Deck 1: The Dynamics of Business and Economics

Question 1

When you take your clothes to the dry cleaner to be cleaned or go to the spa to get a massage, you are not receiving a product because you have not received anything tangible in return.

Answer 1

False

Question 2

Economics refers to all activities concerned with obtaining money and using it effectively.

Answer 2

False

Question 3

The focus of all marketing activities is the successful transformation of resources into goods and services.

Answer 3

False

Question 4

All economic systems must address three important issues, one of which is how the goods and services will be produced.

Question 5

While ethical behavior can enhance a company's reputation, it often has a negative effect on the company's financial performance.

Question 6

Amit hired an attorney to help him draft a purchase and sale agreement for his new home. The home is an example of a product that is a(n)

A) idea.
B) service.
C) tangible item.
D) process.
E) intangible good.

Question 7

Which of the following is NOT an accurate statement regarding nonprofit organizations?

A) They may provide goods and services.
B) They engage in fund-raising.
C) They have the fundamental goal of earning profits.
D) They utilize skills related to management, marketing, and finance.
E) They include charities and social causes.

Question 8

Master Motors is working to find a way to produce the SUVs and trucks its customers want while meeting environmental requirements. This is an effort to please multiple

A) shareholders.
B) clients.
C) stakeholders.
D) businesses.
E) priorities.

Question 9

Which is the BEST example of a business trying to balance the needs of various stakeholders?

A) Pete's Pest Control Company is trying to develop an eco-friendly insecticide that will eliminate crop-killing pests and still adhere to environmental regulations.
B) Even though Joe's Outdoor World received a quantity discount from the manufacturer on gas grills, the company is still going to sell them at the full retail price.
C) To make sure she keeps up with the competition, Amber's Gelato Shoppe offers money-saving coupons during the summer months.
D) A sporting goods store wonders if it should sell football equipment year-round as opposed to just the fall and winter months.
E) Even though it might reduce profits, Bill's Big and Tall Store wonders if it should offer free shipping to its online customers.

Question 10

Talia is the owner of a small business. She has an HR person, an operations manager, a marketing manager, and a sales manager on staff. Who is responsible for the financial decisions that arise in the course of business?

A) the HR person
B) the operations manager
C) the sales manager
D) the marketing manager
E) Talia, the owner

Question 11

Ronan works for a custom furniture manufacturer. His job is to oversee the process of taking raw materials-lumber, fabric, and metal components-and ensure that they are transformed to the customer's exact specifications. Ronan's job falls under the business activity known as

A) operations.
B) advertising.
C) sales promotion.
D) finance.
E) marketing.

Question 12

Allie, the manager of a new pet grooming company, makes sure her grooming salon always has plenty of treats and toys for the animals as well as beverages and snacks for their owners to ensure a quality customer service experience. This is an example of the ________ element of management.

A) service
B) leadership
C) decision making
D) motivational
E) operations

Question 13

The focus of all marketing activity is to

A) promote products better than the competition.
B) transform resources into goods and services.
C) provide financial resources for the operation of the business.
D) satisfy the needs and wants of consumers.
E) coordinate employees' actions to achieve the firm's goals.

Question 14

Fabulous Fitness has a new exercise video that it hopes will increase its sales. It is offering coupons and a sweepstakes to get people to buy the video. These are examples of

A) sales promotion.
B) publicity.
C) advertising.
D) personal selling.
E) direct retail.

Question 15

Decisions regarding product adoption, development, branding, and positioning fall under which element of the marketing mix?

A) price
B) product
C) place
D) distribution
E) promotion

Question 16

Leon is an accountant for a small company. As such, he participates primarily in ________ activities.

A) management
B) financial
C) operations
D) marketing
E) advertising

Question 17

Quentin owns a company that makes metal and wooden signs. In order to acquire the different kinds of wood and steel he needs to make his product, Quentin needs

A) natural resources.
B) labor.
C) capital.
D) factors of production.
E) economics.

Question 18

The factors of production are the

A) systems and processes used to make goods and services.
B) means of distributing wealth within a country.
C) obstacles present in a competitive environment that limit production.
D) land, labor, capital, and enterprise used to produce goods and services.
E) management, marketing, and finance activities of a business.

Question 19

Which of the following is an intangible resource?

A) physical and mental abilities of people
B) forests and minerals
C) economic capital
D) financial assets
E) company reputation

Question 20

Who subscribes to the ideals of a communist economy as proposed by Karl Marx?

