Deck 1: Understanding the Canadian Business System

Question 1

All of the following are factors of production except
natural resources.
labour.
capital.
entrepreneurs.
technology.

Answer 1

technology.

Question 2

Entrepreneurs are important because they
make lots of money.
are good at making decisions.
take risks to start new businesses.
are good managers.
are rich.

Answer 2

take risks to start new businesses.

Question 3

In a 2011 study, Forbes magazine ranked 134 countries in terms of how attractive they were to do business in. Where did Canada rank?
First
Second
Fifth
Twenty-fifth
Eighty-seventh

Answer 3

First

Question 4

Profit is
what remains after business expenses are subtracted from business revenues.
equal to the market value of shares in a company.
equal to total revenue minus cash expenses.
the amount of sales minus 50 percent.
double the amount the company pays in taxes.

Question 5

"Embrace the opportunities and accept the risks" is a phrase that best characterizes the __________ attitude.
entrepreneurial
capitalist
communist
socialist
mixed market

Question 6

Profit is
the market value of shares of stock in a company.
the level of expenses divided by the firm's assets.
what remains after business expenses are subtracted from business revenues.
gross revenue minus taxes a company pays.
gross sales minus taxes a company pays.

Question 7

Not-for-profit organizations
are content with small profits, whereas business firms want large profits.
are more important than business firms.
use the funds they generate from government grants or the sale of goods or services to provide service to the public.
do not sell goods or services.
are not allowed to operate in the manufacturing sector.

Question 8

Labour includes
everyone in a business.
only non-unionized employees.
only unionized employees.
only managers.
only workers who do physical work.

Question 9

In a command economy, the central government
supports free enterprise in every way possible.
allocates all or most factors of production.
encourages citizens to buy shares of stock in small companies.
keeps its control activities to a minimum.
buys surpluses from private sector companies to keep prices from falling.

Question 10

Generally speaking, which one of the factors of production is most important?
Land
Labour
Capital
Entrepreneurship
None of these

Question 11

If two people exchange an apple, they each still have just one apple, but if they exchange ideas, they now each have two ideas. This is an illustration of
the importance of natural resources.
the principle of specialization of labour.
the difference between information and all the other factors of production.
the importance of profit in market economies.
all of these.

Question 12

Examples of businesses include all of the following except
local supermarkets.
one-person businesses, like barbershops.
non-profit organizations.
large corporations like Canadian Pacific or Alcan Aluminum.
farms.

Question 13

Something that would contribute directly to improving labour as a factor of production would be
finding new oil reserves.
better education for more of the population.
increasing the purchasing power of employees.
programs designed to decrease unemployment.
finding more efficient ways to produce products.

Question 14

This week, Jessica's Variety Store had sales of $4000, employees were paid $1000, the cost of goods was $1500, and rent was $500. Profit for the week was
$3000.
$1000.
$4000.
$2000.
$1500.

Question 15

An economic system is
an agreement between countries that deals with free trade.
the way in which a nation allocates its resources among its citizens.
a government decree that requires certain goods and services to be provided.
a long standing agreement between citizens and governments on how an economy is run.
a large government department that oversees how the economy is running.

Question 16

Elizabeth wants to set up a consulting business that specializes in mathematical problem solving. Which of the following factors of production would she require?
Capital
Labour
Information resources
Natural resources
All of these

Question 17

How are provincial universities in Canada different from business firms?
They do not seek to make a profit.
They are not affected by the global environment.
Their organizational boundaries are narrower than normal.
They do not produce goods or services.
They are more important to society than business firms.

Question 18

In terms of factors of production, Imperial Oil's crude oil reserves are an example of _______, while market forecasts are an example of ________.
labour; entrepreneurs
information; labour
capital; information
natural resources; information
information; natural resources

Question 19

Most of the goods and services consumed in Canada are produced by
countries in the European Union.
businesses in the U.S.
countries of the Pacific Rim.
the Canadian government.
business firms.

Question 20

The key difference between economic systems is the different ways in which they manage
the factors of production.
the transportation of goods within their borders.
government rules and regulations.
the payment of workers.
none of these answers is accurate.

