Deck 1: The Foundations of Business

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

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

Question 5

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

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

Question 6

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

Question 7

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 8

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

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

Question 9

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

Question 10

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

Question 11

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

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

Question 12

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

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

Question 13

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

Question 14

Museums and almost all colleges and universities are not-for-profit organizations.

Question 15

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

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

Question 16

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

Question 17

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

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

Question 18

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

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

Question 19

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

Question 20

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

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

Question 21

To start a business, you must have all of the following except _____?

A) an owner or owners
B) customers
C) resources
D) goods to sell

Question 22

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

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

Question 23

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) designing controls
C) directing a function
D) distributing services

Question 24

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

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

Question 25

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 26

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 27

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 28

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 29

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

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

Question 30

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

Question 31

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

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

Question 32

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 33

All of the following are best categorized as _____: the U.S. Postal Service, museums, and almost all colleges and universities.

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

Question 34

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 35

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

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

Question 36

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

A) custom sign maker
B) lumber mill
C) insurance company
D) mobile home manufacturer

Question 37

What are the external forces that influence business activities?

Question 38

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

Question 39

As a functional area of business, what does the accounting section do?

Question 40

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) staff
D) managerial

Question 41

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

Question 42

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) mixed market
C) centrally planned
D) fiscally sound

Question 43

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 44

The planned market system was espoused by Adam Smith in his book The Wealth of Nations, published in 1776.

Question 45

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

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

Question 46

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 47

Which of the following question(s) does an economist attempt to answer?

A) How should goods and services be produced?
B) How much money will it take to produce these products?
C) How many products can we produce in one week?
D) All of these.

Question 48

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

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

Question 49

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

Question 50

Generally speaking, workers in socialist economies (such as those of France and Sweden) work _____ hours and have _____ vacations.

A) more / shorter
B) more / longer
C) fewer / longer
D) fewer / shorter

Question 51

_____ 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) Accountants
C) Economists
D) Entrepreneurs

Question 52

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

Question 53

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

Question 54

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

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

Question 55

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

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

Question 56

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

Question 57

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

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

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

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

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

Question 60

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

Question 61

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

A) Equilibrium
B) Demand
C) Supply
D) Competition

Question 62

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

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

Question 63

A demand curve shows the relationship between the:

A) price of a product and the quantity that consumers are willing to buy.
B) price of a product and the quantity that producers are willing to sell.
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 64

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

Question 65

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

Question 66

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 67

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

Question 68

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

Question 69

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

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

Question 70

_____ 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 71

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

Question 72

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) gross product
D) equilibrium price

Question 73

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

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

Question 74

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

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

Question 75

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

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

Question 76

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

Question 77

A supply curve shows the relationship between the:

A) price of a product and the quantity that customers are willing to buy
B) price of a product and the quantity that producers are willing to sell
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 78

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

Question 79

How do economists study the interactions between households and businesses?

Question 80

What is the free market system?