I.T.B Exam 1

Question 1

Demographic changes create new business opportunities. (Chp 1)

Answer 1

True

Question 2

World trade has both benefits and costs. Which of the following statements best attests to this fact? (Chp 1)

Answer 2

Large companies and small companies agree that the green movement is a global issue. Firms are embracing opportunities to bring value to consumers by creating green products and services.

Question 2

Globalization has increased among nations. (Chp 1)

Answer 2

True

Question 3

The threat of terrorism (Chp 1)

Answer 3

is costly to most firms because it is costly to governments who increase taxes to pay for added protection.

Question 4

Retired people will be draining the U.S. economy of wealth. This is due to: (Chp 1)

Answer 4

the fact there are not enough workers in subsequent generations to support the ongoing drain of older persons into the Social Security system.

Question 5

If businesses are producing at capacity, and the nation is experiencing almost full employment (a very low rate of unemployment—less than 2%), the Fed may decide to
______ Interest rates
(Chp 2)

Answer 5

Increase

Question 6

the loss of the best and brightest people from their home countries to other countries. (chp 2)

Answer 6

Brain Drain

Question 7

An incredibly rare stone known as Diamontite is used in many consumer products, including watch faces, smartphones, computer monitors, and tablets. In one year, the price of Diamontite has gone from $8/lb. to $107/lb. Under these circumstances and the fact that more companies are looking to use Diamontite in their products, a graph of the supply and demand for this product would show (Chp 2)

Answer 7

The price of Diamontite to be above the equilibrium price for this rare gem.

Question 8

T/F: A free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced, and how it is distributed. (Chp 2)

Answer 8

True

Question 9

A major trend around the world today is that
(Chp 2)

Answer 9

free-market economies are moving more toward socialism and socialist economies are moving more toward capitalism.

Question 10

A(n) _____________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

(Chp 2)

Answer 10

Demand

Question 11

Economics was called the “Dismal Science” by Thomas Carlyle because
(Chp 2)

Answer 11

too many people would result in food shortages and shortages of other resources.

Question 12

T/F: History shows that free-market capitalism leads to a fair and equitable distribution of wealth.(Chp 2)

Answer 12

False

Question 13

T/F: Adam Smith believed that an economic system couldn’t truly prosper unless people were taught to value the welfare of others above their own personal gain.(Chp 2)

Answer 13

False

Question 14

T/F: Any output produced by U.S. firms is included in the value of U.S. GDP, even if the output was produced in a foreign country.
(Chp 2)

Answer 14

False

Question 15

As a business strategy, the strategy behind dumping is to (Chp 3)

Answer 15

gain a foothold in a new market

Question 18

American companies that produce sophisticated military weaponry are prohibited from exporting that equipment to unfriendly governments, such as Iran. This complete ban on exporting sensitive technology to specific countries is an example of a(n) (Chp 3)

Answer 18

Embargo

Question 19

Free trade between nations generally results in (Chp 3)

Answer 19

mutually beneficial exchange relationships

Question 20

A favorable balance of trade occurs when the value of (Chp 3)

Answer 20

imports is less than the value of exports.

Question 20

T/F: A common market is a group of countries that have no internal tariffs among member nations, yet have a common external tariff.
(Chp 3)

Answer 20

True

Question 20

A form of foreign direct investment, where a domestic company purchases a company in a foreign country to produce a similar product or service, is a
(Chp 3)

Answer 20

foreign subsidiary.

Question 21

Erin, an American citizen, says that her laptop was made in Japan. Erin purchased a(n) (Chp 3)

Answer 21

Imported item

Question 21

T/F: A small wine and cheese store in Milwaukee sells dozens of different types of cheese—Bulgarian, French, Danish, Greek, and a domestic from its home state of Wisconsin. The domestic cheese sells for less than $2.00 per pound, while all the international cheeses are priced at over $4.00 per pound. Clearly, there is an embargo on international food products. (Chp 3)

Answer 21

False

Question 22

T/F: Contract manufacturing is a form of outsourcing. (Chp 3)

Answer 22

True

Question 22

A disadvantage of licensing is (Chp 3)

Answer 22

the licensee may decide to use the expertise you have developed, break the agreement, and begin producing the product on his/her own.

Question 23

A vision for a company is (Chp 7)

Answer 23

an explanation of why the company exists and where it wants to go.

Question 24

_________ is the management function that involves allocating resources, assigning tasks, and establishing procedures for accomplishing the organizational objectives.
(Chp 7)

Answer 24

Organizing

Question 25

T/F: A mission statement outlines the fundamental purposes of an organization
(Chp 7)

Answer 25

True

Question 26

The SWOT analysis helps firms identify competitive threats and market opportunities.
(Chp 7)

Answer 26

True

Question 27

Which of the following statements about leadership styles is most accurate? (Chp 7)

Answer 27

Effective managers often use a variety of leadership styles

Question 28

__________ Is the management function that involves determining whether an organization is progressing toward its goals, rewarding employees for doing a good job, and taking corrective action when they are not. (Chp 7)

Answer 28

Controlling

Question 29

Tangible products such as computers, food, clothing, cars, and appliances.

Answer 29

Goods

Question 30

Intangible products (that can’t be held in your hand) such as education, health care, insurance, recreation, and travel.

Answer 30

Services

Question 31

A person who risks time and money to start and manage a business.

Answer 31

Entrepreneur

Question 32

Total amount of money a business takes in during a given period by selling goods and services.

Answer 32

Revenue

Question 33

Amount of money a business earns above and beyond what it spends for salaries and other expenses.

Answer 33

Profit

Question 34

Amount of money a business earns above and beyond what it spends for salaries and other expenses.

Answer 34

Loss

Question 35

The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

Answer 35

Risk