Business Foundations Chapters 1-5

Suppose that Marta, a Facebook employee, works during her "off hours" for a start-up company that is developing a social networking site designed to compete with Facebook. Marta is faced with which of the following ethical dilemmas?

A conflict of interest

In May 2021, the total flow of money into Luxembourg exceeded the total flow of money out of the country by EUR 266 million. In terms of Luxembourg, the number EUR 266 million represents which of the following?

Balance of payments

As part of her undergraduate education, Isabel would like to study the application of moral standards to business situations. Which academic discipline should she pursue to best fulfill this academic objective?

Business ethics

Rishaan just researched the Bernard Madoff scandal, and he is appalled by what he has learned. Bernard Madoff was a fraudster and financier who ran the largest Ponzi scheme in history, defrauding his clients of approximately $50 billion in investments. Rishaan's research and his reaction relate most closely to which of the following academic disciplines?

Business ethics

Immediately after their business ethics class on Tuesday morning, Beatriz and Yang began to debate the relative merits of the economic and the socioeconomic views of social responsibility. Beatriz supports the economic model of social responsibility, while Yang supports the socioeconomic model. Which of the following is an argument in support of Beatriz's position?

Business managers are responsible primarily to stockholders, so management must be concerned with providing a return on owners' investments.

Which of the following statements is correct regarding the United States' economic outlook for international trade?

Canada and Mexico are the United States' best partners for its exports.

Suppose you own a tractor manufacturing company that has historically sold exclusively in the United States. You plan to expand your sales to Europe, and you would like to seek input regarding the best ways to market your tractors to consumers in European countries. Which of the following organizations would be best suited to provide you with the international marketing advice you seek?

A Small Business Administration U.S. Export Assistance Center

James, Patrick, and Willow would like to form a corporation for their computer sales and repair business. They would like to split ownership of the stock shares of the company equally and would not like to issue stock for sale to the public. Based on this information, James, Patrick, and Willow would like to form which of the following types of corporations?

A closed corporation

Bank of America provides all its employees a written guide to acceptable and ethical behavior as defined by the organization, outlining uniform policies, standards, and punishments for violations. This written guide is known as which of the following?

A code of ethics

What is the legislative impact of the Sarbanes-Oxley Act of 2002?

It provides sweeping legal protection for those who report corporate misconduct.

Which of the following is correct regarding a corporation's board of directors?

Its members are elected by the stockholders.

In fiscal year 2020, the federal government spent approximately $3.1 trillion more than it received. What does this statistic represent?

The federal deficit

Complete Dental Care in eastern Ohio is one of the dental offices that is part of North American Dental Group. Dr. John Kramer runs a competing dental practice. He saw several of Complete Dental Care's former patients. One patient had gotten two root canals and was told she needed more despite what Dr. Kramer saw on X-rays. When he saw another patient that was told he needed 18 root canals, Dr. Kramer became concerned with Complete Dental Care's practices. He filed a federal False Claims Act lawsuit against Complete Dental Care and North American Dental Group. Dr. John Kramer is engaging in ______.

whistle-blowing

Nederlander's first expansion globally was to purchase three theaters in London, England. This strategy of entering global markets is called _______.

direct investment

For months, Miguel, a waiter, has watched his coworker and fellow server, Oliver, steal money from the restaurant cash register. On numerous occasions, Oliver has encouraged Miguel to do the same, contending that such action is justified because the restaurant does not pay them adequately. Eventually, Miguel does take money from the register, and he is immediately caught by his employer. Miguel's action is most indicative of which of the following factors affecting ethics?

Social

Chloe, a young entrepreneur, plans to open a small textile manufacturing company in Asheville, North Carolina. They plan to hire 20-25 employees. Which manufacturing technique should Chloe use in their textile business for productivity?

Specialization

Suppose that Ford Motor Company decides to shut down entirely its domestic automobile production in the United States and move its operations to other countries. All the individuals in the United States who would be negatively impacted by such a decision are referred to as which of the following?

