic. D. Relatively inelastic.

relatively elastic

When a 5% fall in the price of athletic shoes causes the quantity demanded to increase by 10%, the demand for athletic shoes is said to be A. Perfectly inelastic. B. Relatively elastic. C. Unit elastic. D. Relatively inelastic.

relatively elastic

The manner in which cartels set and maintain price above the competitive market price is to A. Avoid product differentiation in order to decrease demand for the product. B. Advertise more so market demand increases. C. Increase costs so price must rise. D. Require cartel members to restrict output.

require cartel members to restrict output

The Waymand family typically ate hamburger as a staple in their diet. In the last few years, the family's income has doubled, and they have now replaced hamburger with steak as a staple in their diet. This is an example in which the demand for hamburge A. Is relatively elastic. B. Is perfectly elastic. C. Is relatively inelastic. D. Responds as an inferior good.

responds as an inferior good

38) Smithfield Foods laying off 1,800 employees, closing 6 of its 40 plants, and cutting production by 10 percent in 2009 in efforts to stop the liquidity drain on the firm is an example of A) divestiture .B) backward integration. C) liquidation. D) retrenchment. E) forward integration.

retrenchment

39) Smithfield Foods laying off 1,800 employees, closing 6 of its 40 plants, and cutting production by 10 percent in 2009 in efforts to stop the liquidity drain on the firm is an example of A) divestiture. B) backward integration. C) liquidation. D) retrenchment. E) forward integration.

retrenchment

51) Which strategy would be most appropriate for a division classified as a Dog? A) Market penetration B) Market development C) Product development D) Retrenchment E) Forward integration

retrenchment

Falser Co. increases all of its input factors by 100%, resulting in increased output of 90%. Which of the following statements identifies the effect of this change? A. Marginal returns rise. B. Marginal costs decrease. C. Returns to scale increase. D. Returns to scale decrease.

returns to scale decrease

23) According to Porter, what is usually the most powerful of the five competitive forces? A) Potential development of substitute products B) Bargaining power of suppliers C) Bargaining power of consumers D) Rivalry among competing firms E) Potential entry of new competitors

rivalry among competing firms

58) Strategy, as compared to chess, is: A) Science, Art and Compromise B) Art, Sport and Tactics C) Science, Sport and Finance D) Science, Art and Sport E) None of the above

science, art and sport

The rate of unemployment caused by changes in the composition of employment opportunities over time is referred to as the A. Frictional unemployment rate. B. Cyclical unemployment rate. C. Structural unemployment rate. D. Full employment unemployment rate.

structural unemployment rate

If the Federal Reserve raises the discount rate, which of the following effects is likely to occur? A. Fixed interest rates on mortgages will decrease. B. Short-term interest rates will likely increase. C. Consumer spending will increase. D. Corporate profits will increase.

short-term interest rates will likely increase

An industry that is oligopolistic would be best characterized by A. One firm selling a product with no close substitutes. B. The absence of the profit-maximizing goal. C. Significant barriers to entry. D. Horizontal or flat demand curves for the output of individual firms.

significant barriers to entry

Local electric utilities are considered to be natural monopolies because, for these firms, A. Supply curves are upward sloping. B. Demand curves are upward sloping. C. Average total costs never fall. D. Significant economies of scale are present.

significant economies of scale are present

Economic growth can be depicted as all of the following except: A. An outward shift in the aggregate supply curve with a fixed aggregate demand curve. B. An outward shift in the aggregate demand curve with a fixed aggregate supply curve. C. Simultaneous outward shifts in both the aggregate supply and aggregate demand curves. D. Simultaneous inward shifts in both the aggregate supply and aggregate demand curves.

simultaneous inward shifts in both the aggregate supply and aggregate demand curves

Which one of the following is a characteristic of pure competition? A. Mutual interdependence. B. Significant research and development programs. C. Product differentiation. D. Standardized product.