A) Felix believes that in a society, people should contribute according to their ability and receive benefits according to what they need.
B) Esther believes that the government should own only basic industries, like utilities and the postal service, and that individuals should own most small businesses.
C) Ned believes that supply and demand should determine what goods and services are produced and that business owners should be able to keep the profits they make.
D) Isra thinks that a society runs better when people have an unlimited choice of careers and the government stays out of small business ownership.
E) Maria believes that profits earned by a small business should be reinvested in the business and that profits earned by the government should remain with the government.

Question 21

How are profits handled in communist systems?

A) Profits earned by small businesses may be reinvested in the business.
B) Individuals are free to keep profits after paying taxes.
C) Businesses are free to keep profits after paying taxes.
D) Excess income goes to the government.
E) Only profits from government-owned industries go to the government.

Question 22

Chi Ling lives in a country where income and social services are distributed equally among its citizens. However, the citizens must pay high taxes and the country often experiences high levels of unemployment. Chi Ling lives in a(n) ________ nation.

A) communist
B) socialist
C) capitalist
D) supply and demand
E) free-enterprise

Question 23

How does modified capitalism differ from pure capitalism?

A) In pure capitalism, the government intervenes and regulates all business.
B) In modified capitalism, the government doesn't intervene or regulate business at all.
C) In modified capitalism, the government intervenes and regulates business to some extent.
D) In pure capitalism, the government intervenes and regulates basic industries only.
E) In modified capitalism, the government relies on individuals to regulate all aspects of business, including passing laws.

Question 24

A county encourages individuals to own and operate the majority of businesses, but its government passes laws to enforce fair business practices such as labor laws, antitrust legislation, and laws against deceptive advertising. This is an example of

A) modified capitalism.
B) pure capitalism.
C) laissez-faire capitalism.
D) communism.
E) socialism.

Question 25

All of the following are examples of mixed economies EXCEPT

A) in socialist France, the French government owns the postal service industry.
B) in socialist Sweden, most businesses are owned and operated by private individuals.
C) in capitalist United States, an independent federal agency operates the postal service.
D) in once-communist Russia, private ownership of businesses has been implemented.
E) in communist China, state capitalism is used to advance the economy.

Question 26

Oscar is a real estate entrepreneur in a country that promotes the individual right to own property, earn profits, make decisions about business operations, and choose productivity systems. Which system best describes Oscar's business environment?

A) mixed economy
B) free market
C) capitalist
D) free enterprise
E) socialist

Question 27

Kristy is a member of a warehouse club. She likes shopping there because she can buy items like toilet paper and groceries in bulk to save money. This relates to which element of supply and demand?

A) demand
B) supply
C) equilibrium
D) profit
E) product availability

Question 28

Using the supply and demand curves shown in the graph that follows, what is the equilibrium price for soft drinks?

A) 35 cents
B) 45 cents
C) 50 cents
D) 55 cents
E) 75 cents

Question 29

Jeff is an entrepreneur who decided to start an online bakery. Since all his business will be done online and he can bake in his home kitchen, he is saving building and other brick-and-mortar costs that allow him to pass these savings on to his customers. Reducing prices to customers is an element of

A) productivity.
B) efficiency.
C) competition.
D) equilibrium pricing.
E) resource distribution.

Question 30

________ is an example of a product of monopolistic competition.

A) Cotton
B) Wheat
C) Aspirin
D) Electricity
E) Airline fares

Question 31

Trevor owns a local farm stand. Although he sells fruit and vegetables, like the grocery store chains in the area, he has some power over the price he charges because he can offer consumers features they want. For instance, his fruit and vegetables are organic and locally grown. This is an example of

A) monopolistic competition.
B) pure competition.
C) oligopoly.
D) monopoly.
E) competition.

Question 32

The market for corn in Mexico has a large number of sellers and buyers, and there is no difference in the products sold by each seller. As a result, prices are determined by the

A) businesses that sell the corn.
B) consumers that buy the corn.
C) forces of supply and demand.
D) government.
E) agricultural industry.

Question 33

What is true regarding an oligopoly?

A) Prices charged by different firms stay fairly close because a price cut or increase by one company will trigger a similar response from another company.
B) The prices charged by different firms vary widely, since each firm can charge whatever it wants.
C) In oligopolies, it is inexpensive for new firms to enter the marketplace.
D) Prices never change because the government has set the products' price.
E) Since there are very few businesses selling the product, there is no need to ever change the price.

