business 1-5
Which of the following statements is true of a free-enterprise system?
Individuals have the right to choose what career to pursue.
Which of the following is the difference between a foreign corporation and an alien corporation?
A foreign corporation does business outside the state in which it is chartered, whereas an alien corporation does business outside the nation in which it is incorporated.
Camelia has a pure capitalist system, while Ambrosa has a modified capitalist system. How do these systems differ from each other?
Camelia's government doesn't intervene in its economic decisions, while Ambrosa's government intervenes and regulates business to some extent.
Craig is trying to strike up business with GloboFlex, a fitness equipment company from another country. While he is presenting his innovative fitness product, he asks the crowd, "wouldn't you like a product like this?" As he asks the question, he points at a few of the people in the crowd. Later that day, Craig's contact at GloboFlex calls to tell him that the company has decided not to purchase his product. Which of the following most likely caused this response?
Craig's audience might have thought his pointing was rude.
_____ is the condition of an economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced.
Depression
EduTech wants to expand into international business. The company wants to maintain control of its products and services, and thus, it opts to buy its own overseas facilities. What method for entering international business does this exemplify?
Direct investment
Which of the following is an implication of employee-owner separation in a corporation?
Employees are not stockholders of the company for which they work.
Thomas is the top manager of a small heating and air conditioner service company. He wants to create an ethical culture at his company. What is one thing he should do to accomplish this?
He should train managers and employees on what to do if an ethics crisis occurs.
Camelia is a capitalist country in which competition, supply, and demand determine which goods and services are produced, how they are produced, and how they are distributed. Which of the following statements is likely true of this capitalist economy?
Individuals are free to keep profits and use them as they wish.
Auto Depot, a car dealership and auto parts distributor, wants to enter the global market. What is the easiest way for Auto Depot to achieve this goal?
It can use the Internet to sell its cars and products.
Manyland is a socialist country that professes egalitarianism. What does this mean, in practice?
It equally distributes income and social services.
In an effort to measure the state of its economy, Malyia decides to use its gross domestic product. Which of the following statements is true about what this commonly used measure can reveal about Malyia's economy?
It includes profits earned by foreign companies within Malyia.
When Switzerland let the value of the Swiss franc rise by 30 percent against the euro in 2015, what was the result?
It increased the cost of exports.
_____ are especially popular in situations that call for large investments and can even take place between businesses and governments.
Joint ventures
Which of the following is true of the four dimensions of social responsibility?
Legal and economic concerns have long been acknowledged in business, but voluntary and ethical issues are more recent concerns.
Magnesia is a communist country in which the central government determines what goods and services satisfy its citizens' needs, how the goods and services are produced, and how they are distributed. Which of the following statements is likely to be true about Magnesia's economy?
Magnesia has high levels of corruption and little freedom.
Which of the following statements is true of the people and activities involved in business?
Managers control the tasks required to carry out the work of a company or nonprofit organization.
Paul and Megan are partners in an accounting firm. They have an argument, and Paul decides to leave the firm. All of the following are true of what would happen to the partnership EXCEPT
Megan would continue the partnership without any changes.
Which of the following is an advantage of mergers?
Mergers help companies meet foreign competition.
Which of the following statements is true of communist economies?
On paper, they appear to be efficient and equitable.
_____ are best described as goods or services with both tangible and intangible characteristics that provide satisfaction and benefits.
Products
Which of the following is a difference between quasi-public corporations and nonprofit corporations?
Quasi-public corporations are owned and operated by the federal, state, or local government, while nonprofit corporations are not owned by a government entity.
Public corporations must file reports related to stocks and bonds with the
Securities and Exchange Commission.
When Chloe was younger, she thought about the environment solely in terms of how its resources could improve her life and satisfy her needs for food, shelter, transportation, and recreation. However, as she ages, she sees the costs that come with her higher standard of living. Now, she must make some changes to her company to help sustain the environment. What is one thing she can do?
She can eliminate wasteful practices.
Which of the following is an example of a global strategy?
Starbucks standardizing its products across the United States and other countries
Which of the following is best categorized as a small business?
Story Bake is a home-based business that employs a total number of 17 people.
Which of the following trade alliances is likely to promote economic cooperation between Australia, Canada, and Singapore?