standardized product

3) An important activity in ________ is taking corrective action. A) strategy evaluation B) strategy implementation C) strategy formulation D) strategy leadership E) all of the above

strategic evaluation

4) Which phase of strategic management is called the action phase? A) Strategy formulation B) Strategy implementation C) Strategy evaluation D) Allocating resources E) Measuring performance

strategy implementation

Which of the following types of unemployment typically results from technological advances? A. Cyclical. B. Frictional. C. Structural. D. Short-term.

structural

In a capitalistic society, it is not considered possible to have 100% employment of the labor force. Therefore, full employment is defined as something less than 100% employment because of the existence of A. Structural and cyclical unemployment. B. Structural and frictional unemployment. C. Cyclical and frictional unemployment. D. Frictional and part-time unemployment.

structural and frictional unemployment

Unemployment that is caused by a mismatch between the composition of the labor force (in terms of skills, occupation, industries, or geographic location) and the makeup of the demand for labor is called A. Real wage unemployment. B. Deficient-demand unemployment. C. Frictional unemployment. D. Structural unemployment.

structural employment

Which of the following categories best describes auto workers whose jobs have been replaced by computer-driven robots and are actively seeking employment in new industries? A. Structural unemployment. B. Cyclical unemployment. C. Frictional unemployment. D. Discouraged workers.

structural unemployment

65) Which of the following is not an essential skill for managers? A) Tactical B) Conceptual C) Diagnostic D) Technical E) Political

tactical

61) The initiator of Scientific Management was: A) Taylor B) Drucker C) McGregor D) Weber E) von Bertalanaffy

taylor

Marginal revenue is A. Equal to price in monopolistic competition. B. The change in total revenue associated with increasing prices. C. Greater than price in pure competition. D. The change in total revenue associated with producing and selling one more unit.

the change in total revenue associated with producing and selling one more unit

Derived demand can best be described as A. The demand derived purely from the market structure of a particular industry. B. The demand for a final product generated by the demand for a complementary good. C. The demand for an input generated by the demand for the final product. D. The demand for a final product generated by an abundant supply of inputs.

the demand for an input generated by the demand for the final product

Which of the following statements is correct regarding an economy at the peak of the business cycle? A. The economy will be in a static equilibrium. B. The economy will be at the natural rate of unemployment. C. Incomes will be stable. D. The rate of inflation will decrease.

the economy will be at the natural rate of unemployment

Which of the following statements is correct if there is an increase in the resources available within an economy? A. More goods and services will be produced in the economy. B. The economy will be capable of producing more goods and services. C. The standard of living in the economy will rise. D. The technological efficiency of the economy will improve.

the economy will be capable of producing more goods and services

An increase in the federal debt may create inflationary pressures for which of the following reasons? A. Businesses may have difficulty raising investment capital. B. The government may need to cut spending. C. Lenders may charge higher interest rates. D. The economy's money supply may increase.

the economy's money supply may increase

The demand curve for a product reflects which of the following? A. The impact of prices on the amount of the product offered. B. The willingness of producers to offer a product at alternative prices. C. The impact that price has on the amount of a product purchased. D. The impact that price has on the purchase amount of two related products.

the impact that price has on the amount of a product purchased

Which of the following characteristics would indicate that an item sold would have a relatively high price elasticity of demand? A. The item has many similar substitutes. B. The cost of the item is low compared to the total budget of the purchasers. C. The item is considered a necessity. D. Changes in the price of the item are regulated by governmental agency.

the item has many similar substitutes

If a rent control law in a competitive housing market establishes a maximum or ceiling rent that is above the market or equilibrium rent, A. The law has no effect on the rental market. B. A surplus of rental housing units will result. C. Supply will decrease as price increases. D. Demand will increase as price increases.

the law has no effect on the rental market

Which of the following conditions is the primary cause of fluctuations in business activity resulting in the alternating rise and fall of economic growth? A. The level of innovation brought to market. B. The amount of unemployment. C. The level of total spending. D. Governmental monetary policy.

