A+ Answers

Q1. Why are lenders most willing to loan to corporations?

   a. Continuity and legal status are assured.

   b. Links with owners and founders are established.

   c. Professional management teams can be changed.

   d. Commitment to expansion is readily available.

   e. Brand and marketing strategies can be diversified.

 

Q2. Suppose BrightLights Online Video purchases another company, QuikFlix. What is this

an example of?

   a. merger

   b. spin-off

   c. divestiture

   d. acquisition

   e. collapse

 

Q3. What does a start-up company need in order to estimate the required size of a plant,

store, or office, to decide how much inventory to carry, and to determine how many

employees to hire?

   a. sales forecast

   b. tax estimate

   c. business objective

   d. stock options

   e. funding source

 

Q4. What type of company has stock that is widely held and available for sale to the general

public?

   a. private corporation

   b. public corporation

   c. general partnership

   d. limited liability corporation

   e. professional corporation

 

Q5. An S corporation has stock that is widely held and available for sale to the general

public.

   a. True

   b. False

 

Q6. Franchisees may be obligated to contribute a percentage of sales to parent

corporations.

   a. True

   b. False

 

Q7. What do both sole proprietorships and partnerships lack?

   a. trust

   b. legal standing

   c. continuity

   d. shared vision

   e. adaptable processes

 

Q8. Which of the following is a partner who actively manages a firm and has unlimited

liability for its debts?

   a. limited partner

   b. general partner

   c. stockholding partner

   d. public partner

   e. silent partner

 

Q9. Which of the following occurs when two firms combine to create a new company?

   a. acquisition

   b. takeover

   c. venture

   d. divestiture

   e. merger

 

Q10. Kent and Patrick have decided to start a landscaping business. One of the first things

that they do is sign a document that describes the investments and responsibilities of the

partners and makes provisions for the allocation of profits and dissolution of the business.

What is the name of this document?

 

   a. articles of incorporation

   b. partnership charter

   c. partnership agreement

   d. corporate charter

   e. financial proposal

Q11. How does monopolistic competition differ from perfect competition?

   a. There are more sellers in a market characterized by monopolistic competition.

   b. It is easier for sellers to enter a market or industry characterized by monopolistic

competition.

   c. In a perfectly competitive market, products are more dissimilar.

   d. In a market characterized by monopolistic competition, individual firms have some control

over price.

   e. In a perfectly competitive market, the size of the firms must be large.

 

Q12. What does productivity measure?

   a. the total value of all goods and services produced by a national economy

   b. how much a system produces with the resources needed to produce it

   c. how much output is necessary to produce a certain level of demand

   d. the standard of living relative to purchasing power parity

   e. how much gross national product results from inputs of labor

 

Q13. The customs, values, and demographic characteristics of the society in which an

organization functions are the principal elements of the political-legal environment.

   a. True

   b. False

 

Q14. The technological environment includes only electronics and telecommunications used

to perform business activities.

   a. True

   b. False

 

Q15. Honata Automobiles is a South Korean-owned company. Honata has factories in

Indonesia and Brazil. Which of the following is/are affected by the production of Honata

automobiles?

   a. Indonesia, Brazil, and South Korea's GDP

   b. Indonesia and Brazil's GDP

   c. South Korea's GDP

   d. Indonesia and Brazil's GNP

   e. Indonesia, Brazil, and South Korea's GNP

 

Q16. Which of the following is a likely cause of increased prices for products, decreased

purchasing power, and decreased profit margins?

   a. low unemployment

   b. stagnant wages

   c. declining living standards

   d. cyclical inflation

   e. limited credit

 

Q17. Which economic system emphasizes the private ownership of most factors of

production?

   a. socialism

   b. communism

   c. capitalism

   d. Marxism

   e. federalism

 

Q18. Which of the following best describes economic stability?

   a. the measure of economic growth that compares how much a system produces with the

resources needed to produce it

   b. a condition in an economic system in which the amount of money available and the number

of goods and services produced are growing at about the same rate

   c. the economic condition in which a country's exports exceed its imports

   d. a relative equality between what the government owes its creditors and the revenue it gets

from imports

   e. the economic value of all the products that a country exports minus the economic value of all

the products it imports

 

Q19. How would supply affect the aggregate output of an economy?

   a. Supply would decrease aggregate output.

   b. Increases in both would cause inflation.

   c. Aggregate output would grow with supply.

   d. Supply would have no direct effect on aggregate output.

   e. Aggregate output would increase the money supply.

 

Q20. Which course of action should the Federal Reserve take if it wishes to reduce inflation

and curb consumer spending?

   a. The Federal Reserve should buy securities.

   b. The Federal Reserve should sell securities.

   c. The Federal Reserve should decrease the reserve requirement.

   d. The Federal Reserve should lower the discount rate.

   e. The Federal Reserve should sell securities and lower the discount rate.

