Intro to Business
Entrepreneurs who have started several businesses and continue to start new businesses are known as
Serial entrepreneurs
The primary goal of a nonprofit business is to ________.
use its revenues to provide a public service
Which of the following is an example of a for-profit business?
walmart
There are inevitably changes in the market and technology lie beyond the entrepreneur's control. For this reason, entrepreneurs must be
flexible and respond to changes.
________ are people who work directly within the business.
internal stakeholders
The primary goal of a for-profit business is to ________.
maximize profits for owners
Exports are an important source of what for many countries?
revenue
The equilibrium price for Gizmos is $12, but Gizmos are currently priced at $10 throughout the market. In the typical store that sells Gizmos, we might expect:
the box of available Gizmos is often empty
If a company adjust its processes to offer good service and high-quality products at competitive prices, they are responding to which external force?
the competitive environment
What type of environment impacts a business if low interest rates and government incentives are offered to open or expand businesses?
the economic environment
Pertaining to international trade, the acronym WTO stands for:
world trade organization
In the U.S. more goods are imported from China, than are sold and exported to China. We are said to be in a ________ with China.
trade deficit
When more goods are exported than imported it is known as a:
trade surplus
Global trade really gets a boost from regional trade agreements. These are reciprocal trade agreements between:
two or more nations.
The ________ rate generally rises during contractions and falls during expansions.
unemployment
Which of the following is an example of a nonprofit organization?
united way
Sara would like to buy her first car (a beautiful blue Honda Civic). The car is priced at $20,000 and she needs to come up with a down payment of $3,000. Sara starts by looking at her most liquid assets to come up with the necessary down payment. Which of the following are the most "liquid" of Sara's options:
$300 in her checking account.
In your global woodworking business you can produce 100 birdhouses, or 10 pieces of fine furniture for the same amount of resources. Therefore, each piece of fine furniture is worth:
10 birdhouses.
A company wishing to reinforce its commitment to ethical behavior could institute:
A Whistleblower program
What government entity is responsible for monitoring the U.S. money supply?
Federal reserve
The ________ is an organization that seeks to provide capital investments for economic growth and infrastructure projects.
International Monetary Fund
Why don't we use the barter system today:
It is difficult to find two parties that have something they both want to trade.
The Dells Cargo bank was rocked by scandal with the discovery of one million phony accounts created by employees to hit sales targets and receive bonuses. After an investigation, what was discovered was that internal business ethical behavior standards were often brushed aside for profit and bonuses. What would you guess was most likely to be the main reason for the ethics breaches at the Dells Cargo?
Its various levels of management were responsible for misconduct and rule breaking setting the example for company employees.
Bob and Alexandria have set up a partnership for their business. What types of limitations could hinder them in creating an effective partnership?
The potential for disagreements among partners.
Which of the following has primary responsibility for financing economic development on behalf of the international community?
The world bank
Historically many methods and markets were used to raise capital, but the primary methods that have evolved in modern times are the:
bond markets and stock markets
Opportunity cost is a key consideration in determining:
comparative advantage
What are Bonds?
debt
What is the term for an extended period of economic decline with no improving indicators?
depression
________ is a business that provides goods or services to consumers but whose primary goal is not to return profit to the owners.
A nonprofit business
An organization that provides goods or services for the purpose of making a profit is called a
Business
Robin Hood took gold coins from the wealthy and gave them to the poor. Robin Hood was using:
Commodity money
Withholding information from sellers and buyers in order to expedite the closing of a deal is a business practice:
Common, lucrative and unethical.
In the United States of America the ________ is the basic law
Constitution
Google.org made a $2.4 million grant to GiveDirectly, a nonprofit that provides direct cash aid to the poor. This example of Corporate Social Responsibility is known as:
Corporate Philanthropy
Businesses exist in an environment shaped by ________.
Culture
If the federal government wanted to find out how much M1 money is in circulation in the US, it would look at which of the following?
Demand deposits and other checking accounts
intermediary between savers and borrowers
Does not offer shares of the company to the public.
