question

If a company's sales are higher than its expenses, the company has earned what is known as revenue. True or False

answer

False

question

Material resources include sand, water, wood, dump trucks and computers. True or False

answer

True

question

The ____ for a particular product is the quantity that buyers are willing to purchase at each varying price. a. competition b. market price c. supply d. demand e. equilibrium

answer

d. Demand

question

Generally, the business cycle consists of four phases: the peak, recession, the trough, and recovery. True or False

answer

True

question

The health of a nation's economy is actually quite unrelated to the amount of interest consumers pay for homes, automobiles, and credit card purchases. True or False

answer

False

question

In a socialist economy, the distribution of goods and services - who gets what - is controlled by the government however some smaller businesses may be privately owned. True or False

answer

True

question

Approximately 70% of U.S. production consists of goods and services purchased by individuals for personal or household consumption True or False

answer

True

question

The "Invisible Hand" was a term coined by Adam Smith. True or False

answer

True

question

When a firm is lacking financing, inventory, or time, it is dealing with issues of scarcity. True or False

answer

True

question

A system of business where the key industries are owned and controlled by the government with private ownership of some business is known as capitalism. True or False

answer

False.

question

Approximately 45% of small businesses fail within the first seven years. True or False

answer

False

question

Service Economy

answer

An economy in which more effort is devoted to the production of services than tot he production of goods.

question

Free Enterprise

answer

Individuals are free to decide what to produce, how to produce it, and at what price to sell it

question

Productivity

answer

The average level of output per worker per hour

question

Gross Domestic Product (GDP)

answer

The Total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period.

question

Perfect (or Pure) competition

answer

The market situation in which there are many buyers and sellers of a product and no single buyer or seller is powerful enough to affect the price of that product.

question

Economics

answer

The study of how wealth (anything of value) is created and distributed

question

Deflation

answer

A general decrease in the level of prices

question

Consumer Products

answer

Goods and Services purchased by individuals for personal consumption.

question

Sustainability

answer

Creating and maintaining the conditions under which humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations.

question

Unemployment Rate

answer

The percentage of a nation's labor force unemployed at any time.

question

Monetary Policies

answer

Federal Reserve's decisions that determine the size of the supply of money in the nation and the level of interest rate.

question

Microeconomics

answer

The study of the decisions made by individuals and businesses

question

Discuss what you must do to be successful in the world of business.

answer

1. Have a dream—know what you want 2. Adapt to changes in the environment—work hard to turn your dreams into reality

question

Identify the ways to measure economic performance.

answer

1. Productivity 2. Economic Indicators

question

Examine the different phases in the typical business cycle.

answer

1. Recession 2. Depression 3. Monetary Policies

question

Sales Revenue

answer

Expenses + Profit

question

Profit

answer

What remains after all business expenses have been deducted from sales revenue.

question

Loss (negative profit)

answer

Results when a firm's expenses are greater than its revenues

question

Why study business?

answer

1. For help in choosing a career 2. To be a successful employee 3. To improve your management skills 4. To start your own business 5. To become a better informed consumer and investor

question

Tips for Studying Business

answer

? Prepare before you go to class. ? Read the chapter. ? Underline or highlight important concepts. ? Take notes. ? Apply the concepts. ? Practice critical thinking. ? Prepare for exams.

question

Business

answer

The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs

question

Types of Economic Systems

answer

1. Economics 2. Microeconomics 3. Macroeconomics 4. Economy

question

Macroeconomics

answer

The study of the national economy and the global economy.

question

Economy

answer

The system through which a society creates and distributes wealth.

question

Factors of Production

answer

resources used to produce goods and services 1. Land and natural resources 2. Labor 3. Capital 4. Entrepreneurship

question

Entreprenuer

answer

A person who risks time, effort, and money to start and operate a business

question

Differences of Economic Systems

answer

How they answer the four basic economic questions -What goods and services will be produced? -How will they be produced? -For whom will they be produced? -Who owns and controls the major factors of production?

question

Capitalism

answer

An economic system in which individuals own and operate the majority of businesses that provide goods and services Derived from Adam Smith's laissez-faire capitalism

question

Adam Smith's laissez-faire capitalism

answer

a society's best interests are served by individuals pursuing their own self-interest a) Creation of wealth is the concern of private individuals b) Resources used to create wealth must be privately owned c) Economic freedom ensures the existence of a free market economy. Businesses and individuals decide what to produce and buy; the market determines quantities sold and prices d) Limited role of government

question

Capitalism in the U.S.

answer

1. Mixed economy with elements of capitalism and socialism 2. Households -- Consumers of goods and services -- Resource owners of some factors of production 3. Businesses -- Produce goods and services to exchange for revenues (money) -- Use revenues to purchase factors of production 4. Governments -- In exchange for taxes, governments provide public services that would not be provided by business or would be produced only for those who could afford them

question

Command Economies

answer

1. Economic systems in which the government decides what will be produced, how it will be produced, who gets what is produced, and who owns and controls the major factors of production 2. Socialism --Key industries (e.g., transportation, utilities, and banking) are owned and controlled by the government --Small-scale private businesses may be permitted and workers may choose their own occupations --Production is based on national goals, and distribution is controlled by the state --Intent is the equitable distribution of income, elimination of poverty, social services to all who need them, elimination of the economic waste of capitalistic competition 3. Communism --All factors of production are owned and controlled by the government as proxy for ownership by all citizens --Production is based on centralized state planning to meet the needs of the state and not necessarily the needs of its citizens --The state dictates occupational choices and sets prices and wages --Intent is to create Karl Marx's concept of a classless society where all contribute according to their ability and receive benefits according to their needs.

