Test 1 Flashcards
Online Quizes
What is profit?
Difference between revenues and expenses
What is the environment where a firm conducts business known as?
Domestic business environment
What is the general term for resources used by a business to produce a good or service referred to as?
Factors of production
When making decisions about production and allocation, which type of system depends on individual producers and consumers to create a combination of supply and demand?
Market economy
Which of the following best explains the difference between a market economy and a planned economy?
In a planned economy, consumers have little choice in where they work or what they purchase or pay.
In which type of economy do the individual producer and consumer control production through supply and demand?
Market
What is the point at which the supply curve and the demand curve intersect on a graph?
Equilibrium price
What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal?
The market price
What occurs when the quantity demanded exceeds the quantity supplied?
Shortage
What is the willingness and ability of producers to offer a good for sale referred to as?
Supply
What takes place when buyers purchase more of a product when the price drops, and less when the price increases?
Laws of demand
What is needed to gain a competitive advantage over competitors?
The ability to produce goods or services efficiently and at a reasonable profit
What is created when one company is able to supply all the goods or services needed by the marketplace?
Natural monopolies
How does monopolistic competition differ from perfect competition?
In a market characterized by monopolistic competition, individual firms have some control over price.
Which term refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production?
Gross domestic product
Which of the following should be the first step in assessing ethical behavior in a certain situation?
Collect facts related to the situation
What is likely the single MOST effective step that a company can take to set ethical standards?
Demonstrate support from top management
How do top managers BEST demonstrate a commitment to ethical business practices?
By adopting and enforcing written codes of ethics
What category of ethics relates to matters such as hiring, firing, working conditions, privacy and respect?
Behavior toward employees
When an activity benefits an individual but not the employer, what ethical dilemma has been created?
Conflict of interest
When evaluating a decision based on the ethical norm of rights, a manager is MOST likely to consider which of the following questions?
Does the decision respect the individuals involved?
What term refers to the way in which a business tries to balance its commitments to groups and individuals in its social environment?
Social responsibility
What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization?
Organizational stakeholders
What stakeholder group is being protected when managers follow proper procedures and strive to be accurate and candid in assessing future growth?
Investors
Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks?
Insider trading
If a firm hides responsibility for wrongdoing, what type of stance are they taking toward social responsibility?
Obstructionist
How have companies such as Tyvek, General Motors, and DuPont worked to lessen the impact of waste on the environment?
By achieving zero-landfill status
What is the practice of injecting water and chemicals into underground rock in order to break the rock apart called?
Fracking
When a firm increases the price of a good or service because of an increase in demand, what unethical practice are they potentially engaging in?
Price gouging
If a manager believes their job is to generate profits and is willing to do everything legally required, but no more, what social responsibility stance is being taken?
Defensive
The U.S. Department of Commerce considers a business “small” if it has fewer than how many employees?
500
Which of the following industry groups is the fastest growing segment of small business enterprise?
Services
Which of the following types of venue is favored by small-business retailers?
Specialty shop
Why is it difficult to compare relative job growth for different-sized businesses?
It is hard to determine the cutoff point at which a small business becomes a large business.
Why do attitudes about entrepreneurship vary internationally?
Attitudes towards risk-taking in business are culturally determined.
When an investor is not interested in owning their own business, why do they need to understand entrepreneurship?
To assess the market potential for up-and-coming businesses
In a small business, who determines prices for wholesalers and customers?
Market forces
Small businesses impact key aspects of the U.S. economy including
job creation and innovation
What term is most closely associated with the pursuit of entrepreneurship with the goal of independence from working for someone else with a reasonable degree of financial security?
Small business
What is the MOST important source of money for new business start-ups?
Personal resources
What does a start-up company need in order to estimate the required size of a plant, store, or office, inventory levels, and size of staff?
Sales forecast
What is the major drawback of accepting venture capital?
Sharing company control
What is the MOST effective way for an entrepreneur to become a competent manager?
Working for a successful company first
Which distinctive competency must an entrepreneur identify when attempting to enter an established market?
The ability to identify niche markets
Which key element of a business plan will determine inventory, size of space required, and number of employees needed?
Sales forecasting
What is the advantage to starting a business from scratch instead of buying an existing business?
There are no ill-effects from the previous owner.
Which of the following is the MOST significant recent trend in small-business start-ups?
Emergence of e-commerce
Which of the following factors MOST contributes to small business failure?
Managerial incompetence or inexperience
What is a major drawback of sole proprietorships?
Unlimited liability
What is the MOST common type of partnership?
General partnership
What organization was founded in 1967 for economic, political, social, and cultural cooperation in the Asia Pacific region?
ASEAN
Which organization created the classification of countries based on per capita income?
The World Bank
Which of the following resulted from NAFTA?
Mexican imports to the United States have increased.
Which of the following treaties sought to eliminate trade barriers such as tariffs and quotas?
General Agreement on Tariffs and Trade
How does globalization of business benefit shareholders of an organization?
Through increased and improved profitability
What caused manufacturing jobs to move from Mexico to China in the late 1990s?
Increases in Mexico’s cost of living and wages
Where is the world’s largest free marketplace?
Europe
Which of the following refers to the situation when a country’s imports exceed its exports?
Trade deficit
With what type of exchange rate does the value of a country’s currency remain constant relative to that of another country?
Fixed
The value of the U.S. dollar relative to the value of the British pound fluctuates with market conditions. What is this type of exchange rate?
Floating
Which of the following exists when a country can produce something more cheaply and/or of higher quality than any other country can?
Absolute advantage
What typically happens to a country’s balance of trade as the value of its currency falls?
It improves.
What condition will be created when gaining a national competitive advantage by developing strong local or regional suppliers?
Related and supporting industries
Why did the European Union develop the euro as its common currency?
To improve the integration of the economic system between member countries
Which of the following provides exclusive rights to produce a product for another firm, thereby avoiding transportation costs and tariffs?
Licensing arrangement
Which of the following types of tariff is meant to discourage the import of particular products?
Protectionist tariff
Which of the following goals is a primary purpose of tariffs on imports?
Maintain domestic competitiveness
Which of the following statements BEST describes the effects of subsidies?
A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods.
Which of the following refers to associations of producers that control supply and prices?
Cartels
Many governments require that products sold in their particular country be at least partly made there. This policy involves what type of laws?
Local content laws