 

Q21. What is the term for an employee who detects and tries to put an end to a company's

unethical, illegal, and/or socially irresponsible actions by publicizing them?

   a. fast-track manager

   b. whistle-blower

   c. corporate lookout

   d. government inspector

   e. blue sky thinker

 

Q22. What role does accountability play in business life?

   a. It encourages businesses to strive for increased revenue.

   b. It fosters laissez-faire attitudes to economic growth.

   c. It protects and enhances the general welfare of society.

   d. It restricts health warnings on harmful products.

   e. It helps to maximize profits for shareholders.

 

Q23. IBP, a leading meat-processing firm, has a long record of breaking environmental

protection, labor, and food processing laws and then trying to cover up its offenses. What

type of stance has IBP adopted to social responsibility?

   a. accommodative

   b. obstructionist

   c. pragmatic

   d. defensive

   e. proactive

 

Q24. Save-a-Bunch Hardware has tripled its prices for plywood and other building supplies

after a tornado strikes the area. What business practice is Save-a-Bunch Hardware

demonstrating?

   a. price gouging

   b. price wars

   c. price fixing

   d. collusion

   e. buying out competitors

 

Q25. Small businesses must answer many of the same social responsibility questions as big

businesses.

   a. True

   b. False

 

Q26. Which one of the following organizations has as its primary function the regulation of

advertising and pricing practices?

   a. Food and Drug Administration (FDA)

   b. Federal Trade Commission (FTC)

   c. Federal Communication Commission (FCC)

   d. Securities and Exchange Commission (SEC)

   e. Small Business Administration (SBA)

 

Q27. Which of the following occurs when someone uses confidential information to gain

from the purchase or sale of stocks?

   a. identity theft

   b. a margin purchase

   c. insider trading

   d. collusion

   e. a guarantee

 

Q28. Ethical standards relating to business practices are fairly consistent around the world.

   a. True

   b. False

 

Q29. What is a social audit?

   a. an examination of a company's financial records to determine their conformance with GAAP

   b. a program to promote consumer activism

   c. an analysis by the government of a company's compliance with employment laws

   d. an analysis of a firm's success in using funds earmarked for meeting its social responsibility

goals

   e. a check on consumer rights

 

Q30. What is it called when two or more firms agree to collaborate on wrongful acts?

 

   a. monopolizing

   b. consumerism

   c. collusion

   d. brokering

   e. business as usual

Q31. The World Trade Organization (WTO) was created to encourage international trade.

   a. True

   b. False

 

Q32. Globalization refers to the process by which countries around the world are becoming

more self-sufficient.

   a. True

   b. False

 

Q33. Free market economies often establish some system of quotas and/or tariffs.

   a. True

   b. False

 

Q34. ABC Company in the United States has given exclusive rights to XYZ Company in

Switzerland to manufacture its products. What is this is an example of?

   a. a foreign direct investment

   b. a licensing arrangement

   c. a branch office setup

   d. a strategic alliance

   e. an import-export relationship

 

Q35. Which of the following is the name for the overall flow of money into or out of a

country?

   a. exchange rate

   b. trade rate

   c. balance of exchange

   d. balance of payments

   e. balance of trade

 

Q36. In some South American countries, it is sometimes legal to bribe other businesses and

government officials, while this practice is illegal in the United States. Which of the

following refers to this type of policy?

   a. protectionism

   b. business practice laws

   c. free trade agreements

   d. fair trade agreements

   e. local content laws

 

Q37. Critics of protectionism charge that it drives up prices by reducing competition.

   a. True

   b. False

 

Q38. Which of the following refers to the practice of selling a product abroad for less than

the cost of production?

   a. exporting

   b. importing

   c. dumping

   d. safeguarding

   e. offshoring

 

Q39. Which of the following refers to tariffs that are imposed strictly to raise money for the

government?

   a. revenue tariffs

   b. protectionist tariffs

   c. quota tariffs

   d. subsidy tariffs

   e. labor tariffs

 

Q40. Which of the following statements best describes the effects of subsidies?

   a. A subsidy essentially lowers the prices of foreign goods rather than raising the prices of

domestic goods.

   b. A subsidy essentially raises the prices of domestic goods rather than lowering the prices of

foreign goods.

   c. A subsidy essentially lowers the prices of domestic goods rather than raising the prices of

foreign goods.

   d. A subsidy essentially raises the prices of foreign goods while also raising the prices of

domestic goods.

   e. A subsidy essentially lowers the prices of foreign goods while also lowering the prices of

domestic goods

 

 

 

 

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