Introduction to Business Midterm Study Guide

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

corporate philanthropy.

monetary policy-

A government's programs for controlling the amount of money circulating in the economy and interest rates.

demand curve-

A graph showing the quantity of a good or service that people are willing to buy at various prices.

monopolistic competition-

A market structure in which many firms offer products that are close substitutes and in which entry is relatively easy.

How has diversity impacted the marketing and customization of products?

Along with their numbers, the buying power of minorities is growing.

business-

An organization that strives for a profit by providing goods and services desired by its customers.

Management needs to be prepared to deal with problems and seize opportunies as they arise. A company often identfies alternative courses of action to be taken if events undercut a strategic or taccal plan. These are called _____ plans.

Contingency.

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

Social investing.

goods-

Tangible items manufactured by businesses.

crowding out-

The situation that occurs when government spending replaces spending by the private sector.

economics-

The study of how a society uses scarce resources to produce and distribute goods and services.

cyclical unemployment-

Unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy.

business cycles-

Upward and downward changes in the level of economic activity.

knowledge workers-

Workers who create, distribute, and apply knowledge.

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

a pure monopoly.

Which of the following is an example of a natural trade barrier? a. Distance b. Price c. Product characteristic d. Exchange controls e. Custom regulations

a. Distance.

A _____ is a formal document that states an organizaon's purpose and reason for exisng and describes its basic philosophy.

mission statement.

The three basic roles of management are:

interpersonal, descisional, and informational.

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

exchange rate.

A preferential tariff:

gives tariff advantages to one country over others.

The most basic measure of economic growth is the:

gross domestic product.

Which one characteristic most clearly defines a market structure?

the number of suppliers in a market.

Market equilibrium is:

the point at which quantity supplied equals quantity demanded.

A term that means that business damages and/or debts can also be attached to the personal assets of the owners is ______ liability.

unlimited.

capital-

The inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer.

circular flow-

The movement of inputs and outputs among households, businesses, and governments; a way of showing how the sectors of the economy interact.

An economic system based on complete freedom of trade and little, if any, government control is known as:

capitalism.

The ______ is an international bank that normally provides short-term loans to countries that are unable to meet their budgetary expenses.

International Monetary Fund.

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

joint venture.

fiscal policy-

The government's use of taxation and spending to affect the economy.

microeconomics-

The subarea of economics that focuses on individual parts of the economy, such as households or firms.

contractionary policy-

The use of monetary policy by the Fed to tighten the money supply by selling government securities or raising interest rates.

What type of business organization generates the most total sales?

Corporation.

_______ is the quantity of a good or service that people are willing to buy at various prices.

Demand.

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

Eithcs.

_____ is the process of guiding the development, maintenance, and allocation of resources needed to atain organizaonal goals.

Management.

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.

A firm's stockholders have the right to do all of the following EXCEPT: a. sell or transfer their ownership. b. share in company profits, in the form of dividents. c. elect the board of directors. d. get discounts on the company's product or service. e. attend annual meetings.

d. get discounts on the company's product or service.

One of the advantages of owning a small business is:

flexibility.

The Small Business Administration (SBA):

helps people start and manage small businesses.

Alysha Johnson is a manager who communicates effecvely, successfully movates and leads her workers, and allows them leeway in making decisions. Copeland is said to have good:

human relations skills.

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.

The Home Depot supplies all the materials and the labor experse for Habitat Homes in various regions of the country where the retail giant has a store. Its top management believes that this type of philanthropy better reflects the company's commitment to the community than simple donations to the American Cancer Society and similar national charies. The Home Depot is using the practice of:

strategic giving.

Fiscal policy is concerned with:

taxation and spending.

The most fundamental reason for the growth in world trade is probably due to:

the need for businesses to expand their markets.

Which of the following is an example of a disadvantage associated with a partnerhsip?

unlimited liability.

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

Multinational corporations

barriers to entry-

Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm.

cost-push inflation-

Inflation that occurs when increases in production costs push up the prices of final goods and services.

_____ managers are the managers concerned with implemenng the plans and policies of top managers and supervising lower-level managers.

Middle.

Which of the following statements about a general partnership is true?

Partners in a general partnership co-own the company's assets.

entrepreneurs-

People who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal.

______ is the concern of businesses for the welfare of society as a whole.

Social responsibility.

_____ planning is the creation of long-range, comprehensive objectives and the development of long-term courses of action.

