Deck 1: The Dynamics of Business and Economics

Question 1

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

Answer 1

True
Explanation: Financial resources must be managed effectively if the business will succeed.

Question 2

Owners always manage their businesses.

Answer 2

False
Explanation: Owners can manage the business themselves or hire employees to accomplish this task.

Question 3

Profit is what it costs to make and sell a product.

Answer 3

False
Explanation: Profit is the difference between what it costs to make and sell a product and what a customer pays for it.

Question 4

When purchasing,a consumer is actually buying a product's anticipated benefits and

A) satisfaction.
B) price.
C) costs.
D) productivity.
E) form.

Question 5

Briefly describe the goals of a business,especially the primary goal.

Question 6

Owners have little responsibility to provide funds for the operation of the business.

Question 7

Which of the following is not a product?

A) A Dell personal computer
B) A veterinarian's treatment of a pet's injuries
C) A lawyer's advice in a divorce case
D) A business profit
E) A checkup by a doctor

Question 8

If a business is to be successful in the long run,it must produce quality products,operate efficiently,and be

A) fun.
B) socially responsible.
C) hard working.
D) egalitarian.
E) transparent.

Question 9

Products have tangible attributes only.

Question 10

Customers,employees,and investors are examples of

A) entrepreneurs.
B) stockholders.
C) stakeholders.
D) entities.
E) organizations.

Question 11

Managers coordinate resources to achieve the firm's goals.

Question 12

According to the text,profit is the reward for business in exchange for the ____ taken in providing products.

A) expenses
B) time
C) energy
D) risks
E) markets

Question 13

The primary goal of business activities is profit.

Question 14

Nonprofit organizations such as Habitat for Humanity do not engage in management,marketing,or finance activities.

Question 15

____ is the primary goal of business.

A) Growth
B) Profit
C) IPO
D) Marketing
E) Strategy

Question 16

____ have both tangible and intangible characteristics.

A) Products
B) Services
C) Businesses
D) Stakeholders
E) Organizations

Question 17

Businesses differ from nonprofit organizations in that a business's focus is on

A) price.
B) goods.
C) profit.
D) organization.
E) plans.

Question 18

Businesses have the right to keep and use their profits as they choose,without limitations.

Question 19

The focus of all marketing activities is customer satisfaction.

Question 20

The goal of business is to earn

A) respect.
B) resources.
C) profits.
D) responsibility.
E) independence.

Question 21

Describe the relationship between management,marketing,finance,owners,employees,and customers.

Question 22

In a free-market system,the government regulates business.

Question 23

_________________ is the study of how resources are distributed for the production of goods and services within a social system.

A) Financial resources
B) Human resources
C) Economic systems
D) Communism
E) Economics

Question 24

In a capitalist system,individuals own and operate ____ businesses.

A) no
B) few
C) about half
D) many
E) the majority of

Question 25

A central issue of economics is how to fulfill an unlimited demand for goods and services in a world with limited resources.

Question 26

What are the people and activities of business? Define each group.

Question 27

All the following are factors of production used to make goods and services except

A) natural resources.
B) human resources.
C) customers.
D) capital.
E) financial resources.

Question 28

Factors of production are

A) resources used to produce goods and services.
B) fixed resources.
C) hard to find.
D) seldom in demand.
E) free to use.

Question 29

The functions of organizing,staffing,planning,and controlling are most closely associated with

A) employees.
B) customers.
C) managers.
D) stockholders.
E) accountants.

Question 30

Free-market capitalism and laissez-faire capitalism are essentially the same thing.

Question 31

Which of the following functions involves activities designed to provide goods and services that fulfill needs and desires of consumers?

A) Accounting
B) Engineering
C) Finance
D) Production
E) Marketing

Question 32

Advertising,personal selling,coupons,and sweepstakes are forms of _____.

A) publicity
B) promotion
C) marketing research
D) management activities
E) the marketing mix

Question 33

Most socialist nations are democratic.

Question 34

The group of people to whom the management activity most applies is

A) consumers.
B) owners.
C) bankers.
D) government regulators.
E) employees.

Question 35

When a business fails or does not make a profit,_______ have the most to lose.

A) customers
B) workers
C) managers
D) owners
E) consumers

Question 36

____ have the most to lose if the business fails to make a profit.

A) Employees
B) Owners
C) Banks
D) Customers
E) Accountants

Question 37

Capitalism is an economic system in which the government owns and operates basic industries while individuals own most other businesses.

Question 38

____ resources are also known as labor.

A) Economic
B) Human
C) Productive
D) Financial
E) Natural

Question 39

The function concerned with obtaining and managing money and using it effectively is called

A) management.
B) marketing.
C) finance.
D) production and operations.
E) personnel.

Question 40

Financial resources are also known as _______________.

A) capital
B) labor
C) barter
D) economics
E) exchange

Question 41

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 42

What are the three questions that all economic systems must answer? Who answers them under a communist system? A socialist system? A capitalist system?

