BUSI CH 1-6 Exam

Individuals have social responsibilities regarding their ethical behavior in the business world.

True

Which of these are centers that offer new businesses in the critical stage of early development low-cost offices with basic services such as accounting, legal advice, and secretarial help?

Business incubators

Least to greatest government involvement in economics

Capitalism-Socialism-Communism

What is the political and economic system in which the government makes almost all economic decisions and owns almost all the major factors of production, as well as choosing religion, where to live, and jobs for its citizens?

Communism

Adam Smith's book about capitalism is known as The _______ of _______

Wealth; Nations

Which of the following are considered major hurdles to successful global trade?

Economic and financial forces; Legal and regulatory forces

______ refers to accepting the risk of starting and running a business.

Entrepreneurship

Partnerships are less likely to survive than sole proprietorships.

False

Licensing is a contractual agreement whereby someone with a good idea for a business sells others the rights to use the business name to sell a product or service in a given territory in a specified manner.

False; franchise

What two principles did Adam Smith believe essential to the survival of an economy?

Freedom to keep a business's profits; Freedom to own land or property

What is the total value of final goods and services produced in a country in a given year called?

Gross domestic product

Which of the following are functions of export assistance centers (EACs)?

Hands-on exporting assistance; Trade-finance support

Which of following are true about the advantages and disadvantages of being a franchise owner

Having a nationally recognized name for your business in a franchise can help with marketing and awareness; While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch

In which three ways are taxes used to influence the economy?

High taxes draw the money away from the private sector; Low taxes increase the profits a small business can earn; They are used to stabilize the economy

Which of the following countries are members of the Central American Free Trade Agreement (CAFTA)?

Honduras; Guatemala; Nicaragua; Costa Rica

______ are creative people who work as entrepreneurs within corporations.

Intrapreneurs

Which of the following are true regarding ethical behavior?

It does not subtract from the bottom line; it adds to it.

When it comes to getting involved in international business what are the three strategies that require the least amount of commitment and effort?

Licensing, exporting, franchising

Characteristics of an entrepreneurial team that will be developing and marketing a new product.

Members have complementary skills and are creative; Each from different areas of business; A group of experienced people

______ looks at the behavior of individual people and organizations in specific markets.

Microeconomics

What agreement created a free-trade area among the United States, Canada, and Mexico?

North American Free Trade Agreement (NAFTA)

Distribution in many developing countries is difficult because of the lack of reliable transportation infrastructure due to natural disasters. This is an example of what type of forces affecting global trade?

Physical and environmental forces

Chris spent his own money on marketing research, and consulted his sister Kara, who is an accountant. They spent the next few months writing a business plan. Which of the following are some business functions Chris would have addressed?

Planning; Marketing; Financing

Which of the following are good ways to learn how to run your own business?

Run a small business during your off hours; Talk to other business owners; Work for a successful entrepreneur

Who sets the standards of right and wrong as defined by ethics?

Society

Who sets the standards of right and wrong as defined by ethics? Multiple choice question.

Society

Which of the following are true regarding the process of forming a corporation

The bylaws of the corporation describe how the firm is to be operated; The articles of incorporation are usually filed in the state in which the company will be incorporated

What are two characteristics of mixed economies?

They exist when the distribution of resources involves elements from more than one economic system.; They contain elements of more than one system.

Which of the following facts best exemplifies the statement that "ethical problems are not unique to the United States"?

Top leaders from other countries have been charged with bribery.

The main advantage of a sole proprietorship is ease of start up. True false question.

True

While your are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

True

______ are individuals or companies that invest in new businesses in exchange for partial ownership in those businesses.

Venture capitalists

An independent entity whose purpose it is to oversee cross-border trade issues and global business practices is called the

World Trade Organization

There are a few hurdles that prevent many small businesses from engaging in the global market. Which of the following are examples of such problems?

Would-be exporters do not know how to get started.; Financing is often difficult to find.