Stakeholders

Which of the following is not a service provided by the African Development Bank?

Subsidies to the military-industrial complex

Aisha owns and operates a food truck in San Antonio, Texas. Aisha believes that there is too much government regulation of business (she is particularly concerned about all the health regulations governing food sales). She believes that both her business and her customers would benefit most if the government simply left her alone to make and sell the food that her customers want. Which model of social responsibility does Aisha's views represent?

The economic model of social responsibility

Noah and Ramia are forming a general partnership for their accounting business, and they are drafting a partnership agreement. Which of the following should they not include in the partnership agreement?

What classes of stock shares the partnership will issue

Teresa Ross brought a lawsuit against Group Health Cooperative under the False Claims Act. Ross, who worked as Director of Risk Adjustment Services for the healthcare firm, believed that Group Health Cooperative was defrauding Medicare by inflating or altering patients' diagnoses to receive higher payments. The company eventually settled the case with the United States Department of Justice for $6.3 million, and Ross was awarded approximately $1.5 million for engaging in which of the following?

Whistle-blowing

Maricel has a horrible boss named Dimitri. Dimitri verbally humiliates and intimidates Maricel daily, telling her on the shop floor and in front of her coworkers that she is a terrible employee, and that he will fire her soon if she does not improve her performance. Dimitri's actions have made Maricel anxious and deeply depressed, and her productivity has only decreased as a result. Dimitri's statements to Maricel likely constitute which of the following?

Workplace bullying

If the Nederlander Producing Company wanted to take the production of Newsies to a theater in Paris, but realized that some of the song lyrics would need to be changed in order for French audiences to understand the jokes, this would be an example of ________.

a social and cultural barrier

Which of the following is correct regarding government regulation and paperwork requirements associated with the corporate form of business ownership?

A corporation that sells its stock to the public must make periodic reports to its stockholders.

Lowe's Companies, Inc. is a business supply and home improvement retailer incorporated in Mooresville, North Carolina. If Lowe's Companies, Inc. opens a store in any state in the United States other than North Carolina, it will be considered which of the following in that state?

A foreign corporation

Suppose that to expand its gum sales to consumers in China, the Wrigley Company forms a 5-year partnership with a Chinese-based marketing firm. The Wrigley Company partners with the Chinese firm for the strategic purpose of gaining market knowledge and access in China. This business arrangement is known as which of the following?

A joint venture

In 2020, retailer JCPenney was forced to file bankruptcy because it experienced a negative profit caused by the COVID-19 pandemic. This negative profit is referred to as which of the following?

A loss

General Motors Corporation plans to offer 30 new electric vehicle models globally by 2025. It remains to be determined whether consumers will embrace (in other words, purchase) electric vehicles to the extent required by the company's plan. General Motors' decision to commit to electric vehicle technology, despite the risk, is an example of which of the following economic systems?

A market economy

Target buys products from manufacturers and then resells them to consumers. As such, Target is which of the following?

A marketing intermediary

Manu, a student enrolled in an undergraduate economics class, has studied the various types of economic systems. He has concluded that the best type of economic system is one that encourages private enterprise, subject to regulation by the government. He also believes that certain services, such as social security and health care benefits, should be managed by the government. Manu supports which of the following types of economic systems?

A mixed economy

Headquartered in Irving, Texas, ExxonMobil is one of the world's largest publicly traded energy providers and chemical manufacturers. It operates facilities or markets products in most of the world's countries and explores for oil and natural gas on six continents. As such, ExxonMobil is best described as which of the following?

A multinational corporation

Imasu plans to become a licensed realtor and open his own real estate sales office in his hometown of Petaluma, California. What type of business will Imasu be operating?

A service business

Suppose the president of Nauru, a small developing nation, would like to obtain a loan from the International Monetary Fund (IMF) for his country. Which of the following requests would most likely result in a loan from the IMF to Nauru?

