Chapter 1 Practice Quiz pt. 2

Active ownership of a foreign company, with direct investors having either a controlling or a large minority interest in the firm, is called a(n):

direct foreign investment

In 1998, the Canadian Magazine Publisher's Association (CMPA) predicted the demise of many Canadian magazines because the World Trade Organization (WTO) made it legal for U.S. publishers to introduce product into the Canadian market, without incurring the start-up costs involved in launching a new magazine. By using split-run magazines (modifying the U.S. edition so they contain Canadian ads), U.S. magazine publishers could offer lower rates to advertiser and sell the magazines for less money than Canadian publishers could. According to the CMPA, the U.S. magazine publishers would be engaged in:

dumping

U.S. plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries, a Japanese company, to use its trademarks, patents, and other proprietary knowledge to manufacture F-15 fighter planes. Mitsubishi Heavy Industries pays McDonnell-Douglas. This is an example of:

licensing

The implementation of an expansionary policy by the Federal Reserve would result in:

lower interest rates

Thom Nielssen owns 500 acres of woodland. His forest is an example of which factor of production?

natural resources

Laws passed by the U.S. Congress concerning how U.S. businesses trade with Cuba would be an example of _____ factors that influence the business environment.

political and legal

A company that has a global vision:

recognizes and reacts to international business opportunities

Aaron Medford has invested $600 in the corporate stock of a manufacturer of offshore oil drilling equipment. If the company goes bankrupt, the most Medford could lose would be:

$600

Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?

A conglomerate merger is done to reduce risk.

What is the primary difference between a good and a service? Group of answer choices

A good is tangible, and a service is intangible.

Which of the following statements about limited liability companies (LLCs) is true?

All of the above statements about LLCs are true.

An S corporation is generally set up to:

reduce tax burdens

Today companies are focusing on _____, which involves building, maintaining, and enhancing interactions with customers and other parties so as to develop long-term satisfaction through mutually beneficial partnerships.

relationship management

Of all forms of business ownership, corporations account for the largest share of both:

sales and profits

Wal-Mart ran a series of ads in trade journals with the following headline: "We're Looking for Quality Products That Are Guaranteed Not to Last." What Wal-Mart was in fact doing was asking its suppliers to develop more environmentally friendly products and to use material that could be recycled. This concern about the environment is one way that Wal-Mart practices:

social responsibility

The form of business ownership that is easiest to dissolve is the:

sole proprietorship

The most common form of business organization is the:

sole proprietorship

Kraft Foods Inc. joined with the National Latino Children's Institute to announce Salsa, Sabor y Salud - a first-of-its-kind healthy lifestyles educational program designed by Latinos for Latinos. The program was created by NLCI in partnership with Kraft to support Hispanic families, a population particularly at risk for obesity and accompanying health problems. Kraft donated $2 million to the program's startup. This donation is an example of:

strategic giving

Which of the following is an example of a trend in ethics and social responsibility?

strategic giving

Besides tariffs, a government can use a number of other tools to restrict trade. Which of the following is NOT a tool aimed at restricting trade?

subsidy

The quantity of a product or service that businesses will make available at various prices is called:

supply

China imposes a 45 percent tax on the market value of all chickens that are imported from the U.S. into China. Another name for this type of tax is a(n):

tariff

Fiscal policy is concerned with:

taxation and spending

Which of the following is the best example of a good?

the birthday candles you purchased to go on your sister's birthday cake

Why do most large companies have outside directors on their boards?

to bring a fresh view to all of the corporation's activities

A country that imports more goods than it exports is said to have a(n):

unfavorable balance of trade

The slope of the supply curve is:

upward and to the right

The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a(n) _____ merger.

vertical

Social responsibility goes beyond obligations provided by law or union contract. Two important aspects of social responsibility are that the obligation is both:

voluntary and broad

_____ are organizations formed by individuals or businesses with similar interests to achieve greater economies of scale and economic power through collective ownership.

Cooperatives

_____ is the practice of charitable giving by corporations; includes contributing cash, donating equipment and products, and supporting the volunteers' efforts of company employees.

Corporate philanthropy

Rebecca Siddoway own and operate Country Candies. Siddoway specializes in making rich, creamy toffees that she packages in attractive gift boxes and sells through the mail. What would be the advantage to Siddoway if she decides to incorporate her business?

