Chapters 1, 2, 5 Essay

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Which of the following scenarios would best exemplify Adam Smith’s view of best serving the interests of society?
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Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for them.
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Which of the following is not a feature of laissez faire capitalism?
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Guaranteed income
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In Adam Smith’s view, which of the following is not the role of government in business?
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Regulating business activity
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When consumers spend their money to purchase Apple iPhones or computers with an Intel processor, or when they discontinue buying such items as compact discs, they are telling resource owners
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what to produce.
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For the U.S. government to provide services, it collects revenue from
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both households and businesses in various forms of taxes.
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The government uses tax dollars to
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purchase resources and products needed to provide services.
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In a socialist economy, key industries owned by the government include all except
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food production.
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Which of the following is uncharacteristic of a socialist economy?
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All capital and capital goods are privately owned.
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The nationalization of key industries in countries such as Sweden and India is indicative of a(n) ____ economy.
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socialist
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All of the following are characteristics of communist countries such as Cuba except
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an adequate supply of consumer goods.
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Which of the following statements is false?
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Increased productivity can lead to higher manufacturing costs.
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Which of the following would not be included in the gross domestic product of the United States?
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Value of McDonald’s sales for their Tokyo locations
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Which of the following is false in regard to the unemployment rate?
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A nation benefits from unemployment due to a lower level of wages required to be paid by employers.
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All except ____ was a part of the U.S. federal government’s stimulus plan.
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Create a more extensive physical infrastructure
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Which of the following is not a characterization of a depression?
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two or more consecutive three-month periods of GDP decline
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The Federal Reserve uses ____ when it lowers the interest rate charged to banks on short-term loans.
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monetary policy
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Business ethics
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is the application of moral standards to business situations.
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The study of the morality of choices made by people is known as
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ethics.
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You are the executive vice president for Cooper Tire, the sixth largest U.S. tire maker. You have the responsibility to locate land for a new distribution center in Mississippi, and you own over 1,000 acres of land near one site in Tupelo. This could create for you
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a conflict of interest.
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When medical research indicated that a high-fiber diet might help reduce one’s risk of colon cancer, a few producers of fiber cereals suggested in their advertisements that if you eat fiber cereal, you will not get cancer. This is an example of
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unethical communications.
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All of the following are factors that affect the level of ethical behavior in an organization except
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demographic factors.
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Publix, a southeastern grocery store chain, has signs saying that tips are not accepted and employees are all informed of this policy. However, many of the baggers commonly accept tips from customers anyway and they often compare to see who makes the most. The factor affecting the ethical behavior of Publix’s employees is
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social.
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At Victoria’s Secret, managerial approval is required whenever an employee makes a purchase at the store using an employee discount. Which factor affecting ethical behavior is Victoria’s Secret seeking to control?
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Opportunity
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What is probably the most effective way for a company to encourage ethical behavior?
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Develop and enforce a written code of ethics for the organization.
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As a result of the Bhopal incident, in which a toxic gas leak killed thousands of people, leading officials at Union Carbide have dedicated themselves to operating their business ethically. Ways in which the company can encourage ethical behavior include all of the following except
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requiring that ethical behavior be profitable.
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Informing the press or government officials about unethical practices within one’s organization is called
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whistle-blowing.
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When faced with an ethical conflict, a manager should always
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think about his or her own ethics; the company’s ethics; and the interest of employees, stockholders, and customers.
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Social responsibility
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is costly but provides tremendous benefits to society and the business.
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Dorothy worked at a meat packing plant during the 1920s. What would she have been most surprised to see happening at the plant?
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Employees earning vacation time
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Caveat emptor
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is a Latin phrase meaning “let the buyer beware.”
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Before the 1930s, most government involvement in day-to-day business was aimed at
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protection of the free-market system.
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The economic model of social responsibility was developed in a period when the primary concern of firms was
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short-run profits and survival.
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By establishing Ronald McDonald Houses, temporary lodging for individuals with seriously ill family members, McDonald’s has committed itself to more than just shareholder wealth maximization. The corporation’s active role in improving societal conditions suggests that it is responsive to which of the following arguments?
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Social responsibility promotes environmental stability and long-run profitability.
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If Casio were to buy out all other calculator manufacturers, what consumer right would be at stake?
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The right to choose
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One problem affirmative action programs have encountered is
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that not all business people favor such programs.
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What have the courts ruled about quotas as a part of affirmative action programs?
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Courts have ruled quotas unconstitutional but commended their purpose.
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Ethics is the study of right and wrong and of the morality of the choices we make.
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True
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For those who like dealing with people, small business is the place to be.
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True
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Statistically, one can expect about two out of every three new businesses to fail within six years of their founding.
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True
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The SBA is a private organization rather than a government agency.
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False
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John Wells, an African-American small business owner, might be eligible for a grant from the Minority Business Development Agency.
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True
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A license to operate an individually owned business as though it were part of a chain is a franchise.
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True
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About one-third of franchised businesses fail during the first two years of operation.
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False
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A small business is all of the following except
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dominant in its field.
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Which of the following organizations would be considered a small business?
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Wholesaler with 50 employees
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What is the primary reason that so many new businesses fail?
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Mismanagement resulting from lack of business know-how
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Approximately what percentage of the jobs in the United States do small businesses provide?
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over 50 percent
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Which of the following would least likely be started as a small business?
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Electricity company
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Which of the following is not a reason for starting a small business?
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Desire for a guaranteed financial return
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Which of the following statements is correct?
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The risk of failure for women-owned businesses is lower than average
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Steven Jobs and David Wozniak, the founders of Apple Computer, Inc., were creative, free-spirited individuals who decided that being corporate underlings was not what they wanted from a career. They had an innovative idea for a product and desired to create their own business based on this idea. All of the following are factors that could have led them to go into business except
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the low risk and high rewards inherent in entrepreneurship.
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Which of the following statements is true regarding the profitability of new businesses?
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It may take several years for a new business to begin showing a profit.
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What is a common mistake that small-business owners make when their businesses begin growing?
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They overexpand without proper planning.
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Penicillin, airplanes, and air conditioning were all
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created by individual inventors and small companies.
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All of the following are advantages that small businesses have except
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greater potential for making a profit.
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About three-quarters of all small businesses are in the service industry.
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False
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Small businesses are typically managed by people who started and own them.
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True

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