Strategic.

market structure-

The number of suppliers in a market.

equilibrium-

The point at which quantity demanded equals quantity supplied.

demand-

The quantity of a good or service that people are willing to buy at various prices.

factors of production-

The resources used to create goods and services.

inflation-

The situation in which the average of all prices of goods and services is rising.

demography-

The study of people's vital statistics, such as their age, gender, race and ethnicity, and location.

macroceonomics-

The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products.

gross domestic product (GDP)-

The total market value of all final goods and services produced within a nation's borders each year.

expansionary policy-

The use of monetary policy by the Fed to increase, or loosen, the growth of the money supply.

The first step in controlling is to:

establish performance standards.

costs-

Expenses incurred from creating and selling goods and services.

_____ skills refer to a manager's ability to operate in diverse cultural environments.

Global management.

Federal Reserve System (the Fed)-

The central banking system of the United States.

economic system-

The combination of policies, laws, and choices made by a nation's government to establish the systems that determine what goods and services are produced and how they are allocated.

knowledge-

The combined talents and skills of the workforce.

federal budget deficit-

The condition that occurs when the federal government spends more for programs than it collects in taxes.

A well-written business plan should contain: a. executive summary or company overview b. a marketing plan c. a vision and mission statement d. a management plan e. all of the above

e. all of the above.

Pete Yankin and Ken Lowery consider themselves to be experts on hunting in the mountains in North Carolina. As a result, the two men established a company that markets hunting expedions. Yankin and Lowery share responsibilies for booking the trips, gathering supplies, and guiding groups of five to seven hunters into locaons where they can hunt for deer and bear. Since the two will share any profit equally, this would be an example of a(n)

partnership.

A strategic alliance is sometimes called a(n):

strategic partnership.

Which of the following is a characteristic of the entrepreneurial personality?

Ambitious.

capitalism-

An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also known as the private enterprise system.

communism-

An economic system characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central government planning.

economic growth-

An increase in a nation's output of goods and services.

consumer price index (CPI)-

An index of the prices of a "market basket" of goods and services purchased by typical urban consumers.

______ financing is a form of financing consiisting of funds raised through the sale of stock in a business.

Equity.

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

Profit.

Which of the following is NOT one of the five key types of power?

Referent.

frictional unemployment-

Short-term unemployment that is not related to the business cycle.

Which of the following is an example of an unethical business activity? a. The employee uses the company computer to check his results in a network auction. b. The employee did not report his supervisor for taking several illegal deductions on his income tax report. c. The employee told several jokes that demeaned Polish people. d. The salesperson allowed the customer to believe that delivery would be within the next week when the salesperson knew that delivery was at least four weeks away. e. All of the above are examples of unethical business activities.

e. All of the above are examples of unethical business activities.

Intrapreneurs: a. have a high degree of autonomy in spite of the fact they work for a large corporaon b. have the characteriscs of creavity, vision, and risk taking. c. receive regular salaries and employee benefits d. run mini-companies within large corporaons e. are accurately described by all of the above

e. are accurately described by all of the above

A code of ethics: a. provides employees with the knowledge of what their firm expects in terms of their responsibilies and behavior toward fellow employees, customers, and suppliers b. can offer a lengthy and detailed set of guidelines to employees c. is a summary statement of the firm's goals, policies, and priories d. is considered by some to be public relations gimmicks e. is accurately described by all of the above

e. is accurately described by all of the above

A corporation: a. is a taxable entity. b. is subject to the laws of the state in which it was formed. c. can own property. d. can sue and be sued. e. is accurately described by all of the above.

e. is accurately described by all of the above.

The person who takes the risk of starting and managing a business to make a profit is called a(n):

entrepreneur.

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

phlianthropic.

Which of the following is a disadvantage for the fast-food franchisee?

royalty fees.

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

vertical.

________ are goods and services that are made in one country and sold to other countires.

Exports.

full employment-

The condition when all people who want to work and can work have jobs.

mixed economies-

Economies that combine several economic systems; for example, an economy where the government owns certain industries but others are owned by the private sector.

Which of the following demographic groups is having the greatest impact on the growth of the franchising industry?

baby boomers.

A _______ is a formal written statement that describes in detail the idea for a new business and how it will be carried out.

business plan.

Which of the following is a trend that is changing the face of entrepreneurship and small business ownership?

entrepreneurial diversity.

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

free trade.

Which of the following is NOT a reason why small business thrives in the United States?

guaranteed profits.

Utilitarianism:

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

demand-pull inflation-

Inflation that occurs when the demand for goods and services is greater than the supply.