The Asia-Pacific Economic Cooperation (APEC)
Angela, a recent university graduate, wants to start a fashion boutique that will sell tailor-made garments and accessories. She plans to open stores in three different malls and employ about 30 people in total. Which of the following agencies should Angela approach for financial and managerial assistance?
The Small Business Administration
Which of the following statements is true of business ethics?
The acceptability of behavior in business is determined by not only an organization, but also its stakeholders.
The owners of MegaMart, a large grocery store chain, are frustrated by the high level of unemployment in the communities they serve. They decide to take a stand and do what they can to help reduce unemployment. What can they do achieve this goal?
They can donate to programs that provide funding for community businesses.
Which of the following is true of organizations that exhibit a high ethical culture?
They encourage employees to act with integrity.
The developing countries of Thetasia and Malyia have copyright and patent laws that are less strict than those of the United States. As a result, these countries are flooded with counterfeit products. What effect do these counterfeit products have on the companies that produce the products that are being imitated?
They have a negative effect on their sales and reputations.
Pals with Paws enforces its ethical codes and policies by rewarding ethical behavior and punishing misconduct. Each month, the most ethical employee receives a bonus. On the other hand, any employee who is found to be behaving unethically is fired immediately. What effect do these rewards and punishments have on employees?
They increase the acceptance of ethical standards by employees.
Malyia's major textile factory just closed because it wasn't making enough money to sustain itself. As a result, hundreds of workers lost their jobs. In addition to impacting the people who are now unemployed, what impact does this factory closure have on other businesses in the area?
They will have fewer sales because unemployed people can't afford their products and services.
People's Planet is a nonprofit organization that helps people in need to find jobs and housing. Which of the following statements is likely to be true of this nonprofit organization?
This firm may engage in management activities to help reach its goals.
Mandovia is a developing country that has access to limited resources. The total national expenditure of Mandovia amounts to $200 billion annually. However, the country only generates $150 billion from taxes annually. In this scenario, Mandovia is facing
a budget deficit.
Dan and Emily have decided to start a new home inspection business. They have both worked in this industry as sole proprietors, but now, they want to join forces to share in the management of the business. They will both have unlimited liability for the debts of the business. What type of business is this?
a general partnership
When Hardware Headquarters and National Hardware joined forces, it reduced the number of corporations competing in the hardware industry. As a result, federal regulators carefully reviewed the merger before it was allowed to proceed. What type of merger is this?
a horizontal merger
Gian and Greg want to acquire Custom Craft, a wood furniture business. However, they don't have the funds, so they borrow money from the bank, using Custom Craft's assets to guarantee repayment of the loan. What kind of business transaction is this?
a leveraged buyout
Maldova is trying to protect its automobile industry by limiting the number of cars that can be imported. What should its government establish to achieve this goal?
a quota
Until recently, United Marva could develop and produce medical devices and equipment more efficiently than other countries, and, in a sense, monopolized the industry. In the medical devices and equipment market, United Marva had a(n)
absolute advantage.
The developing country of Thetasia is trying to grow its economy. All of the following are indicators that Thetasia's economy is growing EXCEPT
an increase in regulatory actions.
The automobile industry in a developing country has very few sellers. If one automobile company raises the prices of its trucks by a certain amount, other automobile companies in the industry follow by raising prices by a similar amount. This situation is an example of
an oligopoly.
When Lisa and Steve decided to start their own house flipping business, their state required them to draw up an agreement listing how much money they contributed, their management roles or duties, how their profits and losses will be divided, how they may leave the partnership, and any other restrictions that might apply to their agreement. What type of agreement is this?
articles of partnership
Magnesia has a comparative advantage in producing peaches because of its climate and agricultural capabilities. This means that Magnesia can supply peaches
at a lower cost than it can produce other items.
If a country's annual imports and exports in billions is $320 and $280 respectively, the difference between the two is known as its
balance of trade.
The owner of a department store offers the manager of its major supplier an expensive gift to obtain a price reduction for the next consignment. Which of the following approaches is the store owner using to influence the manager's decision making?
bribery
Sheila, a general manager, makes a decision that leads to some personal financial gains, while the company's owners incur financial loses. Which of the following kinds of ethical issues is depicted in this scenario?
conflict of interest
When companies mislead consumers about the benefits of their products, they infringe on
consumers' rights to be informed.