Question 34

Ramona is living on a fixed income since her retirement. She is worried that the economy is expanding too rapidly, which could result in

A) inflation.
B) a depression.
C) a recession.
D) an economic contraction.
E) deflation.

Question 35

Contractions of the economy lead to

A) inflation.
B) recession.
C) rising levels of employment.
D) an increase in production.
E) an increase in income.

Question 36

A country experiences a rapid expansion of its economy, which resulted in prices doubling every 12 hours. This is an example of

A) recession.
B) hyperinflation.
C) deflation.
D) depression.
E) equilibrium.

Question 37

If a country balances the money it spends for social, defense, and other programs with the amount of money it takes in from taxes, this country

A) will not have a budget deficit.
B) will increase its national debt.
C) will have a budget surplus.
D) will have a trade imbalance.
E) will slip into a recession.

Question 38

All of these statements are true of the U.S. national debt EXCEPT

A) massive government stimulus spending during the most recent recession increased the national debt.
B) it is difficult to increase taxes and reduce the deficit because Americans don't want their taxes increased and Congress has difficulty agreeing on appropriate tax rates.
C) the national debt in the United States continues to grow at record levels.
D) the recently enacted tax cuts in the United States are projected to decrease the national debt significantly over the next 10 years.
E) to reduce the debt, the government has to increase its revenues or reduce spending on social, defense, and legal programs.

Question 39

In Norway, most citizens are able to afford basic necessities and some degree of comfort. This means Norway has a(n)

A) high standard of living.
B) low standard of living.
C) high cost of living.
D) low GDP per capita.
E) average standard of living.

Question 40

What is true of an open economy, like that of the United States?

A) Open economies tend to grow very slowly.
B) Open economies do not engage in international trade.
C) Open economies tend to lack efficiency and productivity.
D) Open economies are major players in international trade.
E) Open economies lack access to technology.

Question 41

What would hinder business activity as it relates to an open economy?

A) too much reliance on technology
B) participating in international trade
C) a focus on efficiency and productivity
D) a focus on innovation
E) too much regulation of business activities

Question 42

What are the two primary factors economists consider when evaluating the American economy?

A) growth in GDP and jobs
B) standard of living and consumer confidence
C) government regulation and profitability
D) national debt and budget deficits
E) growth in the tax base and unemployment

Question 43

Before the Industrial Revolution, the economy of North America under the colonists was characterized by

A) farming, and the production of agricultural goods.
B) the export of manufactured goods to England.
C) a scarcity of natural resources.
D) dependence on England for everyday goods.
E) a hunter/gatherer society.

Question 44

All of the following contributed to the evolution of the service economy in America EXCEPT

A) an increase in the standard of living.
B) the desire of women to be stay-at-home-moms.
C) more women entering the workforce.
D) major shifts in the population.
E) an increase in disposable income.

Question 45

As the service economy in America continues to rapidly grow, advances in technology are contributing to new service products based on technology and digital media that provide smart phones, social networking, and e-commerce. This suggests that the country may be moving toward being a ________ economy.

A) socialized
B) laissez-faire
C) digital
D) marketing
E) manufacturing

Question 46

All of the following are true of entrepreneurs EXCEPT

A) in the past, entrepreneurs were inventors who brought all the factors of production together to produce a new product.
B) many of the companies started by early entrepreneurs have failed to stay in operation.
C) a free-enterprise system provides the conditions necessary for entrepreneurs to succeed.
D) many of the companies started by early entrepreneurs still operate today.
E) entrepreneurs constantly change American business practices with new technology and innovative management techniques.

Question 47

Several employees in a well-known corporation, Truck Corporation, were arrested for intentionally selling defective truck parts to their customers. Scandals like this

A) do not affect public confidence in corporations.
B) undermine public confidence in corporations.
C) cause society to boycott corporations.
D) have a positive effect on retired employees.
E) resolve the debate about ethics in business.

Question 48

All of the following are true of workplace diversity EXCEPT it

A) increases employee satisfaction.
B) decreases the financial performance of companies.
C) improves decision making.
D) is highly beneficial to the financial performance of companies.
E) must be balanced to support and protect various stakeholders.

Question 49

What is the primary goal of all businesses? Does a nonprofit organization fit within this goal?

Question 50

Name at least 3 benefits of studying business.

Question 51

Differentiate between communist, socialist, and capitalist economic systems.

Question 52

Explain the relationship between supply and demand in a free-enterprise system.

Question 53

Describe the pre-industrial economic phase of the United States.

Question 54

Define business ethics. Describe the role of ethics and social responsibility in business.