A regional group of countries with a common external tariff, no internal tariffs, and coordinated laws to facilitate exchange among members is the definition of:

a common market

A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs is called:

a social audit

Job seekers should recognize that small businesses in the U.S.

account for about 1/3 of the total U.S. exports

To keep track of daily sales, expenses, profits, inventory control, customer records, and payroll a small business needs a good

accounting system

In a franchise, having management support from the franchisor is a(n) ______ whereas the coattail effect is considered a ______ .

advantage, positive, or benefit; disadvantage, negative, or drawback

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

When the government spends money on such projects as roads and bridges, it is expected that the money will trickle down to the consumers eventually leading to:

an increase in consumer spending

A business can be defined as

any activity that seeks to provide goods and services to others while operating at a profit

The best way to learn how to run a business is to become a ______

apprentice

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors:

are not involved in daily operations

A corporation is formally formed with:

articles of incorporation and bylaws

The total value of a nation's exports compared to its imports measured over a particular period is the definition of:

balance of trade

Global trade is measured using two key indicators known as the:

balance of trade; balance of payments

Howard Schultz started Starbucks for which two reasons?

because he liked the ambience of Italian coffee houses; because he enjoyed the sense of community of the Italian coffee bars

In 2019, online retail sales reached over $365 _____ , or approximately ____ percent of all retail sales.

billion; 12

The periodic rises and falls that occur in economies over time are called:

business cycles

A market consists of consumers with unsatisfied wants and needs who have both resources and the willingness to:

buy

In addition to the articles of incorporation, a corporation has ______, which describe how the firm is to be operated from both legal and managerial points of view.

bylaws

The actions of a fellow franchisee will affect your franchise. This is known as the

coattail effects

The guiding principle of free economic exchange is ____________ theory.

comparative advantage

hics codes that emphasize control and punishment of wrong-doers are______-______ ethics codes.

compliance based

Corporate social responsibility is based on a

concern for the welfare of society

A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trade mark is called:

contract manufacturing

A business owned and controlled through pooled resources by the people who use it is a(n) ______.

cooperative

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n):

cooperative

The concern businesses have for the welfare of society, not just for their owners is:

corporate social responsibility; based on a commitment to integrity and respect

A state-chartered legal entity with authority to act and have liability separate from its owners is a:

corporation

What is a good tactic for entrepreneurs to implement in order to keep a new company growing? Multiple choice question.

delegate authority to employees

A major disadvantage of the corporate form deals with the tax situation called ______taxation.

double or dual

The loss of the best and brightest people to other countries is called brain _______

drain

An increase or decrease in government regulations has a(n) ______ effect on business success due to the costs of adhering to the regulations.

economic

Huge differences in the wealth of relatively similar countries such as North and South Korea are an example of how different ______ and political conditions affect businesses.

economic

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals is _____.

economics

Franchisors often use technology to meet the needs of both their customers and their _______ because technology makes communication faster and more widespread.

employees

Being self-directed, self-nurturing, action-oriented, and tolerant of uncertainty are all considered characteristics of a(n):

entrepreneur

Many _____use their time, money, and energy to turn their passions into sustainable businesses. They are comfortable being their own bosses and are not afraid of failure.

entrepreneurs or micropreneurs

_______behavior can add to the bottom line while ______behavior can ruin companies financially.

ethical; unethical

People learn their organizational _________ from observing the standards, values, and behaviors of leaders and other employees.

ethics

U.S. businesspeople are often accused of _______, an attitude that your own culture is superior to other cultures.

ethnocentricity or ethnocentrism

The _______________is the value of one nation's currency relative to the currencies of other countries.

exchange rate

Goods or services from the U.S. can be______to many countries for different uses, such as snowplows to clear sand from driveways in Saudi Arabia.

exported, exports, or marketed

A trade surplus occurs when a country's:

exports are greater than imports

Socialism has several negative outcomes such as:

fewer incentives to work hard; higher taxes; a brain drain

The purposes of nonprofit organizations include

filling an educational need; filling a societal need

One of the most important advantages of the sole proprietor form of ownership is that a business owner:

finds it easier to start and end the business

Managing a small business became relatively easy with the advent of inexpensive personal computers. Inexpensive computer systems and off-the-shelf or even free, open-source software make it easy for the small business manager to:

follow the daily sales and expenses; manage customer records

A contractual agreement in which someone with a good idea for a business sells others the rights to use a business name and sell a product or service in a given territory in a specified manner is a(n)_______

franchise

Many minority business owners prefer a(n) ________because it offers business connections and support.

franchise

Ed has decided to purchase and follow a business format by becoming a franchisee. The _______ _______ he will sign gives him the right to use the business name and sell the products of the firm.

franchise agreement or franchising contract

The movement of goods and services among nations without economic or political barriers

free trade

Adam Smith believed Blank______ was essential to the survival of any economy.