A short-term loan to address the country's balance-of-payment deficit

Salesforce.com is a Fortune 500 company and one of the largest enterprise software companies in the United States. As one of its goals, Salesforce.com strives to use 100 percent renewable energy, and it tracks its progress annually, releasing its findings in a stakeholder impact report on its website. This is an example of which of the following?

A social audit

You would like to advise your friend Anish, a budding entrepreneur who is considering establishing a sole proprietorship, of the tax implications of owning this form of business ownership. Which of the following is correct regarding the tax implications of owning a sole proprietorship?

A sole proprietor must report business profit to the Internal Revenue Service.

Suppose that to reduce the number of Japanese-manufactured cars sold in the United States, the federal government elects to impose a 25-percent tax on all Japanese cars imported for sale in the United States market. This tax is known as which of the following?

A tariff

In 2020, the United States imported $2,810.6 billion worth of goods and services and exported $2,131.9 billion worth of goods and services. Based on this data, the United States had which of the following that year?

A trade deficit of $678.7 billion worth of goods and services

With its ideal climate, Colombia grows coffee more efficiently than any other nation in the world. With regards to coffee production, Colombia is said to have which of the following?

Absolute advantage

The Coca-Cola Company, a Fortune 500 company, actively seeks to increase the number of employees from underrepresented groups at all levels within its organization. This means that Coca-Cola supports which of the following?

Affirmative action

Due to its climate and a large amount of land suitable for dairy cows, Ireland can produce cheese and butter more efficiently than other products. Because of this, Ireland is said to have which of the following in cheese and butter production?

Comparative advantage

Google is an American multinational technology company that incorporates a workplace system that recognizes and respects the differences among people because of their age, race, ethnicity, gender, sexual orientation, and ability. Which of the following terms refers to the system that Google uses?

Cultural diversity

Suppose that to increase its volume of exports to the United States, the Chinese government lowers the comparable worth of its national currency, the yuan, by 25 percent relative to the U.S. dollar. This practice is known as which of the following?

Currency devaluation

Suppose that as chief executive officer of the United States Chamber of Commerce, Suzanne Clark is very concerned that due to economic turbulence in the United States, product prices in various industries will decrease due to the lack of consumer willingness and/or ability to pay currently existing prices. Mrs. Clark is concerned about which of the following?

Deflation

Sophie is a tattoo artist who operates a small tattoo shop in the Bronx, New York City. There are dozens of tattoo shops in New York City, and Sophie would like to attract more customers. What should she do?

Differentiate her services from the services provided by her competitors

Suppose that Japan produces a particular make and model of television for sale in the United States with a manufacturer's suggested retail price of $699, while customers in Tokyo and Kyoto must pay $999 for the same television. This may be evidence of which of the following?

Dumping

Which of the following is correct regarding a recession?

During a recession, it is typical for consumer buying power to decrease.

Which of the following is correct regarding taxation of a general partnership and its general partners?

Each partner's share of the partnership profit is taxed in the same way a sole proprietor is taxed.

Pranav and Lian are considering forming a corporation to operate their pool installation and repair business. Deion, their friend, supports this idea and plans to inform them of the advantages of choosing the corporate form of business ownership. Which of the following is not an advantage of forming a corporation?

Ease of formation

What is the distinction between ethics and business ethics?

Ethics is the study of right and wrong and the morality of the choices individuals make, while business ethics is the application of moral standards to business situations.

Charlotte has grown her lumber business in the United States, and she would now like to sell and ship a portion of her lumber produced in the United States to customers in Europe. Regarding her plan to sell and ship some of her lumber to European customers, Charlotte plans to engage in which of the following forms of business activity?

Exporting

Katharina owns a business in Michigan that produces solar panels for residential and commercial use. So far, Katharina's business has only sold solar panels to customers here in the United States, but Katharina would like to expand her business to include sales to foreign customers. Which of the following is the least complicated and lowest risk method of business Katharina can choose to expand her business internationally?