question

Economic Indicators (EI)

answer

1. Gross Domestic Product (GDP) 2. Inflation 3. Deflation 4. Unemployment Rate 5.Consumer Price Index (CPI) 6. Producer Price Index (PPI)

question

Productivity

answer

The average level of output per worker per hour

question

Gross Domestic Product (GDP)

answer

The total value of all goods and services produced by all people within the boundaries of a country during a one-year period. (EI)

question

Inflation

answer

A general rise in the level of prices (EI)

question

Deflation

answer

A general decrease in the level of prices (EI)

question

Unemployment Rate

answer

Percentage of a nation's labor force unemployed at any time (EI)

question

Consumer Price Index (CPI)

answer

A monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area

question

Producer Price Index (PPI)

answer

An index that measures prices that producers receive for their finished goods

question

Common Measures Used to Evaluate a Nation's Economic Health

answer

1. Balance of Trade 2. Bank Credit 3. Corporate Profits 4. Inflation Rate 5. National Income 6. New Housing Starts 7. Prime Interest Rates

question

Balance of Trade

answer

The total value of a nation's exports minus the total value of its imports over a specific period of time

question

Bank Credit

answer

A statistic that measures the lending activity of commercial financial institutions

question

Corporate Profits

answer

The total amount of profits made by corporations over selected time periods

question

Inflation Rate

answer

An economic statistic that tracks the increase in prices of goods and services over a period of time; usually calculated on a monthly or annual basis

question

National Income

answer

The total income earned by various segments of the population, including employees, self-employed individuals, corporations, and other types of income

question

New Housing Starts

answer

The total number of new homes started during a specific time period

question

Prime Interest Rate

answer

The lowest interest rate that banks charge their most creditworthy customers

question

Business Cycle

answer

The recurrence of periods of growth and recession in a nation's economic activity.

question

Recession

answer

Two or more consecutive three-month periods of decline in a country's gross domestic product

question

Depression

answer

A severe recession that lasts longer than a recession

question

Monetary Policies

answer

Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates

question

Fiscal Policy

answer

Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending

question

Federal deficit

answer

A shortfall created when the federal government spends more in a fiscal year than it receives

question

National debt

answer

The total of all federal deficits

question

Types of Competition

answer

1. Perfect (or pure) competition 2. Monopolistic competition 3. Oligopoly 4. Monopoly

question

Competition

answer

Rivalry among businesses for sales to potential customers.

question

Perfect (or pure) competition

answer

The market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product a) Supply b) Demand c) Market Price (Equilibrium)

question

Supply

answer

The quantity of a product that PRODUCERS are willing to SELL at each of various prices

question

Demand

answer

The quantity of a product that BUYERS are willing to PURCHASE at each of various prices

question

Market Price (Equilibrium)

answer

The price at which the quantity demanded is exactly equal to the quantity supplied

question

Monopolistic competition

answer

A market situation where there are many buyers along with a relatively larger number of sellers who differentiate their products from the products of competitors

question

Product Differentiation

answer

The process of developing and promoting differences between one's products and all similar products

question

Oligopoly

answer

1. A market situation (or industry) in which there are few sellers (Ex. automobile manufacturers, car rental agencies, and farm implement industries) a) Sizable investments are required to enter into the market b). Each seller has considerable control over price c). The market actions of one seller can have a strong effect on competitors

question

Monopoly

answer

a market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry

question

Natural monopoly

answer

An industry requiring huge investments in capital and within which duplication of facilities would be wasteful and thus not in the public interest

question

Legal monopoly (limited monopoly)

answer

A monopoly created when a government entity issues a franchise, license, copyright, patent, or trademark protecting the owners of written materials, ideas, or product brands from unauthorized use by competitors

question

Standard of living

answer

A loose, subjective measure of how well off an individual or a society is mainly in terms of want satisfaction through goods and services

question

Early business development

answer

1. Barter System 2. Domestic System 3. Factory System 4. Specialization

question

Barter system

answer

A system of exchange in which goods or services are traded directly for other goods and/or services without using money

question

Domestic system

answer

A method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the merchant entrepreneur

question

Factory system

answer

A system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place

question

Specialization

answer

The separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals

question

Business Development in the 1900s

answer

1. Rapid growth of large industries (automobiles, steel, oil, chemical) and the mass production of consumer goods 2. The Roaring Twenties ended with the 1929 stock market crash 3. Government intervention became necessary to get the economy moving again 4. In the last part of the 1900s, a large number of business failures and declining stock values suggested larger economic problems to come

question

Major events that shaped the nation's economy between 1940 and 2000 include:

answer

1. WWII, the Korean War, and the Viet Nam War 2. Rapid economic growth and higher standard of living during the 1950s and 1960s 3. The social responsibility movement during the 1960s 4. A shortage of crude oil and higher prices for most goods in the mid-1970s 5. High inflation, high interest rates, and reduced business profits during the early 1980s 6. Sustained economic growth in the 1990s

question

E-Business

answer

the organized effort of individuals to produce and sell through the Internet, for a profit, products and services that satisfy society's needs--became an accepted method of conducting business

question

A New Century: 2000 and Beyond

answer

1. Technology becomes affordable 2. Growth of service businesses (Service Economy) 3. Although many economic indicators are strong, there is a feeling of pessimism, a large number of business failures, high unemployment, and terrorist threats

question

Current Business Environment

answer

The competitive, global, technological, and economic environments affect business today

question

cultural (or workplace) diversity

answer

differences among people in a workforce owing to race, ethnicity, and gender

question

invisible hand

answer

a term created by Adam Smith to describe how an individual's personal gain benefits others and a nation's economy

question

Market Economy

answer

an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices

question

Mixed Economy

answer

an economy that exhibits elements of both capitalism and socialism

question

social media

answer

the online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services

question

stakeholders

answer

all the different people or groups of people who are affected by an organization's policies, decisions, and activities

question

sustainability

answer

creating and maintaining the conditions under which humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations

question

The ability to deal effectively with individual employees as well as other managers and people outside the organization are known as conceptual skills

answer

False

question

The only current example of a command economy is capitalism

answer

False

question

Since we assume producers are rational people, we would expect them to offer more of a product at a higher price than to offer the product at a lower price.

answer

True

question

Bushels of corn, wheat, or barley that have no unique characteristics are part of a perfect competition market.

answer

True

question

When an economy is at its highest point and unemployment is low, the economy is in a peak period.

answer

True

question

Studies show that the incidence of innovation among small-business workers is ________ than among workers in large businesses.