Question 21

Mexico allows producers and consumers to make production and allocation decisions through the mechanism of supply and demand. Such a system is called
socialism.
communism.
privatization.
nationalization.
a market economy.

Question 22

Socialist economies may stifle economic growth because
management positions in state-controlled industries are often filled on the basis of political considerations.
they have too few regulations concerning product safety.
they are found in countries where people don't have many skills.
they are usually found in countries with cold climates.
they encourage excessive unionization of employees.

Question 23

An economic system that permits private ownership and control of small businesses but where the government controls large critical industries is known as
a mixed economy.
socialism.
communism.
capitalism.
mercantilism.

Question 24

Which of the following statements is correct?
Sweden is the best example of a country with a pure socialist economy.
A GlobeScan poll found that the greatest support for the free market economy was found among the citizens of India.
The United States is a pure capitalist economy.
Many countries in the world have a purely communist economy.
Under socialism, smaller businesses are often privately owned.

Question 25

Stanislav lives in a country where all the factors of production are owned by the government. The economic system in his country is
communism.
capitalism.
mixed market.
socialism.
it is not possible to tell with the information provided.

Question 26

Which of the following is correct with regard to the communist economic system?
The centralized planning emphasis on capital equipment and military hardware has caused declines in the prices of consumer goods.
Government ownership of the means of production is only temporary.
Most government-operated enterprises are very efficient because of central planning.
Overall production expands rapidly because of central planning.
The government owns and operates all sources of production.

Question 27

A GlobeScan poll showed that the highest support for the free market economy was found in
Japan.
China.
U.S.
Canada.
Brazil.

Question 28

An economy that has a strong central government that controls labour, capital, and natural resources and has few entrepreneurs is a
market economy.
command economy.
free-enterprise economy.
capitalist economy.
oligopolistic economy.

Question 29

What is the difference between a command economy and a market economy?
A command economy is found only in communist countries, while a market economy is found only in capitalist countries.
A command economy is more efficient than a market economy.
A market economy gives greater "life satisfaction" to people.
A command economy relies on centralized government control of the factors of production, while in a market economy supply and demand determine production and allocation decisions.
There really are no significant differences between a command economy and a market economy.

Question 30

The economic system in which producers and consumers control production and allocation decisions through supply and demand is called
a centrally planned economy.
privatization.
a market economy.
communism.
socialism.

Question 31

Which country has a command economy?
Australia
Japan
Canada
Germany
Cuba

Question 32

Command economies are most likely to be found in
the newly emerging economies of southeast Asia.
communist and socialist nations.
western European countries.
Japan.
Canada and the U.S.

Question 33

What can we say about the number of business-to-business (B2B) transactions compared to the number of business-to-consumer (B2C) transactions?
There are fewer B2B transactions because there are fewer businesses than there are consumers.
There are more B2B transactions than B2C transactions.
The number of B2B transactions must equal the number of B2C transactions.
It is not possible to determine whether the number of B2B transactions is less than or more than the number of B2C transactions because of industrial secrecy.
It is not possible to determine whether the number of B2B transactions is less than or more than the number of B2C transactions because of data limitations.

Question 34

Socialism is best described as
a kind of command economy in which the government owns and operates all industries.
a kind of command economy in which the government owns and operates large critical industries.
an economy that is free from any regulation or planning.
a market economy in which markets decide what, when, and how much to produce.
an economic system with elements of a market economy, but not a planned economy.

Question 35

Which of the following is correct with regard to the issue of different economic systems?
There is a general consensus that command economies are more efficient than market economies because centralized government can consider a wider range of economic factors when decisions are made.
In recent years, more and more countries have rejected communism and embraced more market-based economies.
Socialism is the most extensive command economic system because government owns all the major industries.
A GlobeScan poll of 20 000 people in 20 different countries showed that support for a free market economy was most pronounced in Singapore.
All of these are correct.

Question 36

John lives in a country where producers and consumers control production, and where allocation decisions are made through the mechanism of supply and demand. John lives in a country with a _________ economy.
privatized
socialist
communist
market
it is not possible to tell with the information given

Question 37

Communism and socialism are
basic forms of market economies.
becoming more popular.
extreme opposites.
basic forms of command economies.
identical forms.