freedom

Mark graduated from college a short time ago and is still looking for his first (dream) job. Mark is part of the unemployment category known as ______ unemployment

frictional

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) _____ partnership.

general partnership

The mortgage bankers and real estate companies who helped create the financial crisis of 2008 were driven by _______

greed

In terms of operating flexibility, what are three things that LLCs are not required to do?

hold annual meetings; file written resolutions; keep minutes

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of _____-_____ franchises.

home-based

Equipment in hospitals, such as CAT scanners, PET scanners, and MRI scanners:

improve the quality of services provided, but do not necessarily increase productivity

The expansion and development of the Internet has sprouted a world of small web-based businesses. This, among other reasons, may explain why online sales are rapidly:

increasing

Compliance-based ethics codes focus on:

increasing control; penalizing wrong-doers

Fiscal policy is the government's efforts to keep the economy stable by:

increasing taxes; decreasing taxes; increasing or decreasing government spending

Responsible business behavior depends on the responsible behavior of each ______ in the business world.

individual

In socialism:

individuals own some smaller businesses and property; government owns and operates some basic industries such as steel mills, utilities, or transportation

The service era is giving way to a new era based on

information

All organizations require the following:

information management; capital; planning

Changes in the technological environment create increases in world wide______ in all sectors of the economy, creating exciting challenges for future leaders.

innovation

In the information age, a company's value is based on its

intellectual capital

The attributes of a conventional corporation include that:

it is a legal entity; it is state chartered; corporate liability is separate from owners

There are more than 7 billion potential customers in 195 countries around the globe. Each country possesses unique materials and skills, and as technology advances, communication barriers are being brought down. Therefore:

it is important to conduct business globally

a partnership in which two or more companies,often from different countries, join to undertake a major project.

joint venture

LLC's are considered to have operational flexibility because while they must submit articles of organization, they are not required to:

keep minutes or hold annual meetings

Legal and regulatory forces can create problems in the global market because:

laws and regulations vary greatly between countries

In a general partnership, all partners share the responsibility for operating the business and assume ______ for the business's debts.

liability

Of all the strategies for reaching global markets, ______ offers the least amount of commitment, control, risk, and profit potential.

licensing

What is the global strategy in which a firm allows a foreign company to produce its product in exchange for a fee?

licensing

An S corporation has the liability protections of a corporation but is taxed:

like a partnership or sole proprietorship

Franchises are expanding internationally to access additional ______, that have new customers and to increase their profit potential.

markets

If you are studying the operation of a nation's economy as a whole, you are learning about

macroeconomics

Rank the order of the managerial hierarchy least to greatest.

managers hire employees-officers hire managers of the corp.-board of directors hire officers of the corp.- owners/stockholders elect board of directors

The result of two firms (usually corporations) combining to form one company is called a

merger

Entrepreneurs start a business with the desire to grow the business and generate wealth while _______ start a business that will stay small, allowing them to have a balanced lifestyle and the ability to do the kind of work they want to do.

microprenuers

About 30 percent of franchises are owned by African Americans, Latinos, Asians, and Native Americans. Franchisors are becoming more focused on recruiting ________ franchisees.

minority or diverse

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

Ethical problems such as influence peddling and bribery: Multiple choice question.

occur in many countries

A small business is defined as:

one that meets certain standards of size in terms of employees or receipts; one that is independently owned and operated; one that is not dominant in its field

Two advantages small firms have over large firms include more personal customer service and the ability to respond quickly to: Multiple choice question.

opportunities

U.S. workers will see increased competition from other countries in the future due to:

outsourcing to foreign countries

A key advantage of a home-based franchise is low _____ costs, which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs.

overhead or operating

A foreign subsidiary is a company owned in a foreign country by another company called the:

parent company

An LLC submits a written operating agreement, similar to a(n) ______ agreement, describing how the company is to be operated.

partnership

The balance of ______ is the difference between money from exports and money from imports, as well as from other sources such as foreign investment and military expenses.

payment or payments

Unlimited liability as it relates to sole proprietorships is the risk of loss of ______ assets beyond the assets of the business.

personal

Gross Domestic Product refers to the total value of goods and services produced in a country in a given year. The goods and services can be

produced by foreign owned companies located in the country; produced by domestically owned companies

Reasons why people become entrepreneurs.