answer

Significantly Higher

question

Airplanes manufactured by Boeing, cars manufactured by Nissan, and Kellogg's cereal are all examples of

answer

oligopolies

question

People do not simply buy goods and services to just own them; they buy goods and services to satisfy a specific need.

answer

True

question

Information is the resource that managers use to effectively combine human, financial, and material resources.

answer

True

question

Manufacturers in the auto industry operate in a monopoly setting.

answer

False

question

Microeconomics is the study of the economy of an entire nation as well as the global economy

answer

False

question

Best Buy, an electronics retailer, could be considered a marketing intermediary.

answer

True

question

Understand what is meant by business ethics.

answer

Ethics is the study of right and wrong and of the morality of choices. Business ethics is the application of moral standards to business situation

question

Identify the types of ethical concerns that arise in the business world.

answer

Ethical issues arise often in business situations out of relationships with investors, customers, employees, creditors, or competitors. Businesspeople should make every effort to be fair, to consider the welfare of customers and others within the firm, to avoid conflicts of interest, and to communicate honestly. 1. Fairness ; Honesty 2. Organizational Relationships 3. Conflict of Interests 4. Communications

question

Discuss the factors that affect the level of ethical behavior in organizations.

answer

Individual, social, and opportunity factors all affect the level of ethical behavior in an organization. 1-Individual factors include knowledge level, moral values and attitudes, and personal goals. 2-Social factors include cultural norms and the actions and values of co-workers and significant others. 3-Opportunity factors refer to the amount of leeway that exists in an organization for employees to behave unethically if they choose to do so.

question

Explain how ethical decision making can be encouraged.

answer

Governments, trade associations, and individual firms can establish guidelines for defining ethical behavior. 1- Governments can pass stricter regulations. 2- Trade associations provide ethical guidelines for their members. 3-Companies provide codes of ethics—written guides to acceptable and ethical behavior as defined by an organization—and create an atmosphere in which ethical behavior is encouraged. 4-An ethical employee working in an unethical environment may resort to whistle-blowing to bring a questionable practice to light.

question

Describe how our current views on the social responsibility of business have evolved

answer

In a socially responsible business, management realizes that its activities have an impact on society and considers that impact in the decision-making process. Before the 1930s, workers, consumers, and government had very little influence on business activities; as a result, business leaders gave little thought to social responsibility. All this changed with the Great Depression. Government regulations, employee demands, and consumer awareness combined to create a demand that businesses act in socially responsible ways.

question

Guidelines for Making Ethical Decisions

answer

1. Listen and learn 2. Identify the ethical issues. 3. Create and analyze options 4. Identify the best option from your point of view. 5. Explain your decision and resolve any differences that arise.

question

Two Views of Social Responsibility

answer

1-The basic premise of the economic model of social responsibility is that society benefits most when business is left alone to produce profitable goods and services. 2-According to the socioeconomic model, business has as much responsibility to society as it has to its owners. Most managers adopt a viewpoint somewhere between these two extremes.

question

Discuss the factors that led to the consumer movement and list some of its results.

answer

1. Environmental Protection 2. Product Performance 3. Safety

question

Six Basic Rights to Consumers

answer

1. Right to Safety 2. Right to be Informed 3. Right to Choose 4. Right to Be Heard 5. Right to Consumer Education 6. Right to Courteous Service

question

Analyze how present employment practices are being used to counteract past abuses.

answer

Legislation and public demand have prompted some businesses to correct past abuses in employment practices—mainly with regard to minority groups. Affirmative action and training of the hard-core unemployed are two types of programs that have been used successfully.

question

Describe the major types of pollution, their causes, and their cures.

answer

Water, Air, Land and Noise Industry has contributed to noise pollution and pollution of our land and water through the dumping of wastes, and to air pollution through vehicle and smokestack emissions. This contamination can be cleaned up and controlled, but the big question is: Who will pay? Present cleanup efforts are funded partly by government tax revenues, partly by business, and in the long run by consumers.

question

Business ethics is the application of legal and regulatory standards to business situations. True False

answer

False

question

Identify the steps a business must take to implement a program of social responsibility.

answer

1-A program to implement social responsibility in a business begins with total commitment by top management. 2-The program should be planned carefully, and a capable director should be appointed to implement it. 3-Social audits should be prepared periodically as a means of evaluating and revising the program. 4-Programs may be funded through price increases, reduction of profit, or federal incentives.1. Commitment of Top Executives 2. Planning 3. Appointment of a Director 4. The Social Audit

question

Cultural norms can play a part in a person's ethical or unethical behavior in the workplace. True False

answer

True

question

Regulations and laws were much stricter in the first quarter of the twentieth century than they are now. True False

answer

False

question

The Interstate Commerce Act was the first federal act to regulate business practices. True False

answer

True

question

A Latin phrase, caveat emptor, summarizes the vulnerable position that consumers were in the early 1900s

answer

True

question

The EPA is a federal agency charged with enforcing laws intended to protect the environment

answer

True

question

The EEOC has the power to investigate complaints of employment discrimination and can sue firms that practice discrimination.

answer

True

question

Misleading advertising in print or television is illegal as well as unethical.

answer

True

question

Which of the following government agencies issues guidelines on the use of labeling that advertisers have an obligation to follow? A. Fair Packaging and Labeling Act B. Clayton Antitrust Act C. Sherman Antitrust Act D. Federal Trade Commission E. Pure Food and Drug Act

answer

Federal Trade Commission

question

The _____________ investigates illegal trade practices

answer

Federal Trade Commission

question

For more than fifty years, women's salaries have consistently been only about ___ for each dollar earned compared to men's. A. 84 B. 82 C. 91 D. 77 E. 62

answer

D. 77

question

The Clean Air Amendments, the Water Pollution Control Act Amendment, and the National Environmental Policy Act were all instituted in the A. 1990s B. 1980s C. 1960s D. 1970s

answer

1970s

question

All of the following are arguments for increased social responsibility except: A. socially responsible decision making by firms can prevent increased government intervention, which would force businesses to do what they fail to do voluntarily. B. by helping resolve social issues, business can create a more stable environment for long-term profitability C. social problems affect society in general, so individuals businesses should not be expected to solve these problems. D. business is a part of our society and therefore cannot ignore social issues. E. business has the technical, financial, and managerial resources needed to tackle today's complex social issues.