Corporations have an enhanced ability to attract financing.

Which of the following is a disadvantage of sole proprietor ownership?

Difficulty in raising capital

Which of the following is an example of a natural trade barrier?

Distance

_____ contributes to an employee's self-worth, which, in turn increases productivity and reduces absenteeism.

Empowerment

Which of the following statements about ethics training is true?

Ethics training is formal training to develop awareness of inappropriate behavior and to practice appropriate responses.

_____ are laws that require a company earning foreign currency from its exports to sell the foreign currency to a control agency, usually a central bank.

Exchange controls

_____ are goods and services that are made in one country and sold to other countries. Group of answer choices

Exports

_____ are corporate takeovers financed by large amounts of borrowed money.

Leveraged buyouts

_____ refers to a government's programs for controlling the amount of money in circulation.

Monetary policy

_____ move resources, goods, services, and skills across national boundaries without regard to the country in which they are headquartered.

Multinational corporations

_____ refers to sending work functions to another country resulting in domestic workers losing their jobs.

Outsourcing

Which of the following statements about the taxation of partnerships is true?

Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns.

_____ is the amount of money remaining from a firm's sales revenue after it deducts production costs, interest costs, and taxes.

Profit

Before selling stock to the public, a corporation must register with the:

Securities and Exchange Commission

How does the current boom in mergers and acquisitions differ from ones in earlier years?

There is a greater number of U.S. and foreign companies making cross-border acquisitions.

Which of the following statements about utilitarianism is true?

Utilitarianism is designed to create both winners and losers.

Which of the following is NOT a form of unemployment?

Which of the following is NOT a form of unemployment?

The original purpose of the _____ was to help build infrastructure in developing countries and to help relief the debt burden of these countries.

World Bank

In perfect competition, there is:

a large number of sellers producing nearly identical products

Articles of incorporation do NOT include:

a list of all stockholders' names

In Canada, the government owns the communications, transportation, and utilities industries, while most other activity is carried on by private enterprise. Canada is an example of:

a mixed economy

IBM purchased MRO Software Inc. for $740 million. MRO was a niche provider of software and services to help customers including nuclear power plants and oil companies. IBM, plans to fold MRO into its software unit. This is an example of a(n):

acquisition

The unemployment rate is the percentage of the total work force that is not working but is:

actively looking for work

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. The mushrooms are expensive, and there were other unexpected financial problems, so Nyami and Rice asked Bill Ng to become a limited partner. This means that Ng:

agrees not to participate in day-to-day management of the firm

Social responsibility should extend beyond the shareholders to include:

all of the above

Members of millennial generation:

are not accurately described by any of the above

Clarence Danvers is buying a Cinnabon franchise at the airport in Tulsa. Danvers knows that he will get all of the following benefits EXCEPT:

assistance in personal income tax preparation

The _____ is the total amount of money that flows in and out of a country.

balance of payments

The _____ is defined as the difference in value of a country's exports and imports over a period of time.

balance of trade

Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:

business dies with her

A German law that prohibited the use of hops grown outside of the country in the production of German-made beer was overturned in the late 1980s. This law was an example of a(n):

buy-national regulation

The two types of cooperatives are:

buyer and seller

Which of the following provides the legal and managerial guidelines for operating the firm?

bylaws

Corporate philanthropy:

can be either a cash or a noncash donation

Individual ownership of property is a key element in:

capitalism

In a _____, the factors of production are owned collectively rather than individually, and no incentives to work harder or to produce quality products are provided.

communist economic system

Canada is currently the second largest producer of nickel in the world. The reopening of the world famous Voisey's Bay mine, which has total resources estimated at 124 million tons of nickel-bearing ore, should give Canada a clear:

comparative advantage

There are over 1,100 Corner Stores that market candy. When Valero Energy Corp. purchased the chain of retail stores, it was an example of a _____ merger.

conglomerate

The Sara Lee Company sells the Hanes brand of hosiery in the United States. The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly. The Sara Lee Company is using _____ to broaden its global marketing base without investing in overseas plants and equipment.

contract manufacturing

The Chubb Group, an insurance company, regularly supplies funds for programming on the public television network. Its donations are an example of:

corporate philanthropy

A country's _____ is the set of beliefs, values, and social norms shared by members of a society that determines what is socially acceptable.