Five dog breeders in Kentucky decided to work together to become more profitable and save money. Together, they can buy dog food, treats, toys, beds, leashes, and collars in bulk at a lower price. They also have a deal with a local veterinarian to charge them lower prices for check-ups and routine treatments. These dog breeders have formed a
cooperative.
A _____ is a form of business ownership that can be subjected to double taxation.
corporation
Candy Emporium is a legal entity whose assets and liabilities are separate from its owners. It can receive, own, and transfer property, enter into contracts with individuals or other legal entities, and sue and be sued in court. What type of business is Candy Emporium?
corporation
Thetasia barters the surplus coffee beans it grows for other agricultural products grown in the neighboring country of Gibria. There is no exchange of currency between these countries. The type of business arrangement between the two countries can be regarded as a(n)
countertrade arrangement.
All of the following are types of economies America has had during its evolution EXCEPT a(n) All of the following are types of economies America has had during its evolution EXCEPT a(n)
digital economy.
Critics of supply and demand say the system
does not distribute resources equally.
MedSource wants to contribute to the general welfare of the community in which it operates. The best way to exercise its community responsibility is to
donate to local and national charities.
Chic Apparel Company sells its products in foreign markets at prices lower than the production cost. This practice is referred to as
dumping.
Karen's small roofing company aims to fulfill the economic foundation of business. What must her company do to achieve this goal?
earn profits
United Nabvia and Fernsland, two neighboring nations, have some political differences. Thus, United Nabvia has banned the import of wine from Fernsland. This is an example of a(n)
embargo.
Maya, a certified yoga instructor, owns and manages a yoga training academy. She charges a reasonable fee to conduct classes for both working women and homemakers. Thus, Maya is regarded as a(n) aya, a certified yoga instructor, owns and manages a yoga training academy. She charges a reasonable fee to conduct classes for both working women and homemakers. Thus, Maya is regarded as a(n)
entrepreneur
Carol is an individual who risked her wealth, time, and effort to develop a new self-service auto shop. She was sick of taking her car to mechanics and having them charge way too much for labor, so she created a place where people can come and do the work themselves. She provides all the tools and parts and simply charges customers for the parts they use and the shop rental for the time it takes to do the repair. Carol is a(n)
entrepreneur.
Zen Nxt, an innovative tablet and smartphone manufacturer, launches a new line of smartphones with advanced processors, high definition displays, and other added features. The company is willing to sell the smartphones at $150 each, and the consumers are also willing to buy these smartphones at that price. In this scenario, $150 is the _____ of the new smartphones made by Zen Nxt.
equilibrium price equilibrium price
The difference between a horizontal merger and a vertical merger is that
firms that make and sell similar products to the same customers merge in a horizontal merger, whereas companies operating at different but related levels of an industry merge in a vertical merger.
Which of the following is an advantage of sole proprietorships?
flexibility and control of the business
In international business, an advantage of trading through an export agent instead of directly is that the company does not have to deal with
foreign currencies.
The government permits Electrify, a national electricity provider, to have a monopoly because the cost of supplying the service is so great that new providers cannot compete for sales. As a result, Electrify's prices are set by
government regulation.
Malyia, a small, developing country, struggles to fulfill its citizens' unlimited demand for goods and services with its limited supply of resources. All of the following are issues it must address EXCEPT
how its citizens will use the goods and services it produces.
The Wok has been consistently ranked as the most popular fast food restaurant in the city, thanks to the excellent culinary skills of its well-trained staff and its remarkable customer service. The competitive advantage of The Wok is due to its
human resources.
The country of Maldova levies a tax on goods brought into the country from foreign nations. What is this tax called?
import tariff
Maldova, a small, developing country, purchases wheat and other food grains from foreign markets. This is called
importing.
Selling a corporation's stock in public markets for the first time is called
initial public offering.
The Ethisphere Institute selects an annual list of the world's most ethical companies. All of the following are criteria it uses EXCEPT
innovation that contributes to the company's profitability.
From the perspective of the United States, the process of foreign companies transferring tasks and jobs to U.S. companies is called
insourcing.
Cash It is a check cashing company that charges its customers fees to cash their checks quickly and without needing to have a bank account. This company's sole objective is to maximize profits. As a result
it is not likely to consider its social responsibility.
