Exam 1: Taking Risks and Making Profits Within the Dynamic Business Environment

Which of the following is the best example of a business whose goal is to earn a profit?

In recent years,almost all new job creation in the United States has occurred in the __________ sector:

Paid vacations and health care insurance are among the benefits provided by the government to entrepreneurs.

The growth in the service sector in the United States appears to be giving way to an information-based global era.

Starting a business always involves _______.

It was reported by a Beijing newspaper that China succeeded in improving its people's standard of living and establishing a relatively affluent society in the past seven years.This report clearly indicates that both income levels and the price of goods and services rose significantly during that time period. If the people of China improved their standard of living,this means that they can purchase more with their current income than they were able to do in the past.In order to purchase the same or more goods than they were able to purchase in the past,the price of goods and services either stayed the same or decreased;or the price of goods and services stayed the same,but income levels rose.

To realize his passion,Alex recently opened Original Tunes,Inc. ,a small state of the art recording studio in Nashville,TN.He probably could have set-up shop in several major cities,but Nashville offered him the two most important factors that he learned in business school would enhance the creation of wealth: labor and political freedom. According to leading economists and business analysts like Peter Drucker,Entrepreneurship and knowledge are the two key factors that enhance the creation of wealth.

Which of the following statements about the competitive environment is most accurate?

Maya is an engineer for Windy Ridge,Inc.a maker of wind turbines.Recently,a large company has shown interest in investing in this small operation.This is not surprising since firms that are creating products for alternative sources of energy are attracting the attention of governments and other businesses. Energy and sources of energy promise to be key considerations that will attract the attention of government and other businesses.

Brett runs a lawn care service.Although he and his employees could service eight households in one day,he averages six yards per crewmember,per day.Brett recently restructured his work crew and provided each cutter with an incentive to acquire two new customers each month through customer referrals.As a recent business graduate,you tell him he's probably on the right track. Companies now have to offer both high-quality products and good value,but also outstanding service at competitive prices.Through restructuring,owners/managers often give-up some of their authority and empower employees to make decisions that exceed customer's expectations.

Competition is fierce! One way to respond quickly to customer needs is to develop a strategy of empowering employees.

Although the Internet is exciting,very few people have access to it outside the U.S. According to the textbook,almost 220 million Chinese were using the Internet in 2008.

Global trade has suffered because of increased problems with the Internet.

The only way a firm can increase its profits is to increase its sales revenue. Revenues minus expenses = profits.A firm with stable or even declining sales might be able to improve profits by reducing expenses.

The capitalist system relies heavily on:

Successful firms follow a customer-driven strategy,as opposed to the management-driven strategy used in the past.

Money is one of the five factors of production that contribute to the creation of wealth.

___________ is a measure of the general well-being and satisfaction derived from a variety of factors including political freedom,safety,education,and a clean environment.

The social security system,

While the proportion of workers employed in agriculture has remained relatively constant,the average size of farms has steadily decreased over the past century.