Exporting

Which of the following is correct regarding advertising?

False and misleading advertising is both illegal and unethical.

Suppose that in an attempt to stimulate the economy, the Federal Reserve Board chooses to cut corporate tax rates. This action is an example of which of the following?

Fiscal policy

Suppose that to be more competitive with General Motors Corporation (GMC) in the United States market, Ford Motor Company decides to lower its automobile prices across its product line. Which of the following will likely occur?

General Motors Corporation will lower its automobile prices across its product line.

Which of the following statements is correct regarding absolute and comparative advantage?

Goods are produced more efficiently when a country specializes in the products for which it has a comparative advantage.

In July 2020, Apple Inc. (headquartered in Cupertino, California) announced its plan to become carbon neutral across its entire business, manufacturing supply chain, and product life cycle by 2030. The company's "climate roadmap" includes steps to increase the use of low carbon and recycled materials in its products, expand its energy efficiency, move its entire supply chain to renewable energy sources, improve its processes and materials, and actively work to remove carbon from the atmosphere. This is an example of which of the following?

Green marketing

In 2020, the total dollar value of all goods and services produced by all people within the boundaries of the United States was $20.9 trillion. Which of the following does this statistic measure?

Gross domestic product

Mikkel is a 45-year-old male with a tenth-grade education. He has been unemployed on numerous occasions and for extended periods of time during his adult life. Mikkel's mother has encouraged him to take classes at the local community college to learn a marketable trade skill, but to no avail. Mikkel is classified as which of the following?

Hard-core unemployed

Suppose that The TJX Companies, Inc., purchases wicker baskets produced in China and sells them to customers in its stores in the United States. Regarding the purchase of wicker baskets produced in China and bringing them into the United States for resale, The TJX Companies, Inc., is engaging in which of the following forms of business activities?

Importing

Suppose that Vincente, founder of his own investment firm, orchestrates a Ponzi scheme designed to defraud investors. Vincente's actions are most indicative of which of the following factors affecting ethics?

Individual

As a retiree living on a fixed income (primarily Social Security benefits), Marlon is very concerned that after the height of the COVID-19 pandemic, grocery store prices are rising significantly. Marlon is concerned about which of the following?

Inflation

Which of the following statements is correct regarding the Export-Import Bank of the United States?

It extends and guarantees credit to overseas buyers of American goods and services and guarantees short-term financing for exports.

In its latest social responsibility report, General Mills describes how it contributed more than $93 million in 2019 to a wide variety of charitable causes, including support for programs that feed the hungry and nonprofit organizations, schools, and communities across the globe. This is an example of General Mills' attempt to satisfy its obligations to which of the following?

Its stakeholders

Suppose you and your friend are both passionate about screen printing. You would like to start up a screen-printing business, form a general partnership for the business, and invite your friend to join you as a general partner. Which of the following is not a recognized advantage of general partnerships you can share with your friend to encourage them to join the business as a general partner?

Limited liability

Your friend, Hakim, is going to open his own bakery soon, and you would like to encourage him to open a sole proprietorship. You plan to share with him the advantages of opening this form of business ownership. Which of the following is not a recognized advantage of owning and operating a sole proprietorship?

Limited liability

Suppose that the Federal Reserve Board chooses to increase interest rates to reduce the possibility of inflation in the overall economy. This action is an example of which of the following?

Monetary policy

Levi Strauss & Co. is a venerable American clothing company known worldwide for its Levi's brand of denim jeans. It was founded in May 1853 when German immigrant Levi Strauss moved from Buttenheim, Bavaria to San Francisco, California to open a west coast branch of his brother's New York dry goods business. Levi's jeans are known for both their brand and their durability, and as a result, Levi Strauss & Co. can command a higher price than many of the other numerous jean manufacturers globally. What type of competition does Levi Strauss & Co. face in selling the jeans it produces?