answer

C. social problems affect society in general, so individuals businesses should not be expected to solve these problems.

question

All of the following are rights of the consumer bill of rights except A. The right to choose B. The right to be informed C. the right to personalized service D. the right to courteous service

answer

C. the right to personalized service

question

affirmative action program

answer

a plan designed to increase the number of minority employees at all levels within an organization

question

business ethics

answer

the application of moral standards to business situations

question

Caveat Emptor

answer

a Latin phrase meaning "let the buyer beware". In other words, "what you see, is what you get."

question

code of ethics

answer

a guide to acceptable and ethical behavior as defined by the organization

question

consumerism

answer

all activities undertaken to protect the rights of consumers

question

economic model of social responsibility

answer

the view that society will benefit most when business is left alone to produce and market profitable products that society needs. Managers who adopts this attitude, social responsibility is someone else's job. Social Responsibility becomes the problem of the government, various environmental groups, charitable foundations, and similar organizations.

question

Equal Employment Opportunity Commission (EEOC)

answer

a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it

question

Ethics

answer

the study of right and wrong and of the morality of the choices individuals make

question

hard-core unemployed

answer

workers with little education or vocational training and a long history of unemployment

question

minority

answer

a racial, religious, political, national, or other group regarded as different from the larger group of which it is a part and that is often singled out for unfavorable treatment

question

pollution

answer

the contamination of water, air, or land through the actions of people in an industrialized society

question

Sarbanes-Oxley Act of 2002

answer

provides sweeping new legal protection for employees who report corporate misconduct. The law deals with corporate responsibility, conflicts of interest, and corporate accountability.

question

Social Audit

answer

a comprehensive report of what an organization has done and is doing with regard to social issues that affect it

question

Social Responsibility

answer

the recognition that business activities have an impact on society and the consideration of that impact in business decision making

question

Socioeconomic model of social responsibility

answer

the concept that business should emphasize not only profits but also the impact of its decisions on society 1. Business is dominated by the corporate form of ownership and the corporation is a creation of society. If a corp doesn't perform as a good citizen, society can and will demand changes. 2. Many firms have begun to take pride in their social responsibility records, among them Starbucks Coffee, HP, Colgate/Palmolive, Coca Cola. 3. Many business people believe that it is in their best interest to take the initiatives in this area. The alternative may be legal action brought against the firm by some special interest group; in such a situation the firm may lose control of its activities.

question

whistle-blowing

answer

informing the press or government officials about unethical practices within one's organization

question

Factors Affecting Ethical Behavior

answer

Individual Social Opportunity

question

What is Social Responsibility good for business?

answer

Customers eventually find put which firms act responsibly and which do not.

question

Interstate Commerce Act (1887)

answer

First federal act to regulate business practices; provided regulation of railroads and shipping rates

question

Sherman Anti-trust Act (1890)

answer

Prevented monopolies or mergers where competition was endangered

question

Pure Food and Drug Act (1906)

answer

Established limited supervision of interstate sales of food and drugs

question

Meat Inspection Act (1906)

answer

Provided for limited supervision of interstate sales of meat and meat products

question

Federal Trade Commission Act (1914)

answer

Created the Federal Trade Commission to investigate illegal trade practices

question

Clayton Anti-Trust Act (1914)

answer

Eliminated many forms of price discrimination that gave large businesses a competitive advantage over smaller firms

question

Arguments for increased social responsibility

answer

1-Because business is a part of our society, it cannot ignore social issues. 2-Business has the technical, financial, and managerial resources needed to tackle today's complex social issues. 3-By helping resolve social issues, business can create a more stable environment for long-term profitability. 4-Socially responsible decision making by firms can prevent increased government intervention, which would force businesses to do what they fail to do voluntarily.

question

Arguments against social responsibility

answer

1-Business managers are responsible primarily to stockholders, so management must be concerned with providing a return on owners' investments. 2-Corporate time, money, and talent should be used to maximize profits, not to solve society's problems. 3-Social problems affect society in general, so individual businesses should not be expected to solve these problems. 4-Social issues are the responsibility of government officials who are elected for that purpose and who are accountable to the voters for their decisions.

question

Federal Hazardous Substances Labeling Act (1960)

answer

Required warning labels on household chemicals if they were highly toxic

question

Kefauver-Harris Drug Amendments (1962)

answer

Established testing practices for drugs and required manufacturers to label drugs with generic names in addition to trade names

question

Cigarette Labeling Act (1965)

answer

Required manufacturers to place standard warning labels on all cigarette packages and advertising

question

Motor Vehicle Safety Act (1966)

answer

Established standards for safer cars

question

Fair Packaging and Labeling Act (1966)

answer

Called for all products sold across state lines to be labeled with net weight, ingredients, and manufacturer's name and address

question

Truth in Lending Act (1968)

answer

Required lenders and credit merchants to disclose the full cost of finance charges in both dollars and annual percentage rates

question

Fair Credit Reporting Act (1971)

answer

Required credit bureaus to provide credit reports to consumers regarding their own credit files; also provided for correction of incorrect information

question

Credit Card Liability Act (1970)

answer

Limited credit-card holder's liability to per card and stopped credit-card companies from issuing unsolicited cards

question

Consumer Product Safety Commission Act (1972)

answer

Established an abbreviated procedure for registering certain generic drugs

question

Fair Credit Billing Act (1974)

answer

Amended the Truth in Lending Act to enable consumers to challenge billing errors

question

Equal Credit Opportunity Act (1974)

answer

Provided equal credit opportunities for males and females and for married and single individuals

question

Amendments to the Equal Credit Opportunity Act (1976, 1994)

answer

Prevented discrimination based on race, creed, color, religion, age, and income when granting credit

question

Magnuson-Moss Warranty-Federal Trade Commission Act (1975)

answer

Provided for minimum disclosure standards for written consumer-product warranties for products that cost more than $15