Hometown Bank has made a significant number of loans to their customers, some of which have been very large. An audit of the bank's records shows that as a result of this increased lending activity, the bank is now below the Federal Reserve's minimum reserve requirement. A member bank, City Bank, has excess reserves, which Hometown Bank borrows. The rate of interest that Hometown Bank will pay to City Bank for the loan is the ________ rate.
federal funds
Stocks or equity securities are:
financial instruments that may include share of a company's future profits
License agreements usually cover property that is ________, such as trademarks, images, patents, or production techniques.
intangible
Banks and credit unions serve as ________.
intermediary between savers and borrowers
Shannon went to the pet store and bought a dog bowl. The bowl cost $15 and Shannon used a $20 bill to pay for the bowl. She received $5 back in change during this transaction. The $15 price of the dog bowl ________.
is a precise measurement of the value of the dog bowl.
You and your dear friend want to start an accounting firm together. You know each other well but you don't want to be held responsible for your friends negligence or misconduct should such an event occur. You and your friend also want to be sure that you are only taxed once on company profits. Which type of organizational structure might be best for you?
Partnership
Your large business just issued bonds for $10 million. You are excited about utilizing the new funds to expand. As you create your budgets for the upcoming years you need to keep in mind that your company will need to ________.
Pay interest payments annually and repay the entire $10 million at the end of the bond term.
Which of the following describes a business cycle?
Periods of increasing and decreasing real Gross Domestic Product (GDP).
What would cause the level of demand (meaning the relationship between price and quantity demanded) to shift?
Population grows in a particular area
New decisions that bind future courts establish:
Precedent
The downward slope of a demand curve illustrates the pattern that as ________ decreases, ________ increases.
Price : quantity demanded
In spite of the controversial nature of Corporate Social Responsibility corporations are adopting programs because:
Profit related benefits, recruiting and keeping the best employees, risk management.
A ________ establishes a new business that is jointly owned by two or more otherwise independent businesses.
joint venture
The relationship between the price in a market and the amount that producers collectively make available for sale, is referred to as:
Supply
Your friend, Hannah, is considering setting up a corporate entity type for her business. You know the main characteristic that distinguishes an S Corporation from a C Corporation. What is that difference?
That only an S corporation's shareholders are taxed, but the business itself is not taxed.
Which statement accurately describes a trade deficit?
The U.S. has a trade surplus with Australia, however our net balance of trade is a deficit
Identify the macroeconomic issue among the following statements.
The average cost of producing electricity nationally is rising
The Denali Mountain bank was scandalized with the discovery of 20,000 fake accounts created by employees to hit sales targets and receive bonuses. Upper management has been fired and you are brought in as the new CEO to change things around. You are preparing to send out a memo to all employees about business ethics and the changes to better implement them. Which would be the best business ethics action to be included in your memo?
The bank will publish standards governing the behavior and actions of employees and actions of the business, and implement mandatory policy training for all employees.
What is one of the key parts of the definition of a small business?
The business has less than 500 employees
The most common ________ involves two companies that are equal partners in the new firm, investing money and resources while sharing control of the newly formed firm.
joint venture
Economists refer to the relationship that a higher price leads to a higher quantity supplied as the:
law of supply
What is the biggest advantage of borrowing money, such as a loan or a bond, instead of issuing stock in order to raise capital?
The current business owner retains complete ownership of the business
When countries specialize in producing goods they are most efficient at, and trade for their other goods from trading partner countries, the arrangement demonstrates:
The law of comparative advantage
When higher prices result in a lower quantity demanded, economists call this relationship:
The law of demand
Imagine that you own a local fitness gym in your hometown called "U-Fit." You have done well over the last few years and have enough capital to acquire another hometown company, "Power Kore, " that makes nutritional protein shakes. Why would it be a good idea for you to undertake a vertical merger or acquisition of this sort?
To increase synergies by merging firms that would be more efficient operating as one.
After taking $45 billion in taxpayer funding to remain afloat, CitiBank spent $50 million on a new private jet. This action was:
Unethical since taxpayer money was given solely with the intent to keep CitiBank solvent.
