Deck 1: The Foundations of Business

Question 1

Fast-food chains that have eliminated Styrofoam containers reflect the desire of owners to be good corporate citizens.

Answer 1

True

Question 2

_____ involve(s)planning,organizing,directing,and controlling a company's resources so that it can achieve its goals.

A)Human resources
B)Management
C)Economics
D)Consumerism

Answer 2

B

Question 3

Ultimately,the goal of any business is to satisfy the needs of its owner(s).

Answer 3

False

Question 4

Because Jenny Craig's bank provides payment services,loan and insurance products,investments,credit cards,and online banking,it is a _____ company.

A)management
B)service
C)goods
D)not-for-profit

Question 5

As a producer and seller of athletic shoes,apparel,and equipment,Nike sells _____.

A)supplies
B)goods
C)services
D)gross domestic products

Question 6

Ultimately,the goal of any business is to satisfy the needs of its _____.

A)employee
B)customers
C)owners
D)creditors

Question 7

The difference between the revenue that a company brings in from selling goods and services and the cost of generating this revenue is called _____.

A)profit
B)gross margin
C)accounts receivable
D)cost of goods sold

Question 8

While financial accountants prepare financial statements to help users both inside and outside of the organization,managerial accountants prepare reports for internal users only.

Question 9

A _____ is any activity that provides goods or services to consumers for the purpose of making a profit.

A)value exchange
B)business
C)service
D)transaction

Question 10

Which of the following is not a characteristic of a business?

A)provides goods and/or services to customers
B)establishes goals and meets them in an efficient manner
C)provides society with social or educational services without concern for profits
D)helps the economy by employing people

Question 11

One of the primary roles of management is investing money back into the business.

Question 12

As a functional area of business,_____ measures,summarizes,and communicates financial and managerial information and advises other managers on financial matters.

A)accounting
B)finance
C)operations
D)marketing

Question 13

All the activities needed to operate a business can be divided into the three functional areas of accounting,operations,and marketing.

Question 14

External forces play a role in determining whether more people or fewer people eat at fast-food restaurants.

Question 15

A good way to accumulate profits is to supply something that can be sold for much more than it costs to produce.

Question 16

Which of the following is an example of a service company?

A)lumber mill
B)insurance company
C)Nike
D)mobile home manufacturer

Question 17

Museums and most colleges and universities are not-for-profit organizations.

Question 18

Managerial accountants prepare financial statements to help users,both inside and outside of the organization,assess its financial strengths.

Question 19

A business is any activity that provides goods or services to consumers for the purpose of making a profit.

Question 20

This week,Billy Bob's Barbeque had sales of $4,000.Employees were paid $1,000;food costs were $1,500;and rent was $500.Profit for the week was (select one)

A)$4,000
B)$3,000
C)$2,000
D)$1,000

Question 21

When they assess the success of plans and decisions and take corrective action when it's needed,managers are _______.

A)managing a business cycle
B)directing a function
C)distributing services
D)designing controls

Question 22

When a fast-food chain responds to environmental concerns by eliminating Styrofoam containers,it shows a desire to be a ______.

A)resource manager
B)free enterprise producer
C)good corporate citizen
D)consumer advocate

Question 23

The activities needed to operate a business can be divided into a number of _____.

A)fiscal policies
B)economic indicators
C)functional areas
D)business cycles

Question 24

A _____ accountant prepares information,such as reports on the cost of materials used in the production process,for internal use only.

A)financial
B)marketing
C)managerial
D)staff

Question 25

When people have more discretionary money to eat out at restaurants and cafeterias,it's a sign that the _____ is strong.

A)gross domestic product
B)supply chain
C)economy
D)government

Question 26

Mataya is good at summarizing and communicating financial and other information to Jesse and the other restaurant managers.Which functional area is her specialty?

A)accounting
B)finance
C)marketing
D)operations

Question 27

Soup, Salad, & Sandwich is a regional chain of restaurants in the northeast that provides dine-in, carry-out, and catering services. Owners Jesse and Mataya Peña currently operate six locations and are in the process of opening a new restaurant in another state. Their operation is quite successful and appeals to health-conscious consumers, busy moms, and executives in a hurry. Staying open longer hours, enlarging the menu, and expanding the scope of the business are among the many goals set by the Peñas. They want to follow a traditional business model in reaching their goals.

-The Peñas hire a manager for each restaurant and assign specific goals and responsibilities.Each manager will perform each of the traditional management functions except _____.

A)staffing
B)organizing
C)directing
D)auditing

Question 28

Every business must have one ____,whose primary role is to infuse money into the business.

