Moraine Valley Community CollegeBUS 100Final exam.+A GRADED

Chapter 1 The U.S. Business Environment 25) Which environment is NOT an important dimension of a business organization's external environment? A) the political-legal environment B) the sociocultural environment C) t ...

Chapter 1 The U.S. Business Environment 25) Which environment is NOT an important dimension of a business organization's external environment? A) the political-legal environment B) the sociocultural environment C) the technological environment D) the corporate cultural environment E) the global business environment Answer: D Explanation: D) The external environment consists of everything outside an organization's boundaries that might affect it. The corporate cultural environment is internal to the organization. Page Ref: 6-7 Difficulty: Easy Objective: 1.2 Learning Outcome: Compare and contrast different economic systems Skill: Concept 26) What term denotes a nation's basis for allocating its resources among its citizens? A) capital structure B) economic system C) ownership processes D) distribution network E) national regulations Answer: B Explanation: B) An economic system is a nation's system for allocating its resources among its citizens, both individuals and organizations. Page Ref: 7 Difficulty: Easy Objective: 1.3 Learning Outcome: Compare and contrast different economic systems Skill: Concept 27) What is the process for converting government enterprises into individually owned firms known as? A) production allocation B) privatization C) entrepreneurship D) demand assessment E) profit maximization Answer: B Explanation: B) Privatization is the process of converting government enterprises into privately owned companies, which will then have the right to run such a business for profit. Page Ref: 10 Difficulty: Easy Objective: 1.3 Learning Outcome: Compare and contrast different economic systems Skill: Concept 28) What is the point at which the supply curve and the demand curve intersect on a graph? A) equilibrium price B) decision point C) surplus price D) perfect price E) parity point Answer: A Explanation: A) The equilibrium price is determined by the shape of the supply curve and the demand curve when plotted by amount available and price. The equilibrium price is set at the point at which the supply curve and the demand curve intersect. Page Ref: 12 Difficulty: Easy Objective: 1.4 Learning Outcome: Discuss strategies for setting and adjusting prices Skill: Concept 29) What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal? A) the going rate B) the margin rate C) the market price D) the optimum price E) the cost price Answer: C Explanation: C) The market price is set by the demand and supply for a given good. It is defined as the price at which the quantity of goods demanded and the quantity of goods supplied are equal. Page Ref: 12 Difficulty: Easy Objective: 1.4 Learning Outcome: Discuss strategies for setting and adjusting prices Skill: Concept 30) What occurs when the quantity demanded exceeds the quantity supplied? A) demand deficit B) surplus C) equilibrium point D) shortage E) supply schedule Answer: D Explanation: D) When demand exceeds supply, there will not be enough goods available to meet the demand for them. This is known as a shortage. Page Ref: 12 Difficulty: Easy Objective: 1.4 Learning Outcome: Compare and contrast different economic systems Skill: Concept 31) Which of the following does NOT represent a degree of competition in a private enterprise system? A) oligopoly B) socialism C) monopoly D) perfect competition E) monopolistic competition Answer: B Explanation: B) Competition is the economic condition in which there are certain demands that can be met by more than one business, so businesses in the same industry compete for the same resources or customers. Page Ref: 14 Difficulty: Easy Objective: 1.4 Learning Outcome: Compare and contrast different economic systems Skill: Concept 32) Which of the following exists when an industry or market has only one producer? A) competition B) oligopoly C) monopoly D) communism E) socialism Answer: C Explanation: C) A monopoly is a market or industry in which there is only one producer that supplies a certain product. Monopolies in the United States economy are either discouraged or regulated so that prices are not too high. Page Ref: 16 Difficulty: Easy Objective: 1.4 Learning Outcome: Compare and contrast different economic systems Skill: Concept 33) Which term refers to the pattern of short-term ups and downs in an economy? A) aggregate output B) business cycle C) standard of living D) balance of payments E) demand and supply schedule Answer: B Explanation: B) The business cycle is the short-term pattern of economic expansions and contractions. Page Ref: 17 Difficulty: Easy Objective: 1.5 Learning Outcome: Compare and contrast different economic systems Skill: Concept 34) Which term refers to the total quantity and quality of goods and services that people living in an economic system can purchase? A) business cycle B) demand and supply schedule C) standard of living D) aggregate output E) consumer price index Answer: C Explanation: C) The standard of living is the total quantity and quality of goods and services that people can purchase with the currency used in their economic system. Standard of living is determined by economic conditions such as inflation and purchasing power. Page Ref: 17 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 35) Which term refers to the total value of all goods and services produced within a given period by a national economy? A) standard of living B) aggregate output C) gross domestic product D) gross national produce E) purchasing power parity Answer: C Explanation: C) Gross domestic product is the total value of all goods and services produced within a given period by a national economy through domestic factors of production. Page Ref: 17 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 36) Which of the following measures indicates the prices of typical products purchased by American consumers living in urban areas? A) GDP per capita B) standard of living C) consumer price index D) purchasing power parity E) Big Mac index Answer: C Explanation: C) The consumer price index is a measure of the prices of typical products purchased by consumers living in urban areas. It is used as a comparative standard, to tell whether inflation or deflation is occurring, for example. Page Ref: 22 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 37) 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 Answer: B Explanation: B) Productivity is a measure of economic growth that compares how much a system produces with the resources needed to produce it. Page Ref: 19 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 38) What is the economic condition characterized by widespread increased prices without increased