BUS 121 Midterm Study Sheet What occurs when the quantity demanded exceeds the quantity supplied? A) demand deficit B) surplus C) equilibrium point D) shortage E) supply schedule Explanation: D) When demand exceeds supply, there will not be enough goods available to meet the demand for them. This is known as a shortage.Page Ref: 12
Which of the following does NOT represent a degree of competition in a private enterprise system? A) oligopoly B) socialism C) monopoly D) perfect competition E) monopolistic competition Explanation: B) Competition is the economic condition in which there are certain demands that can be met by more than one business, so businesses in the same industry compete for the same resources or customers.
Page Ref: 14
Which of the following exists when an industry or market has only one producer? A) competition B) oligopoly C) monopoly D) communism E) socialism C) A monopoly is a market or industry in which there is only one producer that supplies a certain product. Monopolies in the United States economy are either discouraged or regulated so that prices are not too high. Page Ref: 16
Which term refers to the pattern of short-term ups and downs in an economy? A) aggregate output B) business cycle C) standard of living D) balance of payments E) demand and supply schedule B) The business cycle is the short-term pattern of economic expansions and contractions.
Page Ref: 17
Which term refers to the total quantity and quality of goods and services that people living in an economic system can purchase? A) business cycle B) demand and supply schedule C) standard of living D) aggregate output E) consumer price index C) The standard of living is the total quantity and quality of goods and services that people can purchase with the currency used in their economic system. Standard of living is determined by economic conditions such as inflation and purchasing power.
Page Ref: 17
Which term refers to the total value of all goods and services produced within a given period by a national economy? A) standard of living B) aggregate output C) gross domestic product D) gross national produce E) purchasing power parity C) Gross domestic product is the total value of all goods and services produced within a given period by a national economy through domestic factors of production. Page Ref: 17
Which of the following measures indicates the prices of typical products purchased by American consumers living in urban areas? A) GDP per capita B) standard of living C) consumer price index D) purchasing power parity
E) Big Mac index C) The consumer price index is a measure of the prices of typical products purchased by consumers living in urban areas. It is used as a comparative standard, to tell whether inflation or deflation is occurring, for example. Page Ref: 22
What does productivity measure? A) the total value of all goods and services produced by a national economy B) how much a system produces with the resources needed to produce it C) how much output is necessary to produce a certain level of demand D) the standard of living relative to purchasing power parity E) how much gross national product results from inputs of labor Explanation: B) Productivity is a measure of economic growth that compares how much a system produces with the resources needed to produce it. Page Ref: 19
What is the economic condition characterized by widespread increased prices without increased purchasing power? A) unemployment B) inflation C) expansion D) deflation E) recession Explanation: B) Inflation is the condition that occurs when widespread price increases are present throughout an economic system. This happens when the amount of money in the economy grows faster than the amount of products available to buy.
Page Ref: 21-22
What is the condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate? A) unemployment B) stability C) deflation D) inflation E) oversupply Explanation: B) Economic stability happens when the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate. When this occurs, there is neither inflation nor deflation.
Page Ref: 23
What are profits? A) total money taken in by a corporation B) increases in income from year to year C) increases in a corporation's stock price D) revenue generated by goods and services E) difference between revenues and expenses Explanation: E) Profits represent the difference between an organization's revenues and its expenses; profits are the goal of most businesses and allow people to open and expand businesses. Page Ref: 4
How do top managers best demonstrate a commitment to ethical business practices? A) by adopting written codes of ethics B) by reading employees' e-mails C) by decentralized decision-making practices D) by cooperating with other companies E) by monitoring employees' Web searches Explanation: A) A common approach to formalizing top management commitment to ethical business practices is the adoption of a written code of ethics.Page Ref: 36
Which statement about codes of ethics is FALSE? A) Fewer and fewer companies are adopting codes of ethics. B) Codes of ethics are determined by company managers. C) Some ethical responses can be learned through experience. D) Social responsibility involves providing quality products and pricing products fairly. E) Core principles and values should remain a constant characteristic of a company. Explanation: A) The number of companies adopting an ethical code has risen sharply in the last thirty years.Page Ref: 37
Which of the following statements is most likely to be included in a company's code of ethics? A) We reward high achievers. B) We strive for domination in the market. C) We achieve our objective by raising capital. D) We believe in our company brand. E) We reward all valuable contributions. Explanation: E) This statement reflects a strong corporate value and a high ethical standard. Page Ref: 37-38
What term refers to the way in which a business tries to balance its commitments to groups and individuals in its social environment? A) business ethics B) socialization C) stakeholder consciousness D) social responsibility E) corporatization Explanation: D) Social responsibility refers to the way in which a business tries to work responsibly within its social environment by benefiting all stakeholders. Page Ref: 38
How often should an organization change its objectives? A) constantly B) infrequently C) every year D) every decade E) never Explanation: B) The objectives of a business should change only occasionally.
Page Ref: 38
What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization? A) primary agents of interest B) social auditors C) senior managers D) organizational stakeholders E) local communities Explanation: D) Organizational stakeholders are the groups, individuals, and organizations that are directly affected by the practices of an organization. Page Ref: 39
Advertising for which of the following products is most likely to have ethical ramifications? A) swimwear B) sporting equipment C) decaffeinated beverages D) books E) alcohol Explanation: E) Laws regulate the advertisement of such items as underwear, condoms, alcohol, and firearms.