Question 38

Natural resources as a factor of production for mining are a practical consideration when a mining company considers
the ease with which ore could be mined.
the number of miners available to mine the ore.
the amount of capital required to build the mine.
the profit that can be made from mining the ore.
the number of customers who want to buy ore.

Question 39

Which of the following is correct with respect to the factors of production?
The "labour" factor recognizes that it is importance to have labour unions to offset the power of management.
"Capital" is a more important factor than "labour."
As the Canadian economy has become larger and more complex, the importance of entrepreneurs has declined.
Unlike land, labour, and capital, information can be shared without it being diminished.
Human resources is an example of the "natural resources" factor.

Question 40

A major drawback to communism as an economic system is that
government control of the factors of production is only temporary.
people don't like communism.
individuals contribute according to their ability.
individuals receive economic benefits according to their needs.
production of goods and services is inefficient because of the lack of a profit incentive.

Question 41

Which of the following is correct regarding the Competition Act?
The Act prohibits agreements between companies that reduce competition.
The government has to prove that agreements between companies actually reduce competition.
Recent changes to the Act have reduced fines for misleading marketing practices because it has been shown that these fines don't have any effect.
Surveys of business executives show that they think the Competition Bureau is actually quite quick in approving or denying merger requests.
All of these

Question 42

Why are sales taxes called regressive taxes?
Because food and drugs are often exempt
Because the more one makes, the lower the rate of sales tax that is applied to one's purchases
Because poorer people pay a higher percentage of their income than richer people
Because it applies to sales taxes
Because they discourage the purchase of some products

Question 43

Market economies are considered beneficial for small businesses because they
provide small businesses with lots of government assistance and protection.
provide a central economic plan within which small businesses can easily prosper.
protect small businesses from the power of large corporations.
allow small businesses to fail.
allow the business to do whatever it wants as long as it doesn't break the law.

Question 44

The Canada Consumer Product Safety Act replaces the
Hazardous Products Act.
Food and Drug Act.
Weights and Measures Act.
Advertising and Packaging Act.
Textile Labeling Act.

Question 45

Why are income taxes called progressive taxes?
Because poorer people spend proportionally more on necessities
Because the more one makes, a greater proportion of additional amounts is paid in income taxes
Because the more one makes, the higher the income tax rate that is applied to one's entire income
Because they increase total consumption
Because the more one progresses in a company, the more one pays in income taxes

Question 46

Jose is from Guatemala. He is unsure about the nature of business in Canada. You point out that a typical business in Canada operates the same as a typical business in
The People's Republic of China.
Poland.
Peru.
England.
Japan.

Question 47

In which economic system will profit motivate entrepreneurs to use resources efficiently and to produce goods that consumers want?
A centrally planned economy
Communism
A market economy
Socialism
A barter economy

Question 48

Sandy is responsible for monitoring compliance with regulations in her company. She needs to know that the important areas of government regulation are
protecting competition and upholding environmental regulations.
protecting social goals, upholding environmental regulations, and protecting shareholder rights.
protecting competition, protecting consumers, and upholding environmental regulations.
protecting competition, protecting consumers, protecting social goals, and protecting the environment.
protecting shareholder rights, and following business law.

Question 49

The federal government sold the Lester B. Pearson International Airport in Toronto to a group of entrepreneurs, which then set up the Greater Toronto Airports Authority. This sale is an example of
socialism.
freedom of choice.
entrepreneurship.
deregulation.
privatization.

Question 50

Madeline is responsible for answering questions about what her company can do under the Competition Act. Which one of the following is allowed under the Act?
The return of surpluses by credit unions to their members
Pricing products unreasonably low to eliminate competition
Forming a merger or a monopoly that lessens competition
Refusing to sell to a retailer who will, in turn, sell the product significantly below the suggested retail price
Giving selective allowances and rebates to cover advertising expenses to specific retailers

Question 51

Which of the following is correct with regard to the Competition Act?
A company can cut prices in one region of Canada while selling at a higher price everywhere else even if this substantially lessens competition.
Businesses are generally satisfied that the Competition Bureau moves fairly quickly in approving or denying merger plans.
Pyramid selling is permitted as long as participant know they are involved in a pyramid selling scheme and they may not make any money from the scheme.
The mere existence of a conspiracy is assumed to be proof that competition has been reduced.
All of these are correct.