Monopolistic competition

Patrick, a receptionist in a dental office, has been put in sole charge of his employer's financial records. Shortly after this occurred, Patrick embezzled $15,000 from the practice, and manipulated the financial records to hide the fact that he had stolen the money. Patrick's actions are most indicative of which of the following factors affecting ethics?

Opportunity

Joel is a farmer in Eastern Idaho. His small farm has been in his family for five generations and produces primarily the potatoes that have made Idaho famous for its agricultural capabilities. When Joel sells his potatoes to an agricultural wholesaler, market forces dictate that he accept the market rate for his crop. In other words, Joel cannot expect to receive a higher price for his potatoes that the market rate. What type of competition does Joel face in owning and operating his small potato farm?

Perfect competition

Clara and Amelia are considering forming a general partnership for their restaurant business. Before they decide to do so, they would like to consider the disadvantages to choosing this form of business ownership. Which of the following is not a recognized disadvantage to forming a general partnership?

Personal interest

In writing his final paper for Business Ethics class, Nikolaj copied significant parts of the paper from other sources without acknowledging those sources. Once his professor discovered this, he failed Nikolaj for the course. Which of the following violations did Nikolaj commit?

Plagiarism

During her annual performance evaluation, Maira's supervisor Camille expressed that she was very pleased that Maira's output per hour had improved by 17 percent compared to the previous year. Based on her comment, Camille was encouraged with Maira's improvement in which of the following?

Productivity

Dick's Sporting Goods, the biggest sporting goods retailer in the United States, earned significant publicity several years ago when it decided to stop selling guns to customers younger than 21 and removed assault rifles and high-capacity ammunition magazines from all of its stores. This decision is most consistent with which of the following public responsibilities of business?

Public health

Your friend, Aurora, is going to open her own "zip line" business soon, and you would like to encourage her to open a sole proprietorship. You plan to share with her the advantages of opening this form of business ownership. Which of the following is an advantage of owning and operating a sole proprietorship?

Retention of all profits

You own a construction company headquartered in North Carolina and you plan to compete for a large infrastructure (roads and bridges) contract with the Haitian government. Which of the following organizations would be best suited to assist you in competing for this contract?

The Advocacy Center

Jun is a single parent of two children, Bohai and Jian. She has applied for numerous home mortgages, but she has been denied credit every time, even though Jun has a full-time job as a surgical technician making $55,000 per year. Based on several comments made by bank representatives during the mortgage application process, Jun believes that she has been discriminated against because she is unmarried. Which of the following may provide a legal remedy for Jun if she can establish that she was in fact discriminated against because she is single?

The Equal Credit Opportunity Act (1974)

Tiana, a manufacturing employee for a company headquartered and doing business in the United States, believes that the company is denying her promotional opportunities due to her race. If Tiana decides to pursue a workplace discrimination claim, with which of the following federal administrative agencies should she file her claim?

The Equal Employment Opportunity Commission

Yuki is a graduate student enrolled in an International Trade Law course. To learn more about organizations that facilitate international trade, Yuki chooses as the topic of his major research paper the international organization created at the end of World War II and currently comprised, in its new form, of 164 nations dedicated to reducing or eliminating tariffs and other barriers to world trade. Which of the following is the subject of Yuki's research paper?

The General Agreement on Tariffs and Trade (GATT)

Adebola is preparing a research paper for her Introduction to Business class regarding early government regulations that affected American business. Which of the following was the first federal act to regulate business practices?

The Interstate Commerce Act

Which of the following laws established the Environmental Protection Agency (EPA) to enforce federal laws that involve the environment?

The National Environmental Policy Act (1970)

The United States-Mexico-Canada Agreement (USMCA) updated the North American Free Trade Agreement (NAFTA) in all but which of the following ways?

The USMCA will be formally reviewed at least every three years to ensure that it remains beneficial to the United States, Mexico, and Canada.

