Question 1

The Miller family owns and operates an interior decorating business.Henry installs hardwood floors and chair rails;Chloe reupholsters furniture and takes care of the finances;Charles designs and makes draperies and pillows;and Mary coordinates the overall color,look,and design.The process the Miller family uses to run its business is
A) specialization.
B) division of service.
C) the factory system.
D) the domestic system.
E) the barter system.

Accepted Answer

The Miller family has divided their tasks and responsibilities based on their individual skills and expertise, which is known as specialization. This division of labor allows them to work efficiently and produce high-quality products and services. The other options, such as division of service, factory system, domestic system, and barter system, do not accurately describe the process that the Miller family is using in their interior decorating business.

Question 2

Arthur Jones distributes rawhide to several different homes.In turn,each household produces a product such as satchels,belts,shoes,and boots,and then Arthur sells the finished goods.This represents a(n)
A) oligopoly.
B) domestic system.
C) system of specialization.
D) factory system.
E) barter system.

Accepted Answer

This scenario describes the domestic system, where raw materials are distributed to homes and finished goods are produced and sold through a decentralized network of households rather than in a central factory.

Question 3

The maker of Hanes pantyhose attempts to set its product apart from the competition.As a result,the company obtained some limited control over the price of its product.Achieving price control in this manner is known as
A) advertising.
B) distributional efficiency.
C) low-cost production.
D) niche marketing.
E) product differentiation.

Accepted Answer

The statement describes how Hanes attempted to set its product apart from the competition, which is an example of product differentiation. By doing so, the company obtained some limited control over the price of its product, which is a benefit of product differentiation. Therefore, the best choice is E - product differentiation.

Question 4

Henry Spring,a chef at a major restaurant in San Francisco,wants to start his own restaurant.He surveys the market,finds a suitable location,and calculates how much money he will need to lease the building and purchase the necessary equipment and supplies.Henry visits his banker and requests a loan.The money Henry will receive from the loan and the resources he will purchase with it are known as
A) capital.
B) profit.
C) revenue.
D) collateral.
E) stock.

Accepted Answer

Capital refers to the money or resources that a business owner invests in the business to start or expand it. In this scenario, Henry is requesting a loan to invest in his restaurant, which will provide him with the capital necessary to lease the building and purchase the necessary equipment and supplies. Therefore, the answer is A) capital.

Question 5

The production and operations manager at a large shoe factory in Lawrence,Massachusetts,notices that the total number of hours worked by production employees has increased 12 percent,while the number of pairs of shoes ready for shipping has dropped 6 percent this year over last year.This means
A) the inflation rate is unchanged.
B) the demand for shoes is decreasing.
C) the manager's calculations cannot be correct.
D) productivity has decreased.
E) the gross national product has increased by 6 percent.

Accepted Answer

The increase in hours worked and the decrease in pairs of shoes ready for shipping indicates a decrease in productivity, which could be due to a variety of factors such as inefficient processes, low employee morale, or equipment failures. Therefore, option D is the best choice. Options A, B, and E are not relevant based on the given information. Option C is not a valid assumption without further evidence.

Question 6

As Veronica Janneck and her friends prepare to graduate from college,they are faced with numerous job offers with starting salaries better than they could have imagined when they began college four years ago.Based on this information,which stage of the business cycle would the economy be in?
A) Depression
B) Peak
C) Recession
D) Trough
E) Recovery

Accepted Answer

The economy is likely at a peak, as high job offers and salaries suggest strong economic conditions and possibly the highest point before a downturn.

Question 7

During 2016,Just-the-One Jewelry had sales revenues of $1,500,000.This retailer also had expenses that totaled $800,000.What is the firm's profit or loss amount?
A) $2,300,000
B) $1,500,000
C) $800,000
D) $700,000
E) It is impossible to calculate profit or loss with the above information.

Accepted Answer

To calculate the profit or loss, we need to subtract the expenses from the revenues:

$1,500,000 (revenues) - $800,000 (expenses) = $700,000

Therefore, the profit or loss amount is $700,000, which is option D.

Question 8

Researchers just released the results of a study that shows eating fish at least four times a week dramatically decreases adults' risk of heart disease.What will likely result from this new information?
A) The demand for fish will decrease.
B) The supply of fish will decrease,causing a decrease in the price.
C) The demand for fish will increase at every price.
D) The demand for fish will decrease at every price.
E) The demand for fish will likely remain the same,but the market price will adjust.

Accepted Answer

The new information shows that eating fish four times a week reduces the risk of heart disease, which could potentially increase the demand for fish as consumers aim to improve their health. Therefore, the demand for fish will increase at every price.