Unlike the United States, most countries across the globe rely on the _____ to measure units.
metric system
Funds for Families is a national charity that provides grocery vouchers, mortgage assistance, and college sponsorships to needy families in the communities it serves. To fund its programs, it hosts community events to solicit donations from individuals and companies and applies for government grants. Funds for Families is a
nonprofit corporation.
Ideally, managers should consider social responsibility
on a daily basis.
Common stockholders are usually entitled to _____ per share of common stock of a corporation, and they elect its board of directors.
one vote
Ease of organizing, availability of capital and credit, combined knowledge and skills, and quasi-taxable systems are typical characteristics of a(n)
partnership.
Shoe Emporium, a large shoe corporation, wants to take over Head over Heels, a small, specialty shoe store that serves a niche market in its community. Head over Heels does not want to be taken over because it wants to protect its employees and customers from the changes Shoe Emporium would make to the company. To head off this hostile takeover attempt, Head over Heels allows its stockholders to buy more shares of stock at prices lower than the current market value. What technique is Head over Heels using to avoid being taken over?
poison pill
Ken wants to buy stock in Chef Master, a large kitchen appliance corporation. He doesn't have time to attend any meetings, and he doesn't have any interest in having a say in how the company is run. However, he does want to receive dividend payments before anyone else. What type of stock should he buy?
preferred stock
When Russell turned 21-years-old, his father gave him a management position at the family's hardware store. He explained to Russell that his family had owned and operated this store for five generations, and that someday, he would be able to pass it on to his children. He made Russell promise that he would never sell the company or any of its stock or hire managers from outside the family. This business is a
private corporation.
According to Adam Smith, competition fosters efficiency because
producers have to offer the best products at reasonable prices.
Every PowerGrains Cereals box has a toll-free number printed on the side. This allows buyers to contact the manufacturer and make suggestions or register complaints. This is an initiative toward
promoting consumerism.
GloboTech wants to establish a code of ethics. What should GloboTech's code of ethics do?
provide guidelines to help employees achieve organizational objectives
EduTech realizes that it cannot carry out its goals without employees. As a result, it is trying to improve its employee relations. Which of the following is one way it might do this?
providing a safe workplace
In New Hampshire, most general stores sell maple syrup and other maple products. Since no one business sells enough maple products to influence the price, this is an example of
pure competition.
While determining the economic development of a country in terms of infrastructure, the factors to consider are
railroads, hospitals, and highways.
All of the following are reasons small businesses are vital to the American economy EXCEPT they
reduce the amount of exports.
Joanna is a marketer for a large sporting goods store. She conducts market research and makes recommendations for new products based on her research. This is an important part of her job because the focus of all marketing activities is to
satisfy customers.
Auto Depot is a profitable car dealership. In addition to selling new cars, it has a buy-back program in which it buys used cars, fixes them, and gives them to needy families in its community. This is one way that Auto Depot fulfills its
social responsibility.
In Thelisia, the government owns and operates the postal service, utilities, transportation, and health care systems. While individuals and small businesses provide other goods and services, Thelisia's citizens are dependent on the government for many goods and services that are essential to their daily lives. Thelisia is an example of a ______ country.
socialist
Mary sells vacuum cleaners door-to-door for a company called Quick Clean, Inc. She works on a contract basis and is not an employee of this company. Mary is a
sole proprietor.
Richard runs a small convenience store in his neighborhood. He hires two part-time workers to help him with the day-to-day operations of the business. However, Richard alone is responsible for all the debts and liabilities of the business. Thus, Richard's business is an example of a(n)
sole proprietorship.
Beantown Coffee conducts business in an ethical and socially responsible way. Gary, the owner, visited several coffee farms and selected the best one based on growing and labor conditions. As a result, Beantown can provide its customers with coffee that is ethically sourced and has a rich, bold flavor. Since Gary considered the interests of all stakeholders, he can expect
superior financial performance.
Steven, an economist, analyzes the quantity of goods or services that businesses are willing to sell at different prices at specific times. In this analysis, he is focusing on
supply
Jennifer, Liza, and Tami decided to start a freelance publishing business together. They have been working separately as independent consultants for several years, but they decided they would benefit greatly from joining forces and starting an S corporation. All of the following are benefits of starting this type of business EXCEPT
the ease of formation and operation.
Which of the following is highlighted in John F. Kennedy's 1962 Consumer Bill Of Rights?
the right to safety
The Malyian government devalued its currency in relation to other currencies. What does devaluation encourage?
the sale of domestic products
Gross domestic product is defined as
the sum of all goods and services produced in a country during a year.