question

Fair Debt Collection Practices Act (1977)

answer

Outlawed abusive collection practices by third parties

question

Nutrition Labeling and Education Act (1990)

answer

Required the Food and Drug Administration to review current food labeling and packaging focusing on nutrition label content, label format, ingredient labeling, food descriptors and standards, and health messages

question

Telephone Consumer Protection Act (1991)

answer

Prohibited the use of automated dialing and prerecorded-voice calling equipment to make calls or deliver messages

question

Consumer Credit Reporting Reform Act (1997)

answer

Placed more responsibility for accurate credit data on credit issuers; required creditors to verify that disputed data are accurate and to notify a consumer before reinstating the data

question

Children's Online Privacy Protection Act (2000)

answer

Placed parents in control over what information is collected online from their children younger than 13 years; required commercial website operators to maintain the confidentiality, security, and integrity of personal information collected from children

question

Do Not Call Implementation Act (2003)

answer

Directed the FCC and the FTC to coordinate so that their rules are consistent regarding telemarketing call practices including the Do Not Call Registry and other lists, as well as call abandonment

question

Credit Card Accountability, Responsibility, and Disclosure Act (2009)

answer

Provided the most sweeping changes in credit card protections since the Truth in Lending Act of 1968

question

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

answer

Promoted the financial stability of the United States by improving accountability and responsibility in the financial system; established a new Consumer Financial Protection Agency to regulate home mortgages, car loans, and credit cards; became Public Law on July 21, 2010

question

Major Environmental Laws

answer

National Environmental Policy Act (1970) Clean Air Amendment (1970) Water Quality Improvement Act (1970) Resource Recovery Act (1970) Water Pollution Control Act Amendment (1972) Noise Control Act (1972) Clean Air Act Amendment (1977) Resource Conservation and Recovery Act (1984) Clean Air Act Amendment (1987) Oil Pollution Act (1990) Clean Air Act Amendments (1990) Food Quality Protection Act (1996) American Recovery and Reinvestment Act (2009)

question

Which of the following acts involving protecting the environment in some way is the most recent? A - Oil Pollution Act B - American Recovery & Reinvestment Act C - Food Quality Protection Act D - Resource Conservation & Recovery Act E - Clean Air Amendment

answer

B - American Recovery & Reinvestment Act

question

Relationships with customers are not known to cause ethical problems for businesses. True False

answer

False

question

The courts of the U.S. have ruled that quotas in affirmative action programs are unconstitutional. True False

answer

True

question

Which of the following is not considered a step in developing and implementing a social responsibility program in a company? A - Planning the Program B - Preparing a social audit C - Incorporating "buy-in" from all employees D - Appointing a director E - Securing the commitment of top executives

answer

Incorporating "buy-in" from all employees

question

A responsibility audit is a comprehensive report of what an organization is going to do in regard to social issues.

answer

False

question

The Wall Street Reform and Consumer Protection Act was passed in 2009.

answer

False

question

The ________ Act provides sweeping legislation for reporters of corporate misconduct. A- Consumer Product Safety Commission B- Federal Trade Commission C- Accountability and Transparency in Rating Agencies D- Sarbanes-Oxley E- American Recovery and Reinvestment

answer

D- Sarbanes-Oxley

question

Trade associations often do provide ethical guidelines for their members.

answer

True

question

That the consumer was entitled to a "bill of rights" was instituted by President A- Nixon B- Clinton C- George W. Bush D- Kennedy E- Ford

answer

D- Kennedy

question

In a recent survey, the majority of employees surveyed assumed that their use of technology in the workplace is not monitored.

answer

False

question

Which of the following is false about business and social responsibility in the first quarter of the twentieth century? A- No minimum wage laws existed B- Industrial accents were commonplace and nearly expected C- The average work week was approx 40 hours D- Working conditions where were considered deplorable by today's standards. E- Work areas were often crowded and unsafe.

answer

C- The average work week was approx 40 hours

question

The ________ enlarged the solid-waste disposal program and provided for enforcement by the EPA.

answer

Resource Recovery Act

question

Which of the following federal laws was not passed between 1887 and 1914 as were the others?

answer

Fair Packaging and Labeling Act

question

Noise pollution might be addressed by workers being required to wear earplugs to guard against hearing damage.

answer

True

question

Fairness is considered an important ethical concern in business.

answer

True

question

Nobel laureate Milton Friedman refers to social responsibility programs as "hypocritical window-dressing". His belief supports which social responsibility philosophy?

answer

The economic model

question

Sandra, a purchasing agent for Friday Farms, has just secured a new vendor for tractors, plows, and harrows. The new vendor offers Sandra some small, extra pieces of equipment—rakes, shovels, and hand trowels—knowing that the hand tools are always useful as well. The new vendor also is anxious to secure future bids. Sandra needs a few hand tools for her own garden and decides that doing business with this new vendor is in everyone's best interest. From an ethical standpoint, Sandra needs to be very aware of

answer

Conflict of Interest

question

When Maytag provides customers with a booklet describing how to use a washing machine, the company is satisfying the consumer bill of rights to

answer

be informed

question

Which of the following examples is least likely to be covered by federal legislation passed in the 1960s? a. Collection agencies with harsh and abusive collection practices b. Boxes of cereal with net weight and manufacturer contact information c. Bathroom cleaners with warning labels d. A list of ingredients for your favorite ice cream e. Cigarette magazine advertising that offers health warnings

answer

Collection agencies with harsh and abusive collection practices

question

The traditional concept that businesses are responsible to their investors and that social responsibility is someone else's job is the core of the a. corporate code of ethics. b. economic model of social responsibility. c. socioeconomic model of social responsibility. d. corporate model of social responsibility. e. doctrine of caveat emptor.

answer

economic model of social responsibility.

question

By ensuring that products are safe and reliable, the Food and Drug Administration and the Consumer Product Safety Commission are taking part in a movement known as a. protectionism. b. product activism. c. socialism. d. product liability management. e. consumerism.