A)owner
B)employee
C)supplier
D)customer

Question 29

_____ involve(s)the design and management of the processes that transform resources into goods or services.

A)Marketing
B)Operations
C)Finance
D)Ownership

Question 30

Economists study the interactions between households and businesses and look at the ways in which the factors of production are combined to produce the goods and services that people need.

Question 31

Soup, Salad, & Sandwich is a regional chain of restaurants in the northeast that provides dine-in, carry-out, and catering services. Owners Jesse and Mataya Peña currently operate six locations and are in the process of opening a new restaurant in another state. Their operation is quite successful and appeals to health-conscious consumers, busy moms, and executives in a hurry. Staying open longer hours, enlarging the menu, and expanding the scope of the business are among the many goals set by the Peñas. They want to follow a traditional business model in reaching their goals.

-Because the Peñas are following a traditional business model,they will engage which of the following functional areas?

A)investment counseling
B)marketing
C)research and development
D)focus groups

Question 32

Generally speaking,economic systems can be divided into planned and free market systems.

Question 33

Good _____ management is particularly important when a company is first formed because new businesses usually need to borrow start-up money.

A)financial
B)accounting
C)operations
D)marketing

Question 34

All of the following are best categorized as _____: Harvard University,the American Red Cross and American Institute of Certified Public Accountants.

A)natural monopolies
B)nonprofits
C)intermediaries
D)cultural institutions

Question 35

Weight Off,a local weight-loss clinic,maintains a clientele of more than 200 busy executives who travel frequently and need specialized diet and exercise regimes.The activities needed to operate this business include all of the following except _____.

A)research and development
B)management
C)marketing
D)finance

Question 36

Soup, Salad, & Sandwich is a regional chain of restaurants in the northeast that provides dine-in, carry-out, and catering services. Owners Jesse and Mataya Peña currently operate six locations and are in the process of opening a new restaurant in another state. Their operation is quite successful and appeals to health-conscious consumers, busy moms, and executives in a hurry. Staying open longer hours, enlarging the menu, and expanding the scope of the business are among the many goals set by the Peñas. They want to follow a traditional business model in reaching their goals.

-As part of their business plan,the Peñas identify their customers' needs,design products and services to meet those needs,and manage customer relationships.In this respect,they're engaged in _____.

A)marketing
B)finance
C)operations
D)all of these

Question 37

Businesses such as hospitals,insurance companies,financial institutions,and attorneys convert resources into _____ products.

A)tangible
B)secondary
C)intangible
D)operational

Question 38

The economic system with the highest level of government control is communism.

Question 39

Soup, Salad, & Sandwich is a regional chain of restaurants in the northeast that provides dine-in, carry-out, and catering services. Owners Jesse and Mataya Peña currently operate six locations and are in the process of opening a new restaurant in another state. Their operation is quite successful and appeals to health-conscious consumers, busy moms, and executives in a hurry. Staying open longer hours, enlarging the menu, and expanding the scope of the business are among the many goals set by the Peñas. They want to follow a traditional business model in reaching their goals.

-Soup,Salad,& Sandwich features all of the traditional business participants except _____.

A)owners
B)employees
C)shareholders
D)customers

Question 40

Asset-producing resources are the outputs used to produce inputs in a business.

Question 41

In a _____ economy,the government controls selected major industries,such as transportation and health care,while allowing individual ownership of other industries.

A)free market
B)centrally planned
C)fiscally sound
D)mixed market

Question 42

The economic system of a country is the means by which a society makes decisions about allocating resources to produce and distribute products.

Question 43

Generally speaking,economic systems can be divided into _____ and _____ systems.

A)management / service
B)financial / entrepreneurial
C)profit / nonprofit
D)planned / free market

Question 44

Supply is the quantity of a product that sellers are willing to sell at various prices.

Question 45

Among free market theorists,the principle of laissez-faire calls for government intervention to equalize the distribution of resources.

Question 46

_____ not only provide factors of production (or resources)but also consume goods and services.

A)Households
B)Suppliers
C)Nonprofits
D)Entrepreneurs

Question 47

_____ allocates the goods and services produced by government-run industries and tries to ensure that the resulting wealth is distributed equally.

A)Fiscal policy
B)Monetary policy
C)Free enterprise
D)Central planning

Question 48

The free market system was espoused by _____ in his book The Wealth of Nations.

A)Joseph Smith
B)Eli Whitney
C)Benjamin Franklin
D)Adam Smith

Question 49

Demand is the quantity of product that buyers are willing to purchase at various prices.

Question 50

Under a socialist economic system,the government owns all or most businesses.

Question 51

The term laissez-faire means that:

A)the government should regulate industries.
B)key industries should be owned by the government.
C)there should be limited intervention by the government in business activity.
D)the government should leave business activities to function according to the laws of economics.

