Exam 1 (1-6)

___________ means producing items using the least amount of resources.

Efficiency

Outsourcing means selling goods and services to people in other countries. (T/F)

False

The three countries participating in NAFTA are:

Canada, Mexico, and the United States.

What is normally considered a disadvantage of the corporate form of business?

Double taxation of earnings.

________ refers to standards of moral behavior.

Ethics

What represents the value of one nation's currency relative to the currencies of another country?

Exchange rate

A legal entity with authority to act and have liability separate from its owners is called a partnership. (T/F)

False

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business. (T/F)

False

Absolute advantage is the basis for most global trade today. (T/F)

False

Effectiveness means producing goods and services using the least amount of resources. (T/F)

False

If a shortage exists in a market for a good, the price of that good will tend to fall. (T/F)

False

Importing is the selling of products to another country. (T/F)

False

Money is one of the five factors of production that contribute to the creation of wealth. (T/F)

False

Paid vacations and health care insurance are among the benefits provided by the government to entrepreneurs. (T/F)

False

Profits of a business include the salaries paid to its employees. (T/F)

False

The corporation is the most common form of business ownership. (T/F)

False

The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business. (T/F)

False

Under capitalism, the government prohibits people and businesses from competing with each other. (T/F)

False

_____________ refers to a general rise in the price level of goods and services over time.

Inflation

___________ refers to the amount of output generated with a given amount of input, e.g., the number of pizzas produced per worker per hour.

Productivity

What government agency is responsible for encouraging the development of small business?

Small Business Administration

_______________ is/are the external and internal circumstances that surround the business.

The business environment

Most communist countries today are suffering from severe economic problems. (T/F)

Tree

A favorable balance of trade occurs when the value of a country's exports exceeds the value of its imports. (T/F)

True

America's business success is largely due to an economic and social climate that allows businesses to operate freely. (T/V)

True

At the equilibrium price, the quantity consumers desire to buy equals the quantity sellers desire to sell. (T/F)

True

Businesses and nonprofit organizations often strive to accomplish the same objectives. (T/F)

True

Compared to sole proprietorships, an advantage of partnerships is their ability to obtain more financial resources. (T/F)

True

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time. (T/F)

True

E-commerce is the buying and selling of goods over the Internet. (T/F)

True

Entrepreneurship is one of the five factors of production that contribute to the creation of wealth. (T/F)

True

Product differentiation is a key to success in monopolistic competition. (T/F)

True

Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses. (T/F)

True

Revenue is the total amount of money a business takes in during a given period by selling goods and services. (T/F)

True

Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government officials and environmentalists. (T/F)

True

Studies about the effects of population growth on the economy are part of macroeconomics. (T/F)

True

Taxes and government regulations are part of the economic and legal environment in which businesses operate. (T/F)

True

Technology allows firms to be more responsive to their customers' wants and needs. (T/F)

True

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all. (T/F)

True

The United States imports more products and services than any nation in the world. (T/F)

True

The business environment refers to the surrounding factors that either help or hinder the development of businesses. (T/F)

True

Tools, machinery, and buildings are examples of capital resources. (T/F)

True

The __________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes.

World Trade Organization

When the market price of a good is above its equilibrium value, and all other determinants are unchanged:

a surplus will exist in the market.

A(n) _________ occurs when one company buys the property and obligations of another company.

acquisition

One reason limited liability companies have become so popular is that they:

can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation.

The social and economic goals of __________ include private ownership of land and business.

capitalism

The economic and political system in which the government owns almost all the major factors of production is called:

communism.

The theory of _______________ states that a nation should produce and sell goods to other countries that it produces most efficiently, and buy goods from other nations that they produce more efficiently.

comparative advantage

A(n) _______-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.

compliance

One way to lessen the U.S. government budget deficit is to:

cut spending.

A good business plan will:

describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner's qualifications.

A(n) __________ refers to a complete ban on importing or exporting of products from a specific country.

embargo

A major benefit of socialism is the:

emphasis on social equality.

The U.S. government's Immigration Act of 1990:

encouraged entrepreneurs to come to the U.S. through "investor visas."

In a partnership, a(n) __________ partner (owner) actively manages the company and has unlimited liability for claims against the firm.

general

Enterprise zones and investor visas are examples of:

government programs that encourage economic growth through entrepreneurship.

Three important economic indicators of the United States are the unemployment rate, the price indices, and the:

gross domestic product (GDP).

In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:

import quotas.

The executive summary section of the business plan contains:

information that will capture the attention of bankers and other investors who receive many business plans every day.

A(n) _______-based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.

integrity

The Small Business Administration defines a small business as a firm that:

is independently owned but not dominant in its industry.

Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:

licensing.

A ____________ is two firms combining to form one company.

merger

Two key management functions that need particular attention when starting a business are:

planning and financing.

In a free-market economic system, the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

price

A simple supply curve shows a relationship between the:

price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time.

Last year, Adventure Enterprises reported revenues of $24 million while its total expenses were $10 million. Based on this information, Adventure reported:

profits of $14 million.

The two basic types of tariffs are:

revenue and protective.

Affiliate marketing is a web-based business strategy that:

rewards individuals who are willing to link a company's website to their blog or social network page.

Health care, insurance, recreation and other intangible products are provided by the:

service industry.

Enterprise zones are:

specific locations across the U.S. where entrepreneurs can set up shop and receive tax breaks for operating in these areas.

An owner of a corporation is known as a(n):

stockholder.

The Internet and the emergence of an information-based economy are important parts of the ___________ environment in which businesses operate.

technological

The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond:

the amount they have invested in the company.

Any debts or damages incurred by a firm organized as a sole proprietorship are:

the responsibility of the owner.

Which term describes someone who reports illegal or unethical behavior?

whistleblower