answer

consumerism

question

A local bank just completed its social audit for the past year. Which statement indicates a valid attempt at responding to social responsibility by the bank? a. One white female was promoted to CEO. b. A reward system encourages all employees to market the bank's products and services. c. Each employee completed at least 200 hours of service to community functions. d. This year marked an increase of 100 percent in the number of depositors. e. The loan department expanded services to small businesses.

answer

Each employee completed at least 200 hours of service to community functions.

question

Explain the economic basis for international business.

answer

International business encompasses all business activities that involve exchanges across national boundaries. International trade is based on specialization, whereby each country produces the goods and services that it can produce more efficiently than any other goods and services. A nation is said to have a comparative advantage relative to these goods. International trade develops when each nation trades its surplus products for those in short supply. A nation's balance of trade is the difference between the value of its exports and the value of its imports. Its balance of payments is the difference between the flow of money into and out of the nation. Generally, a negative balance of trade is considered unfavorable.

question

Discuss the restrictions nations place on international trade, the objectives of these restrictions, and their results.

answer

Despite the benefits of world trade, nations tend to use tariffs and non-tariff barriers (import quotas, embargoes, and other restrictions) to limit trade. These restrictions typically are justified as being needed to protect a nation's economy, industries, citizens, or security. They can result in the loss of jobs, higher prices, fewer choices in the marketplace, and the misallocation of resources.

question

Outline the extent of international business and the world economic outlook for trade.

answer

World trade is generally increasing. Trade between the United States and other nations is increasing in dollar value but decreasing in terms of our share of the world market. Exports as a percentage of U.S. GDP have increased steadily since 1985, except in the 2001 and 2008 recessions.

question

Discuss international trade agreements and international economic organizations working to foster trade.

answer

The General Agreement on Tariffs and Trade (GATT) was formed to dismantle trade barriers and provide an environment in which international business can grow. Today, the World Trade Organization (WTO) and various economic communities carry on this mission. These world economic communities include the European Union, the NAFTA, the CAFTA, the Association of Southeast Asian Nations, the Pacific Rim, the Commonwealth of Independent States, the Caribbean Basin Initiative, the Common Market of the Southern Cone, the Organization of Petroleum Exporting Countries, and the Organization for Economic Cooperation and Development.

question

Define the methods by which a firm can organize for and enter into international markets.

answer

A firm can enter international markets in several ways. It may license a foreign firm to produce and market its products. It may export its products and sell them through foreign intermediaries or its own sales organization abroad, or it may sell its exports outright to an export-import merchant. It may enter into a joint venture with a foreign firm. It may establish its own foreign subsidiaries, or it may develop into a multinational enterprise. Generally, each of these methods represents an increasingly deeper level of involvement in international business, with licensing being the simplest and the development of a multinational corporation the most involved.

question

Describe the various sources of export assistance.

answer

Many government and international agencies provide export assistance to U.S. and foreign firms. Sources of export assistance include U.S. Export Assistance Centers, the International Trade Administration, U.S. and Foreign Commercial Services, Export Legal Assistance Network, Advocacy Center, National Trade Data Bank, and other government and international agencies.

question

Identify the institutions that help firms and nations finance international business.

answer

The financing of international trade is more complex than that of domestic trade. Institutions such as the Ex-Im Bank and the International Monetary Fund have been established to provide financing and ultimately to increase world trade for American and international firms

question

Saudi Arabia and Siberia enjoy an absolute advantage in the production of crude oil and petroleum products. True False

answer

True

question

Protecting new or weak national industries is a reason to institute trade restrictions. True False

answer

True

question

Exporting is selling and shipping raw materials or products to other states. True False

answer

False

question

The balance of trade includes imports, exports, investments, money spent by foreign tourists, and aid to foreign governments. True False

answer

False

question

A reason against trade restrictions is the higher prices that consumers have to pay. True False

answer

True

question

The NAFTA agreement includes the United States, Canada, and Mexico.

answer

True

question

Exporting is considered simpler than licensing. a. True b. False

answer

False

question

All banks are required to be national banks; it is against international regulations for banks to cross country borders. a. True b. False

answer

False

question

MDB stands for Monetarily-Developed Bank.

answer

False

question

Which of the following is true about absolute advantages? a. No country has an absolute advantage. b. Absolute advantage is the ability to produce more of one product than any other country. c. Every country has an absolute advantage in some product. d. Absolute advantage is the ability to produce a particular product more efficiently than any other country.

answer

Absolute advantage is the ability to produce a particular product more efficiently than any other country.

question

If the tiny country of Antigua & Barbuda imported $900 million worth of goods and services and exported $800 million worth, it would have a a. trade deficit of $100 million. b. balance of trade. c. trade surplus of $100 million. d. balance of payments of $100 million. e. favorable balance of trade

answer

trade deficit of $100 million.

question

If only 100,000 tons of beef is allowed to enter the U.S. borders, the U.S. government has instituted a(n) a. trade embargo. b. import quota. c. devaluation. d. balance of trade. e. foreign-exchange control.

answer

import quota.

question

absolute advantage

answer

the ability to produce a specific product more efficiently than any other nation

question

balance of payments

answer

the total flow of money into a country minus the total flow of money out of that country over some period of time.

question

balance of trade

answer

the total value of a nation's exports minus the total value of its imports over some period of time

question

bill of lading

answer

document issued by a transport carrier to an exporter to prove that merchandise has been shipped

question

comparative advantage

answer

the ability to produce a specific product more efficiently than any other product

question

countertrade

answer

an international barter transaction

question

currency devaluation

answer

the reduction of the value of a nation's currency relative to the currencies of other countries

question

draft

answer

issued by the exporter's bank, ordering the importer's bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer's bank

question

dumping

answer

exportation of large quantities of a product at a price lower than that of the same product in the home market.

question

economic community

answer

an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies.

