Question 1

A critical element of entrepreneurship (as opposed to managerial skills)is
A)leadership skills.
B)risk taking.
C)technology.
D)political skills.

Accepted Answer

Risk taking is a critical element of entrepreneurship as entrepreneurs are willing to take calculated risks in order to pursue new opportunities, innovate and disrupt the market. This distinguishes entrepreneurship from managerial skills, which focuses on operational efficiency and managing resources. Leadership, technology and political skills, although important, are not the defining element of entrepreneurship.

Question 2

Which of the following is the best example of the "command" process?
A)United Airlines buys Northwest Airlines.
B)Striking auto workers force General Motors to shut down its factories.
C)Banks raise their fees on late payments by credit card holders.
D)The FCC requires local telephone companies to provide access to their local networks before being able to offer long distance service.

Accepted Answer

The FCC is a government regulatory agency that has the authority to command local telephone companies to provide access to their local networks before they can offer long distance service to customers. This is a clear example of the "command" process, where a higher authority uses its power to force compliance from a lower level actor. The other options may involve elements of negotiation, competition, or market forces, but are not as clear-cut examples of the "command" process.

Question 3

From the standpoint of a soft drink company the question of "What goods and services should be produced?" is best represented by which of the following decisions?
A)whether or not to hire additional workers
B)whether or not to increase its advertising
C)whether or not to shut down selected manufacturing facilities
D)None of the above are examples.

Accepted Answer

The question of "What goods and services should be produced?" relates to decisions about the types of products a company decides to offer, not about hiring workers, advertising, or shutting down facilities.

Question 4

Managerial economics is best defined as
A)the study of economics by managers.
B)the study of the aggregate economic activity.
C)the study of how managers make decisions about the use of scarce resources.
D)All of the above are good definitions.

Accepted Answer

Managerial economics is focused on the decision-making process of managers in allocating scarce resources in order to achieve their organization's goals. While it is related to the broader field of economics, it is specifically concerned with the application of economic principles and methods to the management of a business or organization. Choice A is too narrow, as managerial economics is not just the study of economics by managers, but rather the application of economic principles by managers. Choice B is too broad, as it includes all economic activity, whereas managerial economics is specifically focused on decision-making within a business or organization. Choice D is incorrect, as it incorrectly includes choice A and choice B as valid definitions, when both are only partially correct.

Question 5

What factors lead to competitive advantage for a firm?

Accepted Answer

The answer of What factors lead to competitive advantage for...

Question 6

Which of the following is the best example of how the question of "what goods and services to produce?" is answered by the command process?
A)government subsidies for windmill energy production
B)laws regarding equal opportunity in employment
C)government allowance for the deduction of interest payments on private mortgages
D)government regulations concerning the dumping of hazardous waste

Accepted Answer

The government's decision to provide subsidies for windmill energy production indicates that it has commanded for more production of this good.

Question 7

What economic conditions are relevant in managerial decision making?

Accepted Answer

The answer of What economic conditions are relevant in managerial...

Question 8

Which of the following is the best example of "how goods and services should be produced?"
A)complying with the technical specifications in the production of an aircraft
B)the production of jet aircraft for the air force or for a commercial airline
C)the use of additional workers versus the use of machines in the production of goods
D)the production of a new manufacturing facility

Accepted Answer

The question of "how goods and services should be produced" refers to the method of production, including the choice between labor-intensive or capital-intensive processes. Option C directly addresses this by comparing the use of additional workers versus machines, making it the best example of considerations on how to produce goods and services.

Question 9

Opportunity cost is best defined as
A)the amount given up when choosing one activity over all other alternatives.
B)the amount given up when choosing one activity over the next best alternative.
C)the opportunity to earn a profit that is greater than the one currently being made.
D)the amount that is given up when choosing an activity that is not as good as the next best alternative.

Accepted Answer

Opportunity cost is the value of the next best alternative that must be foregone in order to pursue a certain action. Therefore, option B is the correct definition of opportunity cost. Option A is similar but not precise, as opportunity cost refers to the specific alternative that is foregone, not all alternatives. Option C is unrelated, and option D is incorrect, as opportunity cost is only concerned with the value of the next best alternative.

Question 10

Which of the following is the best example of opportunity cost?
A)a company's expenditures on a training program for its employees
B)the rate of return on a company's investment
C)the amount of money that a company can earn by depositing excess funds in a money market fund
D)the profit that a company forgoes when it decides to drop one product line in favor of another one

Accepted Answer

Opportunity cost refers to the benefits that you forgo when you choose one alternative over another. In this case, the profit that the company forgoes when it decides to drop one product line in favor of another one is the opportunity cost.

Question 11

Which of the following is not considered as a factor of production?
A)money
B)machinery and equipment
C)land
D)unskilled labor

Accepted Answer

Money is not considered as a factor of production because it is not used to produce goods or services directly. It is used as a medium of exchange to buy factors of production and goods and services. Factors of production include land, labor, capital (such as machinery and equipment), and entrepreneurship.

Question 12

Scarcity is a condition that exists when
A)there is a fixed supply of resources relative to the demand for the product.
B)there is a large demand for a product.
C)resources are not able to meet the entire demand for a product.
D)All of the above

Accepted Answer

Scarcity occurs when resources are limited and cannot meet the entire demand for a product, leading to the need for allocation and prioritization.