Question 52

Among free market theorists,the principle of laissez-faire means _____.

A)leaving things alone
B)equalizing resources
C)forming natural monopolies
D)lengthening supply chains

Question 53

As factors of production -- equipment,buildings,vehicles,and cash are considered _____.

A)output
B)capital
C)consumer goods
D)operations

Question 54

_____ study the interactions between households and businesses and the ways in which the factors of production are combined to produce goods and services.

A)Marketers
B)Economists
C)Accountants
D)Entrepreneurs

Question 55

When government-owned businesses convert to private ownership,they go through a process called _____.

A)privatization
B)consumerization
C)socialization
D)domestication

Question 56

Previously communist economies,such as those of Eastern Europe,are becoming more mixed as they adopt capitalist characteristics and convert previously government-owned businesses to private ownership.

Question 57

In theory,a _____ economy is one in which the government owns all or most enterprises.

A)free market
B)communist
C)financial
D)socialist

Question 58

_____ is the study of the production,distribution and consumption of goods and services.

A)Marketing
B)Economics
C)Inflation
D)Consumerism

Question 59

A mixed market economy is one that relies on both goods? and service?producing businesses and is largely controlled by the government.

Question 60

When sellers supply more of the product than buyers are willing to purchase,a shortage is created.

Question 61

A demand curve shows the _____ of a product that will be demanded at different prices.

A)quality
B)output
C)quantity
D)scarcity

Question 62

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-Because it's set up to make profits while meeting people's needs,New Age stands to make larger profits when prices fluctuate.

Question 63

_____ refers to the quantity of a product that buyers are willing to purchase at various prices.

A)equilibrium
B)supply
C)competition
D)demand

Question 64

A supply curve shows the relationship between the price of a product and the quantity that consumers are willing to buy.

Question 65

Generally speaking,we find products more attractive at higher prices because we believe that other people find value in them.

Question 66

When we plot a supply curve and a demand curve for apples on one graph,the point at which the two points intersect is the _____.

A)stable price
B)consumer price index
C)equilibrium price
D)gross product

Question 67

_____ refers to the quantity of a product that sellers are willing to sell at various prices

A)supply
B)demand
C)equilibrium
D)competition

Question 68

When sellers supply more of the product than buyers are willing to purchase,a ______ is created.

A)shortage
B)surplus
C)supply and demand schedule
D)demand

Question 69

In marketing,supply and demand interact to create a(n)_____price-the price at which buyers are willing to purchase the amount that sellers are willing to sell.

A)gross domestic
B)optimal
C)equilibrium
D)consumer

Question 70

Having plotted both the supply curve and the demand curve for a drug on one graph,New Age executives can determine its equilibrium price.At this point,all patients will be equally able to pay for the drug regardless of the quantity supplied by the company.

Question 71

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-An exception to the New Age demand curve may occur if diabetes patients are willing to pay the price for an effective new drug regardless of the supply that New Age makes available.

Question 72

The equilibrium price is a point at which buyers' demand for a product and sellers' supply of it are in balance.

Question 73

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-New Age's customers will typically be willing to buy more of a product when prices are coming down and less when they're on the rise.

Question 74

A demand curve shows the relationship between the:

A)price of a product and the quantity that producers are willing to sell.
B)price of a product and the quantity that consumers are willing to buy.
C)income of consumers and the quantity of a product that consumers are willing to buy.
D)income of consumers and the quantity of a product that producers are willing to sell.

Question 75

Businesses are more willing to sell a product when the price _____ and less willing to sell it when prices _____.

A)rises / fall
B)rises / rise
C)falls / rise
D)falls / fall

Question 76

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-In researching the quantity of medicines that customers are willing to purchase at various prices,New Age management will actually be researching demand.

Question 77

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-New Age will be more willing to develop new products when prices are on the rise and less willing when they're coming down.

Question 78

If the quantity demanded for cars is lower than the quantity supplied,we can expect that:

A)the price of cars will increase.
B)the price of cars will not change.
C)car manufacturers will increase their production of cars.
D)the price of cars will decrease.

Question 79

New Age Pharmaceuticals Inc. produces two limited lines of drugs—one for common maladies and one for rarer conditions and diseases. The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs. New Age management believes that the company’s research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs. Currently more than 4 million people use New Age products.

-In determining the quantity of drugs that it will be willing to sell at different prices,New Age management will actually be developing a demand curve.

Question 80

Scalpers sell tickets for such events as the World Series and the Super bowl for prices many times the amount printed on the tickets.This situation is an example of which of the following conditions?

A)Market in equilibrium
B)Surplus causing an increase in market price
C)Shortage causing an increase in market price
D)Market in which the quantity demanded is less than the quantity supplied