Question 9

An executive at a U.S.steel company uses growth in gross domestic product as one way to develop trends in industry steel use,so he records GDP change for each year on a graph.However,the executive's figures are considerably higher than those of the staff economist,who also has drawn a graph.This difference is most likely the result of
A) measurement errors by the U.S.Bureau of the Census.
B) a decline in gross domestic product.
C) an increase in gross domestic product.
D) the economist adjusting the figures for the inflation rate.
E) a change in productivity.

Accepted Answer

The economist likely adjusted the figures for the inflation rate, while the executive did not. This would result in the executive's figures being higher, as inflation would make the GDP appear to be growing faster than it actually is.

Question 10

In the mid-1970s,American auto manufacturers produced big gas-guzzling cars and tried to sell them to consumers who needed fuel-efficient transportation.This happened because manufacturers
A) lost sight of consumers' needs.
B) attempted to satisfy consumers' needs.
C) followed consumers' wants too closely.
D) knew the economy would rise again.
E) did not expect a profit.

Accepted Answer

American auto manufacturers lost sight of consumers' needs by producing big gas-guzzling cars instead of fuel-efficient cars.

Question 11

Tim Hughes works at an institutional bakery and is paid a wage dictated by the government.He does not like his job but is not allowed other options.Tim must purchase necessities for his family at fixed prices.The country Tim lives in can be described as a ____ economy.
A) demand
B) command
C) market
D) free-enterprise
E) capitalist

Accepted Answer

The characteristics mentioned in the scenario (government-dictated wages and fixed prices for necessities) indicate that the country has a command economy, where the government controls the production and distribution of goods and services.

Question 12

Gabby is passionate about soccer and decides to open her own soccer sporting goods store.She invests her money,time,and effort into making the store a success.Gabby can be best described as a(n)
A) capitalist.
B) laborer.
C) corporate owner.
D) entrepreneur.
E) competitor.

Accepted Answer

Gabby is taking the initiative to start her own business in a field she is passionate about. This makes her an entrepreneur - someone who takes on financial risks to create their own business.

Question 13

​Weyerheuser owns vast acres of land in Washington State near Mt.Saint Helens where it grows trees for harvesting to make everything from lumber to build houses to newsprint for newspapers. Which of the following best represents some of the material resources of this business.
A) ​Trees,logging trucks,and paper mills.
B) ​Secretaries,loggers,and truckers.
C) ​Computers,cash,and desks.
D) ​Trees,loggers,and computers.

Accepted Answer

The material resources of this business are trees (for harvesting), logging trucks (for transportation), and paper mills (for processing). Secretaries, truckers, and computers are not material resources, and cash and desks are not directly related to the production process.

Question 14

William Welsh,a former Air Force pilot,decides to operate a helicopter tour company to provide customers with breathtaking views of the Rocky Mountains.He obtains a loan and purchases the necessary land,facilities,advertising,and five helicopters for his business.What important factor of production has he overlooked in creating his business?
A) Equipment
B) Capital
C) Labor
D) Entrepreneurship
E) Natural resources

Accepted Answer

While William Welsh has invested in essential equipment, facilities, and advertising, he has not considered the labor required for the helicopter tours. He will need to hire pilots, mechanics, and support staff to run his business successfully. Therefore, he has overlooked the important factor of production, which is Labor.

Question 15

Chris Okowo recently moved to the United States with many hopes and dreams.However,he realizes that economic freedom includes all of the following except the right to
A) guaranteed economic success.
B) use owned resources to produce a profit.
C) accept or reject any job offered.
D) sell a product at the price chosen.
E) buy any economic good or service producers sell.

Accepted Answer

Economic freedom does not guarantee guaranteed economic success, as there are inherent risks and uncertainties in any economic venture. Economic freedom only ensures the right to use owned resources to produce a profit, accept or reject job offers, sell products at chosen prices, and buy economic goods or services.

Question 16

Sherry Garcia begins her first job after graduating from college and starts putting money away in a savings account.She believes she has removed this money from the circular flow between buyers and sellers that she studied in Introduction to Business.Is Sherry correct?
A) Yes,by putting this money into a savings account,only she has access to the funds and they are no longer available to the circular flow.
B) No,even though she has saved this money,the bank will in turn invest the money back into the circular flow.
C) Yes,only direct investments into companies,such as purchasing ownership shares of that company,will put her savings back into the circular flow.
D) Yes,the circular flow focuses on businesses and government,and therefore Gail's savings have no impact on the circular flow.
E) No,because she earned this money from a company and because she paid taxes on it,it is always considered part of the flow.

Accepted Answer

Sherry is not entirely correct. By putting her money in a savings account, she is actually contributing to the circular flow. The bank uses the money to provide loans and other financial services to customers, which in turn creates spending and income for other businesses and individuals. The money is still circulating within the economy, even if it is not in Sherry's immediate possession.