Page Ref: 45
What must every corporation do in maintaining and reporting its financial status? A) purchase stocks on margin B) use creative accounting practices C) support increased stock prices D) aim to maximize predicted profit margins E) conform to generally accepted accounting principles Explanation: E) Every corporation must conform to generally accepted accounting practices. This ensures that all corporations are held to the same standards for assessing their financial information. Page Ref: 47
Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks? A) identity theft B) a margin purchase C) insider trading D) collusion E) a guarantee Explanation: C) Insider trading is the illegal practice of using special knowledge about a firm for profit or gain.
Page Ref: 47
What does the Sarbanes-Oxley Act of 2002 require a chief financial officer to do? A) prevent insider trading B) engage in strategic management C) guarantee the accuracy of financial reporting D) hire a forensic accountant E) oversee the implementation of ethical standards Explanation: C) The Sarbanes-Oxley Act of 2002 requires that the chief financial officer personally guarantee the accuracy of financial reporting.
Page Ref: 47
If a firm hides responsibility for wrongdoing, what type of stance are they taking toward social responsibility? A) responsible B) obstructionist
C) accommodative D) proactive E) moderate Explanation: B) An obstructionist stance toward social responsibility means a company will do as little as possible to solve social or environmental prob.Page Ref: 48
Which entity is defined as independent and has little influence on its market? A) corporation B) joint venture C) small business D) partnership E) government agency Explanation: C) A small business is defined as independent with marginal influence in its market.
Page Ref: 60
Entrepreneurs often have more than one goal for starting a business and becoming self-employed. Which of the following reasons is the LEAST common goal of entrepreneurs? A) to seek independence and be their own boss B) to earn a comfortable living for a period of time C) to grow and expand a current business D) to meet community or social obligations E) to provide for their financial needs Ex: D) Some entrepreneurs may start a business with the goal of meeting community or social obligations, but the other goals are far more common.
Page Ref: 64
What is the name of the document in which an entrepreneur summarizes his or her business strategy for a proposed new venture? A) success chart B) director's guideline C) financial blueprint D) business plan E) balance sheet Explanation: D) A business plan is a summary of the business strategy for the proposed new venture and how that strategy will be implemented.
Page Ref: 65
What is the most significant disadvantage of owning a franchise? A) start-up costs B) operational guidelines C) difficulty obtaining loans D) double taxation E) competition Explanation: A) Start-up costs are considered one of the most significant disadvantages of owning a franchise.Page Ref: 66
Which of the following is the most significant disadvantage of starting a business from scratch? A) having few employees B) inability to franchise C) having competition D) coming up with new ideas E) the risk of failure Explanation: E) There is much greater risk involved in starting a new business from scratch than in acquiring an already-existing business.
Page Ref: 67
What is the most important source of money for new business start-ups? A) banks B) the SBA C) personal resources D) government grants E) venture capital Explanation: C) Most individuals starting a new business have to rely on personal finances to do so.
Page Ref: 67
Who constitutes the membership of SCORE? A) retired executives B) venture capitalists C) company officers D) commercial lenders E) successful entrepreneurs Explanation: A) The Service Corps of Retired Executives is made up of retired executives who volunteer to help entrepreneurs start new businesses.
Page Ref: 68
Which of the following represents the fastest-growing segment of minority business ownership?
A) African Americans B) Asians C) Hispanics D) Pacific Islanders E) Europeans A) The number of businesses owned by African Americans increased by 48 percent during the most recent five-year period for which data is available. Page Ref: 69
Which of the following types of businesses is most common in the United States? A) sole proprietorships B) general partnerships C) cooperatives D) corporations E) limited partnerships Explanation: A) About 72 percent of all U.S. businesses are sole proprietorships. Page Ref: 72
What percent of a business is the least amount that a master partner will retain? A) 10 percent B) 25 percent C) 50 percent D) 75 percent E) 80 percent Explanation: C) The master partner retains at least 50 percent ownership and runs the business, while minority partners have no management voice. Page Ref: 74
In which business sector are cooperatives still important? A) manufacturing B) automotive C) public utilities D) agriculture E) health care Explanation: D) Although cooperatives make up only a minor segment of the U.S. economy, the role of cooperatives is important in agriculture. Page Ref: 74
What are products that are created abroad and then transported and sold domestically? A) dumped goods B) exports C) imports D) buy backs E) domestic goods Explanation: C) Imports are goods that are brought in from other countries.Page Ref: 89
What are products that are created domestically and transported for sale abroad? A) dumped goods B) exports C) imports D) buy backs E) domestic goods Explanation: B) Exports are goods that are made in a country and sold in another country. Page Ref: 89
Which country is the world's largest marketplace and most stable economy? A) the United States B) Canada C) Germany D) Japan E) China Explanation: A) The United States is the dominant trading partner in North America.Page Ref: 90
Which country dominates the Pacific Asia region economically? A) South Korea B) China C) Indonesia D) Japan E) Taiwan Explanation: D) Japan's large automakers and industry help it dominate the Pacific Asia region. Page Ref: 91
Which organization most likely has the greatest impact on Asian countries?