question

Export-Import Bank of the United States

answer

an independent agency of the U.S. government whose function is to assist in financing the exports of American firms

question

exporting

answer

selling and shipping raw materials or products to other nations

question

foreign-exchange control

answer

a restriction on the amount of a particular foreign currency that can be purchased or sold

question

General Agreement on Tariffs and Trade (GATT)

answer

an international organization of 158 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

question

import quota

answer

a limit on the amount of a particular good that may be imported into a country during a given period of time

question

importing

answer

purchasing raw materials or products in other nations and bringing them into one's own country

question

International business

answer

all business activities that involve exchanges across national boundaries

question

International Monetary Fund (IMF)

answer

an international bank with 188 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits

question

letter of credit

answer

issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary

question

licensing

answer

a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation

question

multilateral development bank (MDB)

answer

an internationally supported bank that provides loans to developing countries to help them grow

question

multinational enterprise

answer

a firm that operates on a worldwide scale without ties to any specific nation or region

question

nontariff barrier

answer

a non-tax measure imposed by a government to favor domestic over foreign suppliers Other Non-Tariff Barriers: *import quota *embargo *foreign exchange control *currency devaluation *bureaucratic red tape *cultural attitudes

question

strategic alliance

answer

a partnership formed to create competitive advantage on a worldwide basis

question

trade deficit

answer

a negative balance of trade

question

trading company

answer

provides a link between buyers and sellers in different countries

question

World Trade Organization (WTO)

answer

powerful successor to GATT that incorporates trade in goods, services, and ideas

question

The Basis for International Business

answer

+Some countries are better equipped than others to produce particular goods or services --Absolute advantage --Comparative advantage+Goods and services are produced more efficiently when each country specializes in the products for which it has a comparative advantage +Countries trade when they each have a surplus of the product they specialize in and want a product the other country specializes in --Exporting --Importing +Balance of Trade +Trade Deficit +Balance of Payments

question

Restrictions to International Business

answer

The reasons for restricting trade range from internal political and economic pressures to mistrust of other nations. Nations are generally eager to export their products to provide markets for their industries and develop a favorable balance of trade. Most trade restrictions are applied to imports from other nations.

question

Types of Trade Restrictions

answer

Import Duty (Tariff) Dumping Non-Tariff Barriers

question

Import Duty (Tariff)

answer

A tax levied on a particular foreign product entering a country Revenue tariffs are imposed to generate income for the government Protective tariffsare imposed to protect a domestic industry from competition by keeping the prices of imports at or above the price of domestic products

question

The Extent of International Business

answer

Although the worldwide recessions of 1991 and 2001-2002 slowed the rate of growth, and 2008-2009 global economic crisis caused the sharpest decline in more than 70 years, globalization is a reality of our time In the U.S., international trade accounts for over ¼ of GDP Trade barriers are decreasing, new competitors are entering the global marketplace, creating more choices for consumers and new job opportunities International business will grow with the expansion of commercial use of the Internet

question

The World Economic Outlook for Trade

answer

Economic performance among nations is not equal; growth in advanced countries slowed and then stopped in 2009, while emerging and developing economies continue to grow rapidly International experts expected global economic growth in 2010 and 2011, despite the high oil prices Canada and Western Europe --Canada is projected to show growth in 2010 and 2011 --Euro area is expected to grow in 2011 --U.K. and smaller European countries are expected to experience a recession Mexico and Latin America --Mexico is expected to show growth in 2010 and 2011 --Latin America and Caribbean economies are recovering at a robust pace Japan --Projected to show growth in 2010 and 2011 Other Asian Countries --Lead by China emerging as a global economic power, growth is strong --Key emerging economies is Asia are leading the global recovery Emerging Europe --Growth has been faster than in western Europe and continued growth is expected in 2010 and 2010 Commonwealth of Independent States --Projected to show growth in 2010 and 2011 --With the collapse of communism, trade between the U.S. and central and Eastern Europe expanded substantially Exports and the U.S. Economy --In 2008, exports as a percentage of GDP reached its highest level since 1916 --In the past 50 years, exports have become increasingly important to the U.S. economy

question

General Agreement of Tariffs and Trade (GATT)

answer

1. International organization of 153 nations dedicated to reducing or eliminating tariffs and other trade barriers 2. Most-favored-nation status (MFN)—Each member of GATT was to be treated equally by all other members 3. Kennedy Round, Tokyo Round, Uruguay Round, Doha Round

question

World Trade Organization (WTO)

answer

1. Created in the Uruguay Round of GATT negotiation as a successor to GATT 2. WTO oversees GATT provisions, has judicial powers to meditate trade disputes arising from GATT rules and exerts more binding authority than GATT

question

North American Free Trade Agreement (NAFTA)

answer

United States Canada Mexico Chile is expected to become the 4th member

question

Central American Free Trade Agreement -Dominican Republic(CAFTA-DR)

answer

El Salvador Guatemala Honduras Nicaragua Dominican Republic Costa Rica

question

Association of Southeast Asian Nations (ASEAN)

answer

Brunei Myanmar Cambodia Indonesia Laos Malaysia Philippines Singapore Thailand Vietnam

question

International Economic Organizations Working to Foster Trade

answer

North American Free Trade Agreement (NAFTA) Central American Free Trade Agreement -Dominican Republic(CAFTA-DR) Association of Southeast Asian Nations (ASEAN) European Economic Area (EEA) Pacific Rim Commonwealth of Independent States (CIS) Caribbean Basin Initiative (CBI) Common Market of the Southern Cone (MERCOSUR) Organization of Petroleum Exporting Countries (OPEC) Organization for Economic Cooperation and Development (OECD)

question

Methods of Entering International Business: Licensing

answer

Licensing A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensationAdvantage -It allows expansion into foreign markets with little or no direct investment Disadvantages -The product image may be damaged if standards are not upheld -The original producer does not gain foreign marketing experience

question

Methods of Entering International Business: Exporting

answer

May use an export/import merchant who assumes the risks of ownership, distribution, and sale Letter of credit -Issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary Bill of lading -Issued by a transport carrier to an exporter to prove merchandise has been shipped Draft -Issued by the exporter's bank, ordering the importer's bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer's bank May use an export/import agent who arranges sale for a commission or fee; the exporter retains title to products until they are sold May establish own sales offices or branches in foreign countries

