Exam 1 (1-6)
___________ means producing items using the least amount of resources.
Efficiency
Outsourcing means selling goods and services to people in other countries. (T/F)
False
The three countries participating in NAFTA are:
Canada, Mexico, and the United States.
What is normally considered a disadvantage of the corporate form of business?
Double taxation of earnings.
________ refers to standards of moral behavior.
Ethics
What represents the value of one nation's currency relative to the currencies of another country?
Exchange rate
A legal entity with authority to act and have liability separate from its owners is called a partnership. (T/F)
False
A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business. (T/F)
False
Absolute advantage is the basis for most global trade today. (T/F)
False
Effectiveness means producing goods and services using the least amount of resources. (T/F)
False
If a shortage exists in a market for a good, the price of that good will tend to fall. (T/F)
False
Importing is the selling of products to another country. (T/F)
False
Money is one of the five factors of production that contribute to the creation of wealth. (T/F)
False
Paid vacations and health care insurance are among the benefits provided by the government to entrepreneurs. (T/F)
False
Profits of a business include the salaries paid to its employees. (T/F)
False
The corporation is the most common form of business ownership. (T/F)
False
The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business. (T/F)
False
Under capitalism, the government prohibits people and businesses from competing with each other. (T/F)
False
_____________ refers to a general rise in the price level of goods and services over time.
Inflation
___________ refers to the amount of output generated with a given amount of input, e.g., the number of pizzas produced per worker per hour.
Productivity
What government agency is responsible for encouraging the development of small business?
Small Business Administration
_______________ is/are the external and internal circumstances that surround the business.
The business environment
Most communist countries today are suffering from severe economic problems. (T/F)
Tree
A favorable balance of trade occurs when the value of a country's exports exceeds the value of its imports. (T/F)
True
America's business success is largely due to an economic and social climate that allows businesses to operate freely. (T/V)
True
At the equilibrium price, the quantity consumers desire to buy equals the quantity sellers desire to sell. (T/F)
True
Businesses and nonprofit organizations often strive to accomplish the same objectives. (T/F)
True
Compared to sole proprietorships, an advantage of partnerships is their ability to obtain more financial resources. (T/F)
True
Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time. (T/F)
True
E-commerce is the buying and selling of goods over the Internet. (T/F)
True
Entrepreneurship is one of the five factors of production that contribute to the creation of wealth. (T/F)
True
Product differentiation is a key to success in monopolistic competition. (T/F)
True
Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses. (T/F)
True
Revenue is the total amount of money a business takes in during a given period by selling goods and services. (T/F)
True
Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government officials and environmentalists. (T/F)
True
Studies about the effects of population growth on the economy are part of macroeconomics. (T/F)
True
Taxes and government regulations are part of the economic and legal environment in which businesses operate. (T/F)
True
Technology allows firms to be more responsive to their customers' wants and needs. (T/F)
True
The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all. (T/F)
True
The United States imports more products and services than any nation in the world. (T/F)
True
The business environment refers to the surrounding factors that either help or hinder the development of businesses. (T/F)
True
Tools, machinery, and buildings are examples of capital resources. (T/F)
True
The __________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes.
World Trade Organization
When the market price of a good is above its equilibrium value, and all other determinants are unchanged:
a surplus will exist in the market.
A(n) _________ occurs when one company buys the property and obligations of another company.
acquisition
One reason limited liability companies have become so popular is that they:
can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation.
The social and economic goals of __________ include private ownership of land and business.
capitalism
The economic and political system in which the government owns almost all the major factors of production is called:
communism.
The theory of _______________ states that a nation should produce and sell goods to other countries that it produces most efficiently, and buy goods from other nations that they produce more efficiently.
comparative advantage
A(n) _______-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.
compliance
One way to lessen the U.S. government budget deficit is to:
cut spending.
A good business plan will:
describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner's qualifications.
A(n) __________ refers to a complete ban on importing or exporting of products from a specific country.
embargo
A major benefit of socialism is the:
emphasis on social equality.
The U.S. government's Immigration Act of 1990:
encouraged entrepreneurs to come to the U.S. through "investor visas."
In a partnership, a(n) __________ partner (owner) actively manages the company and has unlimited liability for claims against the firm.
general
Enterprise zones and investor visas are examples of:
government programs that encourage economic growth through entrepreneurship.
Three important economic indicators of the United States are the unemployment rate, the price indices, and the:
gross domestic product (GDP).
In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:
import quotas.
The executive summary section of the business plan contains:
information that will capture the attention of bankers and other investors who receive many business plans every day.
A(n) _______-based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.
integrity
The Small Business Administration defines a small business as a firm that:
is independently owned but not dominant in its industry.
Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:
licensing.
A ____________ is two firms combining to form one company.
merger
Two key management functions that need particular attention when starting a business are:
planning and financing.
In a free-market economic system, the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.
price
A simple supply curve shows a relationship between the:
price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time.
Last year, Adventure Enterprises reported revenues of $24 million while its total expenses were $10 million. Based on this information, Adventure reported:
profits of $14 million.
The two basic types of tariffs are:
revenue and protective.
Affiliate marketing is a web-based business strategy that:
rewards individuals who are willing to link a company's website to their blog or social network page.
Health care, insurance, recreation and other intangible products are provided by the:
service industry.
Enterprise zones are:
specific locations across the U.S. where entrepreneurs can set up shop and receive tax breaks for operating in these areas.
An owner of a corporation is known as a(n):
stockholder.
The Internet and the emergence of an information-based economy are important parts of the ___________ environment in which businesses operate.
technological
The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond:
the amount they have invested in the company.
Any debts or damages incurred by a firm organized as a sole proprietorship are:
the responsibility of the owner.
Which term describes someone who reports illegal or unethical behavior?
whistleblower