culture

Bribery translates to kuroi kiri (black mist) in Japan, schmiergeld (grease money), and baksheesh (tip or gratuity) in the Middle East. This differing way of looking at bribes is descriptive of differences in:

culture

An S corporation:

does not make the owners of the corporation personally liable for its debts

Double taxation in a corporation means:

earnings of the corporation and dividends of the shareholders both are taxed

At the base of the corporate social responsibility pyramid is:

economic responsibilities

A total prohibition against importing certain products is called a(n):

embargo

In 1914, the United States prohibited the importation of Mexican avocados even though Mexico is the world's largest producer of the fruit. This prohibition remained in effect until 1996. The ban on importing Mexican avocados is an example of a(n):

embargo

A company can only be concerned about its _____ responsibilities once it has met its economic and legal responsibilities.

ethical

In the chocolate market, Green & Black is acting at the _____ responsibilities level of the pyramid of corporate social responsibility when it makes a profit, does so by abiding by the laws, and helps cocoa farmers by agreeing to pay above-market prices for cocoa.

ethical

The _____ is the value of one currency in terms of another.

exchange rate

Botswana produces diamonds, copper, nickel, soda ash, meat, and textiles, which it sells to the members of the European Union. To Botswana, the diamonds, copper, nickel, soda ash, meat, and textiles it produces are examples of:

export

The least costly and least risky method for selling a product on the global market is:

exporting

A country that exports more goods than it imports is said to have a(n):

favorable balance of trade

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As a sole proprietor, McAnem:

found the business to be easy and inexpensive to form

A policy of permitting the people of a country to buy and sell where they please, without restrictions, is called:

free trade

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. Nyami and Rice have recently abandoned their business because they could not pay its outstanding business debts. Since Nyami and Rice are both liable for the debts, their business was a(n):

general partnership

The growing popularity of bread machines has become a new business opportunity for Shelly Clemins and Jan Schoenbarr. The women make and sell bread machine covers and fabric gift bags to hold the bread loaves made in the machines. The women share the responsibilities of running the business (called Bread & Butter) as well as its profits equally. Bread & Butter would be an example of a(n):

general partnership

A preferential tariff:

gives tariff advantages to one country over others

The World Trade Organization (WTO):

has emerged as the world's most powerful institution for reducing trade barriers and opening markets

Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses. As the sole proprietor of the business, he has unlimited liability, which means:

he is fully liable for all business debts

The franchisor generally does NOT provide the franchisee with:

help in employee selection

North American Van Lines and Allied Van Lines combined in a _____ merger that will create the world's largest moving company. Prior to the merger, North American was the leading company in moving high-end merchandise such as computer and hospital equipment, while Allied specialized in households.

horizontal

One of the keys to ethical business behavior is:

how the company's top management conducts themselves

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As the business grew, she realized that she did not want to be personally liable for the business's debts and wanted her business accounts to be separate from her personal accounts. Therefore, she should have:

incorporated Stirya

Jamaica has 35 airports, 18,700 kilometers of paved and unpaved road and a total of 272 kilometers of railroad track. This is a partial description of the nation's:

infrastructure

A code of ethics:

is accurately described by all of the above

A corporation:

is accurately described by all of the above

Imagine you are trying to gather the information needed to calculate the balance of payments for an Eastern European country. To do your calculations, you would need to have information on all of the following EXCEPT:

its corporate tax rates

A _____ is when two or more companies form a special entity to undertake a specific project, usually for a specific period of time.

joint venture

An enterprise in which two or more firms or investors (including governments) share ownership of a business and its property rights is called a(n):

joint venture

Capital Radio PLC, the United Kingdom's biggest commercial radio firm announced in 2002 that it would cooperate with Walt Disney Co. to create a radio network for children under the age of 16. The company will broadcast to a potential audience of 25 million under the name Capital Disney. This new radio network will be created as the result of:

joint venture

Hard Rock Cafe International and Sol Melia Hotels and Resorts have allied to develop a multimillion-dollar hotel. This relationship is a _____ because their alliance will end as soon as the hotel is completed.