purchasing power? A) unemployment B) inflation C) expansion D) deflation E) recession Answer: B Explanation: B) Inflation is the condition that occurs when widespread price increases are present throughout an economic system. This happens when the amount of money in the economy grows faster than the amount of products available to buy. Page Ref: 21-22 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 39) What is the 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? A) unemployment B) stability C) deflation D) inflation E) oversupply Answer: B Explanation: B) Economic stability happens when the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate. When this occurs, there is neither inflation nor deflation. Page Ref: 23 Difficulty: Easy Objective: 1.5 Learning Outcome: Explain how economic performance is monitored Skill: Concept 40) What are profits? A) total money taken in by a corporation B) increases in income from year to year C) increases in a corporation's stock price D) revenue generated by goods and services E) difference between revenues and expenses Answer: E Explanation: E) Profits represent the difference between an organization's revenues and its expenses; profits are the goal of most businesses and allow people to open and expand businesses. Page Ref: 4 Difficulty: Moderate Objective: 1.1 Learning Outcome: Explain how economic performance is monitored Skill: Concept 41) A new U.S. company plans to introduce an inexpensive, high-quality line of shoes to the American market. It has found a manufacturer in another country that can produce the shoes at a low enough cost that they will still be cheaper than other brands of the same quality. Which of the following represents a potential ethical implication that the company should consider before beginning production? A) the country's existing labor laws and the factory working conditions B) the average exchange rate of the country's currency over a ten-year period C) the challenges of doing business in a country with a nonconvertible currency D) the energy demands of the manufacturer's facility E) the basic international business strategy it will use Answer: A Explanation: A) When choosing a country to outsource to, a company should not only consider the financial implications of offshoring, but also the ethical implications of conducting business in a country that may have very different laws and legal standards. Page Ref: 6 Difficulty: Moderate AACSB: Reflective thinking skills Objective: 1.1 Learning Outcome: Compare and contrast different economic systems Skill: Application 42) What marks the key difference between economic systems? A) the way they manage the factors of production B) the way they transport goods within their borders C) the way rules and regulations are legislated D) the way workers are relocated to different regions E) the way basic necessities are determined Answer: A Explanation: A) Economic systems manage the factors of production differently; management of these factors often revolves around the degree of government control of them. Page Ref: 7 Difficulty: Moderate Objective: 1.3 Learning Outcome: Compare and contrast different economic systems Skill: Concept 43) What does a planned economy rely on a centralized government to do? A) support free enterprise in every way possible B) allocate all or most factors of production C) encourage citizens to buy shares of stock in small companies D) keep its control activities to a minimum E) direct workers to start their own small businesses Answer: B Explanation: B) A centralized government controls all or most of the factors of production. Page Ref: 10 Difficulty: Moderate AACSB: Dynamics of the global economy Objective: 1.3 Learning Outcome: Compare and contrast different economic systems Skill: Concept 44) Which economic system emphasizes the private ownership of most factors of production? A) socialism B) communism C) capitalism D) Marxism E) federalism Answer: C Explanation: C) Capitalism makes use of the profit incentive for private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive. Page Ref: 10 Difficulty: Easy AACSB: Dynamics of the global economy Objective: 1.3 Learning Outcome: Compare and contrast different economic systems Skill: Concept 45) A city of 150,000 people has a large commercial sector bringing in businesses from the surrounding region. In 2005, there was 2.75 million square feet of commercial space available. Five years later, after a building boom, there was 5.5 million square feet of commercial space available. Which effect will most likely occur? A) The equilibrium price of commercial real estate will not be effected. B) The increase in the supply of commercial real estate will lead to a corresponding increase in its price. C) The price of commercial real estate will decrease, absent a dramatic increase in demand. D) The increase in the supply of commercial real estate will lead to an increase in resource prices. E) The increase in supply will cause a corresponding increase in demand. Answer: C Explanation: C) Since the supply of commercial real estate has dramatically increased, unless there was a dramatic increase in demand we would expect the price of commercial real estate to decrease. Page Ref: 12 Difficulty: Moderate AACSB: Reflective thinking skills Objective: 1.4 Learning Outcome: Discuss strategies for setting and adjusting prices Skill: Application 46) A new watch manufacturer would like to determine the market price of a new line of watches. How could the manufacturer most effectively determine the market price? A) Place several of the new watches on sale at a watch store and see which sells most quickly. B) Arrange to sell the watches in a number of diverse auctions. C) Set the price of one watch higher than another and see which sells the most quickly. D) Survey potential customers and retailers on what they think the price should be. E) Canvass executives from competing companies about what they think the price should be. Answer: B Explanation: B) Auctions are an effective way to determine market prices because consumers determine the selling price. Page Ref: 16 Difficulty: Moderate AACSB: Reflective thinking skills Objective: 1.4 Learning Outcome: Discuss strategies for setting and adjusting prices Skill: Application 47) A new feature on the the latest Acme smart phone has made it wildly popular. Which action should Acme take to maximize profits? A) Increase the supply of the smart phone. B) Decrease the supply of the smart phone. C) Reduce the price of the smart phone. D) Maintain the current supply until demand falls. E) Create a shortage of the smart phone. Answer: A Explanation: A) Acme will want to have more phones available when demand is high. Page Ref: 12 Difficulty: Moderate AACSB: Reflective thinking skills Objective: 1.4 Learning Outcome: Discuss strategies for setting and adjusting prices Skill: Application