The equation for balance of trade is:
Value of exports - value of imports
You need to have your gutters cleaned in the spring but have no ladder and are really afraid of heights. Buddy lives down the street and owns a roofing business. You contact Buddy and ask him if he will come clean out your gutters and in exchange you will make him a wreath he can hang on his door at the holidays. He agrees to the exchange of these two assets. What type of system have you used in this transaction?
a barter system because each person gets something of value
A decrease in the quantity supplied can be the result from:
a decrease in price
As a business owner you decide to hire a new employee named Maria. You decided to pay Maria $15.00 an hour for her work. At the end of the week Maria receives a paycheck for $600. The $600 Maria received is ________.
a measure of her work's value to the company
Excess supply occurs when the actual price in some market is ________ the equilibrium price.
above
If your country is the single, only source of a given product, good or service, you are said to have:
absolute advantage
Benefits of being a franchisee include:
access to a template for the business.
The purpose of a financial institution such as a bank or credit union is to ________.
act as an intermediary between savers and borrowers
External forces that affect businesses include
advances in technology
Which of the following items is not scarce?
air
When it was formed the World Trade organization absorbed:
all of GATT's agreements.
When economists talk about supply, they are referring to a relationship between the price in a market and the:
amount that producers collectively make available for sale.
When a business makes decisions, which group outside of the business is affected in some way?
customers
A business incurs a ________ if its costs associated with the operation of the business exceed the total sales revenue.
loss
A pharmaceutical company owns all of the marketable medicines for a certain disease. Due to the critical nature of the disease, and their market monopoly, they are able to charge extremely high prices for the drug. The shareholders are happy with their returns but the CEO faces a(n) ________ every day.
ethical dilemma
In a market with an upward sloping supply curve and a downward sloping demand curve, when the actual price must be higher than the equilibrium price, there will be:
excess supply
Countertrade is the exchange of goods and services without:
exchanging currency
Businesses are most likely to hire new employees during which stage of the economic cycle?
expansion
Rising economic indicators typically signal ________ in the economy.
expansion
Glenda opened a tax accounting business where she works with small businesses to manage their finances and prepare their records for tax season. Glenda's primary objective when she opened her business was ________.
making a profit
A motel provides both services and goods. Which of the following is an example of a good provided by a motel?
offering a bathrobe that you can purchase to take home with you
When products and services are produced or provided, ________ is responsible for ensuring that those products and services meet high quality standards?
operations
A ________ is owned and managed by a group of individuals who share in decision-making and risk.
partnership
A ________ ________ is an example of when a programmer hacks software code to understand how it works and then writes a program that replicates it.
patent violation
The unemployment rate generally ________ during contractions and ________ during expansions.
rises : falls
Infrastructure needed to transport goods in a foreign country include:
roads, railways, and port systems.
A business collects demographic information about what potential and current customers purchase, where they live, and how they spend their time. This business is responding to the ________.
social environment
Sarah owns a business, but has met with an unfortunate accident and dies as a result. Because her business was set up as a ________ it will perish as well because of her death.
sole proprietorship
Each of us face decisions in our lives that require us to make choices, knowing that:
the correct choice depends upon the opportunity cost of a choice.
A business hiring new employees will need to report to
the federal and state and local government.
Sasha, a business manager, must consider many external factors that could affect her business. As she considers the low cost of labor in other countries around the globe when making business decisions, Sasha is considering
the global business environment
A free market is described by which of the following statements?
the government does not intervene in any way
In global finance the term IMF refers to ________.
the international monetary fund
Bribery is one of ________ examples of a corporation engaged in unethical behavior.
the most common
Denice invented a small, portable purse hook that allows a purse to be hung from a table and not touch the floor. She knows that there is a market for her purse hook and takes a loan out on her home to finance a small start-up company in Rock Creek, WI. As an entrepreneur, Deniece's primary motivation for opening the business is ________.
the potential of making a profit if the business succeeds
Suppose Congress passes legislation that offers subsidies to orange farmers. The impact on the market for orange juice will be a rightward shift of:
the supply curve
A severe freeze has damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:
the supply curve.
The international monetary community created both the IMF and the World Bank because:
the two organizations create an important division of labor
Which of the following are accurate statements about corruption in the global business environment?
the united states companies must abide by the foreign corrupt practices act
A competitive market is one in which:
there are a large number of buyers and seller
The equation for balance of payments is:
total money (inflow) - total (outflow)
Natural resources would include which of the following?
wind
Guillerma wants to start a business after this class. His first step, as described in our textbook, is to
write a business plan.