the level of total spending

Which one of the following changes will cause the demand curve for gasoline to shift to the left? A. The price of gasoline increases. B. The supply of gasoline decreases. C. The price of cars increases. D. The price of cars decreases.

the price of cars increases

Which of the following is correct regarding the consumer price index (CPI) for measuring the estimated decrease in a company's buying power? A. The CPI is measured only once every 10 years. B. The products a company buys should differ from what a consumer buys. C. The CPI measures what consumers will pay for items. D. The CPI is skewed by foreign currency translations.

the products a company buys should differ from what a consumer buys

The discount rate of the Federal Reserve System is A. The specified percentage of a commercial bank's deposit liabilities that must be deposited in the central bank. B. The rate that the central bank charges for loans granted to commercial banks. C. The rate that commercial banks charge for loans granted to the public. D. The ratio of excess reserves to legal reserves that are deposited in the central bank.

the rate that the central bank charges for loans granted to commercial banks

Because of economies of scale, as output from production expands, A. The short-run average cost of production decreases. B. The long-run average cost of production increases. C. The long-run total cost decreases. D. The slope of the demand curve increases.

the short-run average cost of production decreases

46) Which section of the SWOT Matrix involves matching internal strengths with external opportunities?' A) The WT cell B) The SW cell C) The WO cell D) The ST cell E) The SO cell

the so cell

The definition of economic cost is A. All the dollar costs employers pay for all inputs purchased. B. The opportunity cost of all inputs minus the dollar cost of those inputs. C. The difference between all implicit and explicit costs of the business firm. D. The sum of all explicit and implicit costs of the business firm.

the sum of all explicit and implicit costs of the business firm

Increased demand for Product A increases the demand for resources used to produce Product A. What is the best explanation for the increase in the demand for resources? A. The theory of derived demand is working. B. Product A is in an expanding industry. C. The theory of the "invisible hand" is working. D. The demand for Product A is highly elastic.

the theory of derived demand is working

Gross domestic product includes which of the following measures? A. The size of a population that must share a given output within 1 year. B. The negative externalities of the production process of a nation within 1 year. C. The total monetary value of all final goods and services produced within a nation in 1 year. D. The total monetary value of goods and services including barter transactions within a nation in 1 year.

the total monetary value of all final goods and services produced within a nation in 1 year

All of the following are components of the formula used to calculate gross domestic product except A. The value of a homemaker's work. B. Foreign net export spending. C. Government spending. D. Gross investment.

the value of a homemaker's work

If the Federal Reserve Banks sell $20 million in government securities to commercial banks and the required reserve ratio is 25%, the effect will be A. To reduce the actual supply of money by $20 million. B. To reduce the actual supply of money by $5 million. C. To reduce the potential money supply by $20 million. D. To reduce the potential money supply by $80 million.

to reduce the potential money supply by $80 million

28) Who does a planning horizon of two to five years apply to? A) Top management B) General management C) Middle management D) Lower management E) All levels of management

top management

Suppose that a stairway manufacturer's price elasticity of demand was relatively inelastic. If this manufacturer decided to increase the price of its stairways, what should have been the result? A. Total revenues decreased. B. Total revenues increased. C. Total revenues remain unchanged. D. Total revenues were perfectly inelastic.

total revenues increased

16) The mission statement answers which question? A) What is our business? B) How can we improve ourselves? C) What do we want to become? D) Who are our stakeholders? E) How can we increase profitability?

what is our buisness

64) What is the last of Drucker's Five Questions? A) What is our mission? B) What is our plan? C) What results do we seek? D) What does our customer value? E) Who is our customer?

what is our plan

Under which of the following conditions is the supplier most able to influence or control buyers? A. When the supplier's products are not differentiated. B. When the supplier does not face the threat of substitute products. C. When the industry is controlled by a large number of companies. D. When the purchasing industry is an important customer to the supplying industry.

when the supplier does not face the threat of substitute products