profit; independence; opportunity

Trade______ is the use of government regulations to limit the import of goods and services such as import tariffs and quotas.

protectionism

Productivity in the service sector is difficult to measure because new technology adds to _______, but not necessarily the _______of the service produced.

quality; quantity, output, or productivity

Many corporate executives reported that they use social media to communicate their socially responsible activities to customers because it

reaches broad and diverse groups; allows them to reach specific groups more directly; allows them to connect directly with customers

The best strategy for college graduates is to

remain flexible and see where new jobs are being created

One of the challenges for future leaders is that the information-based global revolution is moving the economy in new directions that

require innovation to succeed in global markets

Studies have shown that what most influences a company's effectiveness and financial performance is:

responsible management of human resources

What are two characteristics that define a business

seeks to provide goods and services; its goal is to operate at a profit

Stockholders are ______ from the managers and employees of the firm because they are not actively involved in the operations of the firm.

separate, independent, or separated

If the statement "ethics is caught more than it is taught" is true, then management facilitates this by:

setting a good example

The firms often better prepared to leap into global markets and react quickly to opportunities are:

small and medium businesses

Many companies believe they have a role in promoting ______________ , so they donate to local food banks, promote literacy, and provide computer lessons for inner city children.

social justice or public responsibility

A communication tool many companies use to inform diverse groups of their social responsibility efforts at little cost is

social media

A positive goal of Blank______ is social equality, while a negative outcome is taking income from citizens at extremely high rates.

socialism

Free education, free health care, and more free time are some benefits of ______ , while a brain drain is one of its most negative outcomes.

socialism

The economic system based on the premise that some, if not most, basic industries should be owned by the government so that profits can be more evenly distributed among the people is called

socialism

The idea that some basic businesses such as steel mills, coal mines and utilities, should be owned and controlled by the government is indicative of a _______ economic system.

socialist or command

A business that is owned and managed by one person is a(n) ______ .

sole proprietorship

The easiest type of business entity to form is a

sole proprietorship

What are two reasons that franchises are attractive to minority populations?

some offer financial support to aspiring business owners they provide personal ownership of a business

Some common causes of small business failure include: Multiple select question.

starting with too little capital; underpricing or overpricing goods or services; no experience in that business or industry

Mary worked for a GM factory in Detroit all her life. Unfortunately, when GM closed the plant because of restructuring, she could not find any jobs in the automotive industry in or around Detroit. Mary would be counted as an example of:

structural unemployment

A company situated in a foreign country that is owned by a parent company located in a different country, is a foreign

subsidiary

a tax imposed on imports

tariff

What are three threats to the future of global trade?

terrorism; rogue states; nuclear proliferation

Challenges for new leaders since the global information-based revolution include

that the service era is coming to a close; learning about world quality standards

Eduardo owns a farm in a country where taxes are very high and where the government openly considers the possibility of taking over the agricultural sector. Eduardo stopped investing in his farm and only works enough hours to be able to grow the food necessary for him and his family. Eduardo's behavior demonstrates that

the freedom to own property and keep the profits from work is necessary to the survival of an economy

In an economic and political system called communism:

the government owns almost all the factors of production

According to Adam Smith, as long as farmers, laborers, and businesspeople received economic reward for their efforts, they would work hard. As a result of this self-directed desire to gain, the economy would prosper and everyone would become wealthier. Smith called this process:

the invisible hand

Benefits of exporting goods such as snowplows and sand to the Middle East include that:

the product may be used differently than in the U.S.; there is likely to be less competition

A business plan is a detailed written statement that describes: Multiple select question.

the target market; the resources and qualifications of its owner(s)

The motives of those involved in unethical behavior that caused the financial crisis in the real estate, banking, and mortgage industries included:

the wish to inflate their own earnings; greed

What is the goal of a nonprofit organization?

to make a contribution to the welfare of society

When the value of a country's imports is more than its exports, the country exhibits a(n):

trade deficit

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as:

unlimited liability

Many brick and mortar franchisees are using Blank______ to expand their businesses online to lower costs and better meet the needs of their customers.

websites; e-commerce; technology

Because of the difficulty in ending a partnership, decisions regarding what two areas should be spelled out in a partnership agreement?

when a partner can retire; how to distribute assets

U.S. business people are often accused of ethnocentricity which is a belief that:

your own culture is superior to other cultures