Statutory law is:
written and available online
What function is responsible for ensuring that products and services which are produced or provided meet high quality standards?
Operations
The legal age for purchase of alcoholic beverages is defined by:
Statutory law
Governments maintain laws that regulate business practices in order to:
create a stable environment for business
Which of the following are external stakeholders in a business?
creditors
When a company decides it will cut vacation time and increase production hours, which stakeholders will be most directly impacted?
employees
The one unique point in which quantity demanded equals quantity supplied is called:
equilibrium
Which of the following is one of the factors of production?
natural resources
Board of trustees oversee the operations of ________ organizations.
nonprofit
The U.S. Government Accounting Office has chosen to define a sweatshop as any manufacturing facility that is guilty of ________ labor abuses such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, abusive discipline, sexual harassment, or violation of labor laws and regulations.
2 or more
Marcie goes to the salon and has a pedicure and a manicure. What has Marcie purchased from the salon?
A service.
A ________ seeks to provide a return to shareholders while pursuing other goals that benefit community or society.
B corporation
If an organization or business has its production becoming more efficient as the scope of production rises, an organization or business is using what specialization advantage?
Economies of scale
InfoTech is a computer application firm based in Silicon Valley and has been responsible for introducing some of the highest rated applications available for personal productivity. Two brothers originally founded the company, but they quickly realized they needed to convert the business into a corporation and establish functional areas within the company to handle various aspects of operations. The company is now considering expanding operations by building a production facility in another country. The Board of Directors has approved this move, and now it will become the responsibility of which functional area to secure the necessary funding for the expansion?
Finance
If a bribe has been paid to a foreign government official to obtain or retain business, then it is a violation of the:
Foreign Corrupt Practices Act.
There are many ways that a business can reach the global market, the most intensive approach is through ________.
Foreign direct investment
Which of the following statements describe(s) a free market?
Government does not intervene in any way.
A business cycle reflects changes in economic activity, as measured by:
Gross Domestic Product (GDP)
The market value of all goods and services produced by the economy in a given year is known as:
Gross Domestic Product (GDP)
Your friend tells you he is working on setting up a business. He tells you he has a business partner who shares in all decision making, it has been fairly easy to set up, he will only be taxed once on company profits, and he has limited liability for the company. What kind of business has your friend most likely described?
Limited Liability Partnership
What business function is responsible for making sure that organizational strategies and goals are aligned with staffing plans?
Management
Which of the following are internal stakeholders in a business?
Managers
Varvitsiotis Architecture is a commercial architecture company founded in 1996. Their primary client base is private businesses and industries. They have little experience bidding on or designing projects for government entities, such as Department of Defense or the State of Alabama. Recently, the U.S. government announced an economic stimulus program that is intended to jumpstart construction. However, these funds were allocated to public (government) projects where the firm currently does not have a presence. Which function in Varvitsiotis Architecture would have primary responsibility for defining a business strategy that would create success for the company in this environment?
Managment
A function is responsible for aligning products and services to customer needs. Which function is driving this alignment?
Marketing
A neighbor has apple trees to harvest but no time to do it. The Peterson family has time to harvest but doesn't want to work for apples. The Petersons are hoping to take a vacation next summer, and agree to harvest the apples for their neighbor in exchange for a $200 payment for their work. This illustrates one of the advantages of money over bartering, which is:
Money stores value
A Trade Surplus is characterized by:
More goods exported than imported.
Your business, Balcony Management, has been doing very well. In fact, you are starting to see some decent profit! You decide it is time to move to a larger office space and purchase some new office furniture and equipment. You go to the bank you have been using for your business transactions and ask for a business loan. The bank provides you with a loan. What do you have to do next for the bank?
Repay the loan, including interest, over a predetermined amount of time
Which country has characteristics of a command economy?
Russia
If the federal government wanted to find out how much M2 money is in circulation in the US, they would look at which of the following?