Question 52

The role of government in our economic system includes all of the following except
customers.
innovators.
competitors.
regulators.
taxation agents.

Question 53

What is the difference between privatization and deregulation?
Research shows that deregulation yields higher economic performance than privatization.
Privatization only works in socialist countries.
Privatization means converting companies that are in financial trouble into government-controlled organizations.
The trend toward both privatization and deregulation slowed somewhat after the financial crisis of 2008.
There is no real difference between the two ideas.

Question 54

Which of the following is correct with respect to input and output markets?
In the input market, firms supply goods and services in response to demand on the part of households.
In the output market, firms buy resources from households, which then supply those resources.
Consumer buying patterns provide information that helps companies decide which products to produce.
Consumers are restricted in the companies they can work for.
Input and output markets exist only in communist countries.

Question 55

Which of the following is correct with respect to the issue of government taxation?
Progressive revenue taxes are harder on low-income people than on high-income people.
Revenue taxes are designed primarily to encourage people to buy certain kinds of goods and avoid buying other kinds.
Restrictive taxes prevent businesses from expanding.
Regressive revenue taxes are levied at the same rate regardless of a person's income.
All of the statements are correct.

Question 56

Canada is home to a(n) ________ economy.
mixed market
oligopolistic
socialist
market
command

Question 57

Market economies have all of the following characteristics, except that they
allow businesses to charge whatever they want for their products and services.
encourage entrepreneurship by offering profits as an incentive.
require government intervention in order to prosper.
rely on markets, not governments, to decide what, when, and for whom to produce.
allow customers free choice.

Question 58

Which of the following is correct with respect to mixed market economies?
They have features that are not found in either command or market economies.
As a result of the financial crisis of 2008, there is a trend toward increased government regulation of business in mixed market economies.
Very few countries have this type of system.
There is a trend toward increased government ownership of business in mixed market economies.
The mixed market economy is the best type of economic system.

Question 59

Which of the following is correct with respect to privatization?
The TNT Post Group in the Netherlands has been converted from private to government ownership.
Privatization is most likely to occur in communist countries.
Privatization has been a general trend during the last decade, but some countries are going in the opposite direction and pursuing nationalization instead.
Several companies have been nationalized in Canada in recent years.
The recession of 2008 accelerated the trend toward privatization.

Question 60

John has just received a rather handsome increase in salary, but he is upset because he feels that he should not be charged a higher rate of tax on this extra money. John is being taxed by a ________ tax system.
provincial
federal
progressive
restrictive
regressive

Question 61

Incentive programs are designed to
encourage families to have more babies.
encourage businesses to locate in economically depressed parts of the country.
create "corporate welfare bums."
encourage families to move to depressed parts of the country.
reimburse businesses for making unprofitable but necessary products.

Question 62

If a semiconductor firm is opening a new manufacturing facility in Canada and is looking for ways to better influence government policy in their industry, it could
hire a lobbyist or join a trade association.
obtain a government contract for supplies and equipment.
ensure worker safety in its business facilities.
keep its manufacturing plants in Canada.
obtain export business for the new facility.

Question 63

The law of demand states that
producers will offer more of a product as the price falls.
demand and supply meet at an equilibrium point.
buyers will purchase more of a product as the price falls.
producers will offer more of a product as the price rises.
buyers will purchase more of a product as the price rises.

Question 64

Which law forbids most monopolies in Canada?
Consumer Protection Act
Lobbying Act
Fair Trade Act
Competition Act
Environmental Contaminants Act

Question 65

The GST is considered a regressive tax because
food and drugs are often exempt.
the more a person makes, the lower the rate of sales tax applied to that person's purchase.
it is unfair.
poorer people pay a higher percentage of their income than richer people.
it is designed to discourage the purchase of certain products.