Paulo works in an office with many women. He often compliments the women he works with, but they find his compliments to be insulting. All of the following are things that should be considered when determining whether Paulo's behavior is abusive EXCEPT
the women's intent in calling this abuse.
The small, developing country of Thetasia imports more products than it exports. This means it has a(n)
trade deficit.
Traders Inc. buys goods in Maldova and sells them to buyers in Thetasia, handling all the consulting, marketing research, advertising, and warehousing activities required to move the products between the two countries. Traders Inc. is a(n)
trading company.
Claire works at a large publishing company, which provides her with many resources that she can use to do her job. Which of the following practices would be considered unethical for Claire to do in her workplace?
using her cell phone during work hours to make dinner plans with friends
Orchid Health Inc. believes that its objectives should not be limited to earning profits only. The company supplies drugs and vaccines to underdeveloped countries at a very low profit margin or sometimes below the cost price. According to the four stages of social responsibility, which of the following is the highest level of responsibility that Orchid Health Inc. is fulfilling?
voluntary responsibility
EduTech, a small educational technology company, contributes to the community it operates in and toward the quality of life by donating its products to families that can't afford them. This fulfills its
voluntary responsibility.
GL Inc., a firm facing the threat of bankruptcy, did not want to be acquired by Red Phoenix Inc. because it would make drastic changes to the business, laying off employees and changing the nature of its products and processes. Thus, the management of GL Inc. approached Fortium Inc., which was willing to acquire GL Inc. and maintain the company as is. In this scenario, Fortium Inc. is referred to as a
white knight.
Pam makes homemade jam. She has found that if she sells four jars of jam for $20 and prices each jar at $6, she sells more than if she simply prices each jar at $6. This is because consumers
will buy more of an item as the price falls to save money.
Which of the following is true of the North American Free Trade Agreement (NAFTA)?
It provides protection for intellectual property.
Kevin runs a small business, supplying auto parts to local mechanics. He stores the auto parts in his warehouse, delivers them to the mechanics' shops, and provides management and merchandising assistance to his clients. Kevin is a
Joseph developed a new robotic home cleaning system that can mop, dust, and vacuum. To start his business, developing and selling this new technology, Joseph will need
Which of the following organizations was created in 1995 by the Uruguay Round and is based in Geneva, Switzerland?
The World Trade Organization
Which of the following is true of the United States, Great Britain, and Japan?
They are industrialized nations.
They receive a larger share of profits after the limited partners have received their initial investment back.
They receive a larger share of profits after the limited partners have received their initial investment back.
In the United States, if a salesperson brought a fancy gift to a potential client on their first meeting, it might be considered as
a bribe.
Huechi Inc., a mobile phone manufacturer, purchases its direct competitor, OnePhone Inc., by buying most of its stocks. In this scenario, Huechi is involved in a(n)
acquisition.
How can ethical behavior be improved in business?
by having established ethics policies and standards
The Organization of Petroleum Exporting Countries (OPEC) consists of 12 member countries across three continents. It aims to increase the price of petroleum throughout the world and to maintain high prices. This organization is an example of a
cartel.
A pharmacist stocks only one particular brand of acetaminophen, a popular pain-relief drug. Even if his customers prefer other popular brands selling the same drug, he insists they buy this brand. This is a violation of consumers' right to
choose
If 1 euro equals to 1.26 United States dollars, the ratio between these two currencies can be regarded as their
exchange rate.
One of the principal causes of unethical behavior in organizations is
overly aggressive business objectives. overly aggressive business objectives.
A country with a _____ has a favorable balance of payments.
trade surplus
An engineer employed by a government contractor realizes that her employer is using low-quality materials in most construction projects, as against what was promised. She reports this to the concerned government regulatory agency. This is an example of
whistleblowing
Novakia is a small country that has abundant natural resources. Annually, it exports goods worth $100 billion and imports goods worth $60 billion. Also, its annual revenue through taxes is $80 billion and expenditure is $100 billion. In this scenario, what is the balance of trade of Novakia?
$40 billion
Which of the following statements accurately defines a small business?
A small business is any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.
In the context of business, which of the following statements is true of resources?
Being socially responsible is considered a resource for a firm.