Savings accounts
Celebrity chef Jamie Oliver started a company called Fifteen to help disadvantaged youth to create a better future for themselves. If other celebrities or individuals wanted to start a similar company with the sole purpose of helping others and giving back to society, these individuals would be known as:
Social entrepreneurs
Which form of business ownership involves tax reporting requirements that are fairly simple and the lowest tax rate of any legal structure?
Sole proprietorship
To establish negligence a plaintiff must prove the defendant:
breached their duty, caused harm, and harmed
Global corruption data from Transparency International show that:
bribes have increased
Compared to International Business, Globalization is:
broader
Silver Mining is opening a new mineral extraction facility in the local town and will employ several thousand people. They have decided to install scrubbers on the smokestacks of their facility in order to protect the environment, even though they are not required by the law to install them. This is an example of:
business ethical behavior
Because of our limited money, time, and effort, we are best off when we allocate those things:
by constantly assessing the opportunity costs of our choices.
Resources that can be used to produce other goods and services and have been produced are_
capitol
Companies today are held to higher standards than ever before. Consumer and other groups consider not only the quality and price of a company's products but also its ________.
commitment to environmental and social concerns
The point of a business cycle fluctuation during which growth slows, unemployment increases, and pricing pressures subside is called a(n):
contraction.
Diana has started a shop to sell and repair computers. She is looking forward to the
control.
When ________, business firms will collectively supply a lower quantity of output at any given price, and the supply curve will shift to the left.
costs of production increase
Complete the following sentence: If people think that the price of televisions will decrease in the near future, that belief may cause a(n):
decrease in the demand for televisions today.
Bank Of The North issued many large loans to their customers. An audit of the bank's records shows that the bank is now below the Federal Reserve's minimum reserve requirement. The Fed lends the bank the amount necessary to bring its reserves up to the required level. Bank Of The North will have to pay interest on the money that it borrowed from the Fed. The interest rate that is paid to the Fed on this loan is called the ________.
discount rate
The funding section of your business plan should:
distinguish between debt and equity funding.
is the way a service or good is produced and divided into a variety of tasks performed by different workers, instead of the same person performing all the tasks.
division of labor
Noah owns a private company. His company ________.
does not offer shares of the company to the public
Trade tariffs and quotas are designed to protect:
domestic producers
Both kinds of organizations, nonprofit and for-profit, can
earn revenue
Managing multiple and varying currencies is a(n) ________ challenge in a global business environment.
economic
Market economies are based on private enterprise, which means
economic decision-making happens through markets.
When conducting business in a market of comparative advantage, trading partners will realize:
economies of scale.
Negligence may include:
emotional, economic, or reputational damage
The FCPA applies only to bribes paid (or offered) to ________ to obtain or retain business or to develop an unfair competitive advantage.
foreign government officials
Both capital and natural resources can be used to produce other goods and services, but only capital ________.
has been produced
Capital is the only resource that ________.
has been produced
Human intellect and creativity falls into which of the following four factors of production?
human resources
The Uniform Commercial Code provides that the warranty of merchantability and warranty of fitness are:
implied
A company acquires goods or products from another country and sells them in domestic markets. This is an example of:
importing
When the price in some market is above its equilibrium price:
in the typical warehouse for that item, inventory is unintentionally rising
For a for-profit business, the primary goal is to ________.
maximize profits for owners
To qualify as a small business, the business:
may be a sole proprietorship, corporation, or any other legal form
What will we never do in a world of scarcity?
meet all of society's wants
A landlord fails to make improvements to keep the balconies of his apartment building at a level of repair that meets the city code. After several warnings from the city, one of the balconies falls and smashes the furniture and barbecue of one of the tenants. Another tenant is near the balcony when it falls but no one sustains physical injuries. Compensatory damages may include:
payment for damaged property and/or mental suffering.
Entrepreneurs tend to be good at
perceiving new business opportunities.
According to the Clayton Act companies must notify the government in advance to:
plan large mergers or acquisitions
The combined political and economic forces of a country are known as:
political economy
A demand curve shows the graphical relationship between quantity demanded and:
price
The amount a business earns after deducting what it spends for rent, salaries, and other expenses is
profit
One of the ways the Federal Reserve System seeks to stabilize prices is by:
regulation of interest rates