Question 43

When businesses can promote different features of their products and consumers are willing to pay more for products containing the features they desire,the competitive environment is probably

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

Question 44

Agricultural commodities are usually sold under which competitive environment?

A) Monopoly
B) Monopolistic competition
C) Pure competition
D) Oligopoly
E) Modified competition

Question 45

When there is only one business providing a product in a given market,there exists

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

Question 46

In a socialist system,citizens are dependent on _________ for many goods and services.

A) the government
B) the people
C) businesses
D) supply and demand
E) suppliers

Question 47

____ is often called the father of capitalism.

A) Karl Marx
B) George Washington
C) Benjamin Franklin
D) Alan Greenspan
E) Adam Smith

Question 48

The _______ is the price at which the number of products that businesses are willing to supply equals the number of products consumers are willing to purchase at a point in time.

A) supply price
B) equilibrium price
C) demand price
D) demand curve
E) exact price

Question 49

The equilibrium price is represented by the point where a product's supply and demand curves intersect.

Question 50

In a socialist economic system,people are free to choose an occupation of their choice,but many people work in ___ jobs.

A) self-employed
B) government
C) high-paying
D) poverty-wage
E) part-time

Question 51

Equal distribution of income and social services is also referred to as

A) laissez-faire.
B) egalitarianism.
C) capitalism.
D) equality.
E) democracy.

Question 52

When Target has a sale on bed linens,

A) consumers will not demand more than normal.
B) the store will not supply more linens than it normally does.
C) consumers will demand more linens.
D) the manufacturer will halt production.
E) consumers will demand fewer linens than normal.

Question 53

When Apple introduced the iPad,the price of and demand for netbook and notebook computers were high.As a result,

A) other suppliers introduced competing products to take advantage of the demand.
B) consumers stopped buying netpads.
C) manufacturers stopped producing netpads.
D) competition was not allowed to enter the market.
E) the equilibrium price met supply.

Question 54

The American economic system is best described as _______ because the government regulates business to preserve competition and protect consumers and employees.

A) socialism
B) laissez-faire capitalism
C) modified capitalism
D) communism
E) business ownership

Question 55

___________ exists when there are many small businesses selling one standardized product.

A) Monopolistic competition
B) Oligopoly
C) Pure competition
D) Monopoly
E) Market structure

Question 56

____ relates to the number of goods and services that consumers are willing to buy at different prices at a specific time.

A) Supply
B) Demand
C) Elasticity
D) Equilibrium
E) Economics

Question 57

Monopolistic competition exists when there is only one producer of a product in a given market.

Question 58

A product's equilibrium price is constantly changing in response to changes in economic conditions,availability of resources,and degree of competition.

Question 59

Demand is the quantity of goods and services that consumers are willing to buy at different prices at a specific time.

Question 60

An oligopoly exists when there are many small businesses selling one standardized product.

Question 61

Increased unemployment can reduce consumer demand for goods and services,leading to

A) economic expansion.
B) inflation.
C) deflation.
D) a budget deficit.
E) recovery.

Question 62

What is an economic contraction,and what can it lead to?

Question 63

Economic contraction occurs when

A) spending increases.
B) spending declines.
C) jobs increase.
D) inflation decreases.
E) unemployment falls.

Question 64

A severe recession may turn into a depression.

Question 65

When a nation takes more from taxes than it spends,it has a budget deficit.

Question 66

________________ can be harmful if individuals' incomes do not increase at the same pace as rising prices because it reduces their buying power.

A) Deflation
B) Stagflation
C) Inflation
D) Economic expansion
E) Economic contraction

Question 67

Define competition,and describe the different forms it can take.

Question 68

Entrepreneurs risk their wealth,time,and effort to develop for profit an innovative product or way of doing something.

Question 69

Gross domestic product is the sum of all goods and services produced in a country during a year.

Question 70

A budget surplus,when a nation spends less than it takes in from taxes,is the opposite of a(n)

A) stagnant income.
B) budget deficit.
C) economic expansion.
D) balance of trade.
E) economic contraction.

Question 71

Countries measure the state of their economies to

A) determine whether they are expanding or contracting.
B) regulate wages and employment.
C) let other nations know the state of their economic health.
D) avoid taking corrective action.
E) control government spending.

Question 72

A continuing rise in prices over a period of time refers to

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

Question 73

The Industrial Revolution brought increasing prosperity and propelled the United States into a manufacturing economy.

Question 74

Define supply,demand,and equilibrium price,and explain their relationship with each other.

Question 75

Discuss the issues involved in measuring a country's economy.

Question 76

Advertising first made consumers aware of differences in products and prices in the marketing economy.

Question 77

Economic expansion occurs when

A) fewer goods and services are produced than consumers demand.
B) an economy is growing and people are spending more money.
C) a nation's standard of living drops quickly.
D) employment levels decline over time.
E) prices begin to rise and incomes begin to fall.

Question 78

Economic expansion occurs when an economy is growing and people are spending more money.

Question 79

After World War II,the United States became an agricultural economy.

Question 80

The standard of living rises because people have less money to spend.