Hina is an undergraduate student enrolled in an International Economics course. During one class session, Hina's professor devotes a portion of her lecture to discussing the most widely known multilateral development bank (MDB), a cooperative of 189 member countries that provides loans to developing countries to help them grow. To which of the following organizations was Hina's professor referring?

The World Bank

Suppose the federal government suspects that China is illegally dumping semiconductors into the United States market and would like to have its concerns addressed by an international forum. In which of the following organizations should the United States pursue its claim?

The World Trade Organization (WTO)

Prisha, a majority shareholder in Southwestern Home Furnishings, Inc., would like to convert the company to an S corporation. To do so, she must meet all but which of the following requirements?

The corporation must have two classes of outstanding stock (common and preferred).

In her Principles of Economics course, Valentina learned about the characteristics of socialism. These characteristics include all but which of the following?

The government owns all smaller businesses.

Karolina and Ida are forming a general partnership for their automobile repair business, and they are drafting a partnership agreement. Which of the following should they include in the partnership agreement?

The investment each partner will make

Inspired by her visit to a Voodoo Donut shop in Austin, Texas, Nahia decided to start her own donut shop in her hometown of Jacksonville, Florida. As a result of her passion for donuts and her hard work, Nahia's donut shop became very successful. As a result, Nahia became personally wealthy, she paid, local, state, and federal taxes on her earnings, and she contributed generously to local causes. This is an example of which theory of economics?

The invisible hand

BP p.l.c. is a British multinational oil and gas company headquartered in London, England. It is one of the world's seven oil and gas "supermajors." BP p.l.c. is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing, power generation, and trading. It also has renewable energy interests in biofuels, wind power, smart grid, and solar technology. BP p.l.c. has operations in roughly 80 countries worldwide, and approximately 19,000 service stations worldwide. Which of the following is correct regarding BP p.l.c. and all other multinational corporations?

They are organized under the laws of their home country.

Camille, an attorney, has been offered a general partnership in the law firm where she works. She is considering whether to accept the position. Which of the following is correct regarding general partners?

They assume unlimited liability for all business debts, including business debts incurred by any other general partner without their knowledge or consent.

Manuel, a financial entrepreneur, has been offered a limited partnership in a natural gas drilling partnership. He is considering whether to pursue this opportunity. Which of the following is correct regarding limited partners?

They receive a portion of partnership profits and tax benefits.

Tobias, a first-year student at the local community college, has just inherited $25,000 from his dear aunt Katharina, and Tobias would like to pursue a course of study that will help him earn the best financial return on his inheritance. Which of the following is a reason Tobias should study business?

To become a better informed investor

Which of the following is not a frequently cited reason for restricting trade with other countries?

To lower prices for consumers

Isabel is interested in taking an Introduction to Business course during her freshman year at university. Which of the following is not a reason why she should study business?

To pursue the sole path to self-actualization

Which of the following is correct regarding trade associations' role in encouraging ethics?

Trade associations must ensure that their ethical codes do not contain provisions that run afoul of antitrust laws.

North American Dental Group recently hired Keith Carrington as its chief compliance and privacy officer. One thing that Carrington may be responsible for is creating a _____, which would outline policies for acceptable and ethical behavior.

code of ethics

Generally, the situation occurring at North American Dental Group offices is an ethical issue related to _____.

fairness and honesty

The Nederlander Producing Company has expanded to China through a strategic partnership with the China Arts and Entertainment Group (CAEG). It is hoping to open a production of Ghost, based on the movie of the same name. Nederlander has been forced to cut one song from the show due to censorship imposed by the nation's government. This is an example of ______.

legal and political climate considerations

The People's Bank of China's (PBOC's) reduction of reserve rate requirements is an example of ______.

monetary policy

Based on this information China leans toward a ______ economic system.

socialist

China's gross domestic product (GDP) was approximately $15.6 trillion USD in 2021. This number was found by _____.

totaling the dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period