Question 13

In the text,the key question in the "economics of a business" is
A)whether the need to grow revenues is being met.
B)should the firm be in the business in which it is operating.
C)whether the firm faces rising labor costs.
D)can the firm affect its market share.

Accepted Answer

The text states that the key question in the "economics of a business" is whether a firm should be in the business in which it is operating. This speaks to the fundamental question of a firm's viability and sustainability in its chosen industry or market. The other options (A, C, and D) are potentially relevant factors in a business's economics, but they are not the primary question at the heart of the matter.

Question 14

Managerial economics is best defined as the economic study of
A)how businesses can make the most profits.
B)how businesses can decide on the best use of scarce resources.
C)how businesses can operate at the lowest costs.
D)how businesses can sell the most products.

Accepted Answer

Managerial economics is concerned with the application of economic concepts and analysis to solve practical problems faced by businesses in decision-making regarding the allocation of scarce resources to achieve their objectives, such as maximizing profits, minimizing costs, or providing the best products to customers. Therefore, option B is the correct answer, while the other options only represent partial perspectives of managerial economics.

Question 15

The best definition of economics is
A)how choices are made under conditions of scarcity.
B)how money is used.
C)how goods and services are produced.
D)how businesses maximize profits.

Accepted Answer

Economics is the study of how people make choices under conditions of scarcity. Scarce resources mean that people have to make choices about what goods and services to produce and consume. Economics helps to explain how people make these choices and how these choices affect society as a whole. Money, production of goods and services, and business profits are all important aspects of economics, but they are ultimately tied to the fundamental issue of scarcity and the choices that people make.

Question 16

Select the group that best represents the basic factors of production.
A)land,labor,capital,entrepreneurship
B)land,labor,money,management skills
C)land,natural resources,labor,capital
D)land,labor,capital,technology

Accepted Answer

The group that best represents the basic factors of production is land, labor, capital, and entrepreneurship. These are the four main inputs needed to produce goods and services in an economy. Land refers to natural resources, labor refers to human effort and skills, capital refers to tools, equipment, and infrastructure used in production, and entrepreneurship refers to the ability to bring all of these factors together and organize them in a way that creates value. Money, management skills, and technology are important, but they are not considered basic factors of production.

Question 17

Which of the following is the best example of "what goods and services should be produced?"
A)the use of a capital intensive versus a labor intensive process of manufacturing textiles
B)the production of SUVs versus the production of sub-compact cars
C)the manufacturing of computer workstations in China or in India
D)the leasing versus the purchasing of new capital equipment

Accepted Answer

The decision between producing SUVs or sub-compact cars represents a choice of what goods should be produced, as both are consumer goods that serve a similar purpose (transportation) but have different features and appeal to different segments of the market. The other options all relate to production processes or capital management, which are more related to how goods can be produced efficiently rather than what goods should be produced.

Question 18

Which of the following is the best example of the "traditional process"?
A)commercial bank mergers
B)minimum age limits for the purchase of alcoholic beverages
C)auctioning U.S.Treasury bills
D)colleges and universities give admissions preferences to children of alumni

Accepted Answer

The "traditional process" refers to practices that have been carried on through generations or have historical precedence. Giving admissions preferences to children of alumni (legacy admissions) is a practice that has been part of many colleges and universities for generations, making it a clear example of a traditional process.

Question 19

Which of the statements below best illustrates the use of the market process in determining the allocation of scarce resources?
A)"Let's make this product because this is what we know how to do best."
B)"We should consider shifting to products where we can earn even more money."
C)"Everyone is opening video stores,why don't we?"
D)"We can't stop making this product.This product gave our company its start."

Accepted Answer

This statement illustrates the use of the market process because it suggests that the company should consider shifting to products where they can earn more money. This indicates that the company is assessing market demand and potential profits in order to allocate resources more efficiently. The other statements do not necessarily consider market demand or potential profits and do not demonstrate a market-oriented allocation of resources.

Question 20

The economic concept of "opportunity cost" is most closely associated with which of the following management considerations?
A)market structure
B)resource scarcity
C)product demand
D)technology

Accepted Answer

Opportunity cost refers to the cost of the alternative forgone when making a decision. It is most closely associated with resource scarcity, as resources are limited and choosing to use them in one way means sacrificing their use in another way.

Quiz 1: Introduction

A critical element of entrepreneurship (as opposed to managerial skills) is

Which of the following is the best example of the "command" process?

From the standpoint of a soft drink company the question of "What goods and services should be produced?" is best represented by which of the following decisions?

Managerial economics is best defined as

What factors lead to competitive advantage for a firm?

Which of the following is the best example of how the question of "what goods and services to produce?" is answered by the command process?

What economic conditions are relevant in managerial decision making?

Which of the following is the best example of "how goods and services should be produced?"

Opportunity cost is best defined as

Which of the following is the best example of opportunity cost?

Which of the following is not considered as a factor of production?

Scarcity is a condition that exists when

In the text,the key question in the "economics of a business" is

Managerial economics is best defined as the economic study of

The best definition of economics is

Select the group that best represents the basic factors of production.

Which of the following is the best example of "what goods and services should be produced?"

Which of the following is the best example of the "traditional process"?

Which of the statements below best illustrates the use of the market process in determining the allocation of scarce resources?

The economic concept of "opportunity cost" is most closely associated with which of the following management considerations?