joint venture

Peter Drucker, a well-known management scholar, has said that companies should be evaluated on two basic dimensions:

legality and responsibility

Fred Pittman has invested $10,000 in his son's motorcycle repair shop, but he takes no part in its management. Pittman is a(n):

limited partner

The implementation of a contractionary policy by the Federal Reserve would result in:

lower inflation

The standard of living in any country is:

measured by the output of goods and services people can buy with the money they have

The combination of two companies that join to form one company is called a:

merger

Because the government owns the factors of production in public lands, postal service, and some water resources, Great Britain is considered a(n):

mixed economy

A market in which there are a large number of firms that differentiate their products is called:

monopolistic competition

The Ford Motor Company has investing $6 billion to build a "world car," the midsize Mondeo. The car was designed in the U.S., Germany, and the United Kingdom to be adaptable to any market in the world. Ford is a(n) _____ company.

multinational

With a communist economy system:

none of the above is true

An industry in which a few firms produce most or all of the output of a product and in which large amounts of capital are needed is called a(n):

oligopoly

In a(n) _____, a few sellers can exert substantial control over prices.

oligopoly

Ease of formation, flexibility, and diversity of management are advantages of the _____ form of business ownership.

partnership

Stewed Tomatoes was an "all-girl power-pop trio." Its three members realized that many musicians feel stifled when making music in a sterile studio environment while the clock ticked away expensive hours, so the three girl band members created Materville Studios, a multimedia production house and recording studio in downtown Chicago. They share work responsibilities and profits equally. Materville Studios is a(n):

partnership

A company has achieved the level of _____ responsibilities when it has met its ethical, legal, and economic responsibilities.

philanthropic

During a two-month period Lladro Comercial, S.A., the manufacturer of handcrafted porcelains, donated ten percent of its retail profits to the Susan G. Komen Breast Cancer Foundation. The action was legal and ethical and allowed the company to still be profitable. According to the pyramid of corporate social responsibility, it was acting at the _____ responsibilities level.

philanthropic

The highest level of the corporate social responsibility pyramid is:

philanthropic responsibilities

Japan bans importation of rice to protect its domestic rice industry. This ban is an example of:

protectionism

The European Union (EU) bans the importation of hormone-fed U.S. beef and bioengineered corn and soybeans on safety grounds although Americans eat this food every day. This ban is so consumers in the EU will buy domestic beef and products made from domestically produced corn and soybeans. This ban is an example of:

protectionism

A decline in real GDP that lasts for two consecutive quarters is called a(n):

recession

When a single firm accounts for 100 percent of industry sales, it is an example of:

a pure monopoly

It has been alleged that a Coca-Cola water bottling plant in India has caused illegal water shortages in fifty villages that surround the bottler. If this accusation is true, than Coke was operating at which stage of the social responsibility pyramid?

economic

Which of the following statements about ethics training is true?

All of the above statements about ethics training are true.

_____ is a philosophy that focuses on the consequences of an action to determine whether it is right or wrong. This philosophy holds that an action that affects the majority adversely is morally wrong.

Utilitarianism

_____ inflation is triggered by increases in production costs which increase the costs of final goods and services.

_____ inflation is triggered by increases in production costs which increase the costs of final goods and services.

Which of the following is an example of a business?

all of the above

Labor, as a factor of production, refers to:

all workers in business

Which of the following is an example of an unethical business activity?

All of the above are examples of unethical business activities.

If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply, then both countries are exercising the principle of:

comparative advantage

The Department of Natural Resources spent money to promote the use of national parks as perfect sites for a summer vacation causing motels, campgrounds and other tourist attractions in the private sector to become less attractive to consumers. Consequently consumers spent more money on trips to the national parks and less money in the private sector for their vacations resulting in _____.

crowding out

Summer Dean was walking through the mall and found a gym bag lying on the ground. The decision Dean must make as to whether to keep the gym bag and its contents for herself or turn it into the mall's lost and found department involves:

ethics

The average price of construction materials increased by 8.1 percent in 2005. The head of the Home Builders Association said it was due totally to increases in lumber, metal, and labor costs. The 8.1 percent increase is probably an example of: Group of answer choices

inflation

Utilitarianism:

is difficult to implement because it is hard to tell how one decision will impact a large number of people

Wal-Mart has announced that it will only sell fresh and frozen fish that come from environmentally sound sources and bear the label of the Marine Stewardship Council. Wal-Mart's size gives it a unique opportunity to improve the fishing industry. This concern for _____ is one of many initiatives Wal-Mart is introducing to improve our environment.

social responsibility

Seeds of Change manufactures and markets certified organic entrees. Its mission reads, "At Seeds of Change, we're committed to making delicious foods that are healthy for you as well as the planet." In support of this mission, the company donates money to support environmental protection activities. In other words, Seeds of Change engages in:

strategic giving

_____ is the set of moral standards for judging whether something is right or wrong.

Ethics

Which of the following is an example of an ethical business activity?