Question 66

When the government of Canada prevented the merger of the Royal Bank and the Bank of Montreal, this was an application of the ________ Act.
Fair Trade
Consumer Protection
CRTC
Competition
Bank Act

Question 67

Nutrition labeling and claims are intended to provide consumers with information to aid them in the selection of a healthy diet aimed at reducing risk of premature illness and death due to diet-related chronic diseases. Insufficient labeling is a violation of which act?
Food and Drug Act
Weights and Measures Act
Advertising and Packaging Act
Textile Labeling Act
Consumer Protection Act

Question 68

The term "demand" refers to
the stock exchange.
the willingness and ability of buyers to purchase a product or service.
the willingness and ability of businesses to sell a product or service.
the willingness of buyers to accept high prices for high quality goods.
the willingness of government to sell goods and services.

Question 69

What is "demand"?
The idea that buyers will purchase more of a product as the price drops
The price and quantity of a product at which the quantity demanded is equal to the quantity supplied
The idea that producers will offer more of a product as the price rises
The willingness and ability of buyers to purchase a product
None of these

Question 70

Which of the following statements is most correct with respect to government in its role as regulator?
A business complains that the Competition Bureau is too slow in approving or denying merger plans.
The government really has very little power in its role as regulator.
Because of the move toward deregulation, federal and provincial governments have become less and less involved in regulating business activity.
The main areas of government regulation of business are achieving social goals, protecting consumers, and providing assistance to small business firms.
Studies have shown that government regulation reduces the effectiveness of business firms.

Question 71

The law of supply states that
buyers will purchase more of a product as the price falls.
demand and supply meet at an equilibrium point.
producers will offer more of a product as the price rises.
producers will offer more of a product as the price falls.
buyers will purchase more of a product as the price rises.

Question 72

The price at which the quantity of goods demanded and the quantity of goods supplied are equal is referred to as
the going rate.
the point-of-no-return price.
the market price.
the better price.
the best price.

Question 73

When Labatt Brewing sales representatives gave money to store operators who agreed to not lower prices on some brands of beer, the company was prosecuted for engaging in
bait-and-switch advertising.
resale price maintenance.
a pyramid scheme.
selling mislabeled products.
a violation of the Beer Act.

Question 74

With regard to demand and supply in a market economy, it is correct to say that
demand refers to the price that consumers are willing to pay for a product.
the demand and supply schedule indicates how many units of a given product will be sold at different prices.
demand and supply curves are used to determine the demand and supply schedule.
equilibrium prices are only rarely achieved.
if a seller tried to increase profits by making more products to sell, the result would be a more efficient use of resources because economies of scale would be achieved.

Question 75

The federal Lobbying Act requires lobbyists to
register with the Department of Consumer and Commercial Relations.
contribute a minimum of $10 000 to political campaigns.
attend at least two sessions in the House of Commons each year.
report on their communications with designated public office holders.
meet with members of Parliament on a regular basis.

Question 76

Kristine discovered that when she dropped the price of her paintings, more people were asking her to create paintings for them. Kristine is experiencing
the law of supply and demand.
market price variations.
the law of supply.
economic justice.
the law of demand.

Question 77

What is "supply"?
The idea that sellers will sell more of a product as the price increases
The price and quantity of a product at which the quantity demanded is equal to the quantity supplied
The idea that buyers will want less of a product as the price increases
The willingness and ability of producers to offer a good or service for sale
None of these

Question 78

Ian, the owner of 5-for-1 Pizza, has noticed that when he increases the price of his pizzas by $2.00, the number of pizzas that he sells drops by 30 percent. Ian has discovered
the law of supply and demand.
the supply curve.
the demand curve.
the law of supply.
the law of demand.

Question 79

Suppose that several microelectronics manufacturers want to set up a trade association. They need to know that trade associations are allowed to do all of the following except
allocate markets for their members.
influence the kind of legislation that is passed.
conduct training programs relevant to the industry.
arrange trade shows.
publish newsletters featuring articles on new products.

Question 80

The three main ways in which business can influence government policy are
advertising, lobbyists, and trade associations.
political contributions, letters to the editors of newspapers, and advertising.
advertising, trade associations, and political contributions.
trade associations, lobbyists, and letters to the editors of newspapers.
lobbyists, political contributions, and advertising.