Question 17

Matthew Brown decides to become a part owner of a corporation.As a part owner,he expects to receive a profit as payment because he has assumed the risk of
A) serious inflation eroding the purchasing power of his investment.
B) being paid before the suppliers and employees are paid.
C) losing his home,car,and life savings.
D) losing the money he has invested in the corporation and not receiving profits.
E) the company giving all of the profits to local communities.

Accepted Answer

As a part owner of a corporation, Matthew Brown assumes the risk of losing the money he has invested in the corporation and not receiving profits. Therefore, his expectation of receiving a profit is based on assuming this risk. Options A, B, C, and E are not directly related to the risk assumed by a part owner and the expectation of receiving profits.

Question 18

Fred Sanchez owns and operates his own small automobile repair shop.However,the prices he can charge are fixed,and he rents his land and building from the government.Most of his friends work for industries owned by the government.Fred's country is most likely a(n)____ economy.
A) market
B) communist
C) socialist
D) industrialized
E) capitalist

Accepted Answer

A socialist economy is characterized by a government ownership of major industries and resources, as well as fixed prices and controlled rents. Fred's inability to set his own prices and ownership of his building by the government suggests that he is operating in a socialist economy.

Question 19

A local retailer calls its customers when it receives merchandise that they may be interested in,provides individual service to each customer,provides forms and phone numbers for complaints and comments,and has a 100 percent satisfaction guarantee.Which objective is this business working hard to accomplish?
A) Making a profit
B) Achieving low employee turnover
C) Satisfying the needs of its customers
D) Increasing the owner's wealth
E) Keeping up with the current technology

Accepted Answer

The business is working hard to accomplish customer satisfaction by providing individual service, notifying them of merchandise, providing complaint and comment options, and having a guarantee.

Question 20

A furniture manufacturer like Thomasville would be concerned with the producer price index because it
A) is related to the real gross domestic product.
B) measures prices that manufacturers must pay for lumber and other raw materials used in the manufacturing process.
C) tracks the cost of housing and transportation.
D) is published daily.
E) measures the effect of interest rates on the economy.

Accepted Answer

The producer price index measures the average change over time in the selling prices that domestic producers receive for their goods and services. This index is important to a furniture manufacturer because it measures the prices that manufacturers must pay for lumber and other raw materials used in the manufacturing process.

Quiz 1: Exploring the World of Business and Economics

Arthur Jones distributes rawhide to several different homes.In turn,each household produces a product such as satchels,belts,shoes,and boots,and then Arthur sells the finished goods.This represents a(n)

The maker of Hanes pantyhose attempts to set its product apart from the competition.As a result,the company obtained some limited control over the price of its product.Achieving price control in this manner is known as

The production and operations manager at a large shoe factory in Lawrence,Massachusetts,notices that the total number of hours worked by production employees has increased 12 percent,while the number of pairs of shoes ready for shipping has dropped 6 percent this year over last year.This means

As Veronica Janneck and her friends prepare to graduate from college,they are faced with numerous job offers with starting salaries better than they could have imagined when they began college four years ago.Based on this information,which stage of the business cycle would the economy be in?

During 2016,Just-the-One Jewelry had sales revenues of $1,500,000.This retailer also had expenses that totaled $800,000.What is the firm's profit or loss amount?

Researchers just released the results of a study that shows eating fish at least four times a week dramatically decreases adults' risk of heart disease.What will likely result from this new information?

In the mid-1970s,American auto manufacturers produced big gas-guzzling cars and tried to sell them to consumers who needed fuel-efficient transportation.This happened because manufacturers

Tim Hughes works at an institutional bakery and is paid a wage dictated by the government.He does not like his job but is not allowed other options.Tim must purchase necessities for his family at fixed prices.The country Tim lives in can be described as a ____ economy.

Gabby is passionate about soccer and decides to open her own soccer sporting goods store.She invests her money,time,and effort into making the store a success.Gabby can be best described as a(n)

Weyerheuser owns vast acres of land in Washington State near Mt.Saint Helens where it grows trees for harvesting to make everything from lumber to build houses to newsprint for newspapers. Which of the following best represents some of the material resources of this business.

Chris Okowo recently moved to the United States with many hopes and dreams.However,he realizes that economic freedom includes all of the following except the right to

Sherry Garcia begins her first job after graduating from college and starts putting money away in a savings account.She believes she has removed this money from the circular flow between buyers and sellers that she studied in Introduction to Business.Is Sherry correct?

Matthew Brown decides to become a part owner of a corporation.As a part owner,he expects to receive a profit as payment because he has assumed the risk of

Fred Sanchez owns and operates his own small automobile repair shop.However,the prices he can charge are fixed,and he rents his land and building from the government.Most of his friends work for industries owned by the government.Fred's country is most likely a(n) ____ economy.

A furniture manufacturer like Thomasville would be concerned with the producer price index because it