The employee reported to his supervisors that a co-worker had misappropriated company funds.

An economic system based on competition in the marketplace and private ownership of the factors of production is known as:

capitalism

A homebuilder who disposes of asbestos shingles by burying them on his own property may please the home owner because it is a less expensive means of disposal but will be punished by various legal agencies if any become aware of his crime. At which stage of the social responsibility pyramid is the builder most likely operating?

economic

A retailer that allowed its employees to handle a customer complaint without having to ask for permission or direction from management would have:

empowered its employees to help customers

When Ted Giovanni was preparing for his trip to Brazil, he found that he could go to his bank and trade his 10 U.S. dollars for 37.11 Brazilian real (the nation's currency). In this instance, the _____ was one U.S. dollar to 3.711 Brazilian real.

exchange rate

A(n)_____ occurs if a country's total expenditures are higher than the revenues received from the taxes it gathers.

federal budget deficit

Laws have curtailed smoking, and as a result, the sale of cigarettes is down. Rather than fighting the law, the cigarette industry is looking for ways to take their business beyond cigarettes. Many experts believe that the cigarette producers have found a way around the law with the promotion and distribution of smokeless tobacco, which has shown consistent sales gains over the last decade. In terms of the social responsibility pyramid, at which level is the cigarette industry operating?

legal

Archer Daniels Midland Co. (ADM) has joined with Baron Spices and Seasonings to market spices, seasonings and herbs to the foodservice industry. ADM will provide the raw materials, and Baron will act as the distributor and use its already existing relationships with participants in the food service industry to make a success of this:

strategic alliance

Iris Souza started the summer with $30. She took $10 and made signs for her dog walking service. She posted the signs all over her neighborhood. She used the other $20 to buy a stout leash and a pooper-scooper. At the end of the summer, after buying herself a new pair of shoes for $50 (she had worn her other shoes out walking dogs), she had $125 left. What was Souza's profit for her summer job?

$125

Which of the following statements about human rights is true?

None of the above statements about individual rights is true.

_____ is the practice of limiting investments to securities in companies that behave in accordance with the investor's beliefs about ethical and social responsibility.

Social investing

Which of the following statements about social responsibility is true?

The obligation that a business has to act socially responsible extends beyond the investors in the company to include workers, suppliers, consumers, and communities.

The government does not consider full employment to mean 100 percent of its citizens are employed because:

all of the above conditions can and do exist

When the government raises taxes on consumers and businesses, it is dealing with _____ policy.

fiscal

The Blue Bird Bus Company in Georgia sells buses to the South African government. To South Africa, these buses are an example of:

imports

Social investing:

is the practice of limiting investments to companies that have ethical policies that match those of the investor

Many weight-loss programs advertise that they can help individuals lose a great deal of weight without any changes in the individual's lifestyle. Typically when the person who has lost the weight leaves the program, he or she regains all the lost weight. This yo-yoing is almost as bad for the body as the excess weight. These weight-loss programs are engaged in _____ behavior.

legal but irresponsible

Criticism of South Africa's post-apartheid government contends that the new government has not extended liberties to its black majority population, but has instead concentrated on proving to a white minority that a black-run administration can govern a reasonably sophisticated economy and society. The belief that the new South African government is behaving unethically is an expression of the philosophy associated with:

utilitarianism

The _____ is an agreement that dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO).

Uruguay Round

A group of investors in a retirement fund removed their money from the fund when they learned the fund manager had invested in a gambling casino. The investors' religious beliefs lead them to believe in the fundamental evil of all forms of gambling. These investors were engaging in:

social investing

Hudson Kling mows yards during the summer. Which of the following is an example of revenue for Kling?

the $10 tip Mrs. Pierre gave him for doing such a fine job of mowing her yard

Which of the following countries has a high standard of living?

the United States