question

Methods of Entering International Business: Joint Ventures

answer

A partnership formed to achieve a specific goal or to operate for a specific period of time Advantages -Immediate market knowledge and access -Reduced risk -Control over the product attributes Disadvantages -Complexity of establishing agreements across national borders -High level of commitment required of all parties involved

question

Methods of Entering International Business: Totally Owned Facilities

answer

Production and marketing facilities in one or more foreign nations Advantage -Direct investment provides complete control over operations Disadvantage -Risk is greater than that of a joint venture Two forms -Building new facilities in the foreign country -Purchasing an existing firm in the foreign country

question

Methods of Entering International Business: Strategic Alliances

answer

Partnerships formed to create competitive advantage on a worldwide basis

question

Methods of Entering International Business: Trading companies

answer

--Firms that provide a link between buyers and sellers in different countries --Takes title to products and perform all the activities necessary to move the products from one country to another

question

Methods of Entering International Business: Countertrade

answer

--An international barter transaction --Avoids restrictions on converting domestic currency to foreign currency

question

Methods of Entering International Business: Multi-national Enterprise

answer

A firm that operates on a worldwide scale without ties to any specific nation or region

question

Sources of Export Assistance

answer

National Export Strategy (NES) Trade Promotion Coordinating Committee (TPCC) -Assists U.S. firms in developing export-promotion programs -Help American firms compete in foreign markets and create new jobs in the U.S.

question

Financing International Business: The Export-Import Bank of the United States (Eximbank)

answer

An independent agency of the U.S. government whose function it is to assist in financing the exports of American firms

question

Financing International Business: Multilateral Development Bank (MDB)

answer

An internationally supported bank that provides loans to developing countries to help them grow World Bank, Inter-American Development Bank (IDB), Asian Development Bank (ADB), African Development Bank (AFDB), European Bank for Reconstruction and Development (EBRD)

question

Financing International Business: The International Monetary Fund (IMF)

answer

An international bank with 186 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits

question

A trading company provides a link between buyers from one country and sellers in another country. a. True b. False

answer

True

question

Despite the global recession, economic growth in Asia remained strong in 2011 and 2012. a. True b. False

answer

True

question

A country's ________ is the total flow of money into a country minus the total flow of money out of the country over a period of time. a. favorable balance of trade b. balance of trade c. balance of payments d. comparative advantage e. trade deficit

answer

balance of payments

question

It can be said that the United States has an absolute advantage in research and development as well as high-technology. a. True b. False

answer

False

question

Why are revenue tariffs levied? a. To generate income for the government b. To protect consumers of the product that the taxes are levied on c. To generate revenue for the importing company d. To generate revenue for the companies receiving the imported products e. To protect the importing company

answer

a. To generate income for the government

question

The Inter-American Development Bank focuses on helping developing countries grow. a. True b. False

answer

True

question

GATT is headquartered in Washington D.C. a. True b. False

answer

False

question

________ is our second largest export customer. a. Mexico b. Canada c. England d. Germany e. France

answer

Mexico

question

A grocery chain that directly purchases a portion of its products from outside the country rather than using an American distributor is engaging in international business. a. True b. False

answer

True

question

Loans by the IMF are primarily provided to fund international trade. a. True b. False

answer

True

question

Which of the following is least likely to be an economic consequence of trade restrictions? a. Restrictions in consumers' choices b. Higher prices for consumers c. Loss of jobs d. Misallocation of international resources e. Protection of the health of citizens

answer

c. Loss of jobs

question

A multinational enterprise may operate in multiple countries but the business is based in one specific country. a. True b. False

answer

False

question

Trade restrictions are applied to products exported to other countries more often than to imports. a. True b. False

answer

False

question

One risk of licensing is the possibility that licensees may not adhere to quality standards required and expected by the licensing company. a. True b. False

answer

True

question

Describe the advantages and disadvantages of sole proprietorships.

answer

Advantages - 1. Ease of start-up 2. Pride of ownership 3. Retention of all profits 4. No special taxes 5. Flexibility of being your own bossDisadvantages - 1. Unlimited liability 2. Lack of continuity 3. Lack of money 4. Limited management skills 5. Difficulty in hiring employees

question

Explain the different types of partners and the importance of partnership agreements.

answer

General Partnerships Limited Partnerships

question

Types of Partners: General Partners

answer

General partner - A person who assumes full or shared responsibility for operating a business General partnership - A business co-owned by two or more general partners who are liable for everything the business does

question

Types of Partners: Limited Partners

answer

Limited Partners - A person who contributes capital to a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership Limited partnership - A business co-owned by one or more general partners who manage the business and limited partners who invest money in it Master limited partnership (MLP) - A business partnership that is owned and managed like a corporation but taxed like a partnership

question

The Partnership Agreement

answer

Articles of partnership - An agreement listing and explaining the terms of the partnership; written is preferable to oral Agreement should state 1. Who will make final decisions 2. What each partner's duties will be 3. How much each partner will invest 4. How much profit or loss each partner receives or is responsible for 5. How the partnership can be dissolved

question

Describe the advantages and disadvantages of partnerships.

answer

Advantages - 1. Ease of start-up 2. Availability of capital and credit 3. Personal interest 4. Combined business skills and knowledge 5. Retention of profits 6. No special taxesDisadvantages - 1. Unlimited liability 2. Management disagreements 3. Lack of continuity 4. Frozen investment

question

Corporations

answer

An artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts Unlike a real person, however, a corporation exists only on paper There are approximately 6 million corporations in the U.S. They comprise about 19 percent of all businesses, but they account for 83 percent of sales revenues

question

Corporate Ownership

answer

Stock - The shares of ownership of a corporation Stockholder - A person who owns a corporation's stock Closed corporation - A corporation whose stock is owned by relatively few people and is not sold to the general public Open corporation - A corporation whose stock is bought and sold on security exchanges and can be purchased by any individual

question

Forming a Corporation

answer

Incorporation - the process of forming a corporation Most experts recommend consulting a lawyer.

question

10 Aspects of Business that May Require Legal Help

answer

1. Choosing either the sole proprietorship, partnership, corporate or some special form of ownership. 2. Constructing a partnership agreement. 3. Incorporating a business 4. Registering a corporation's stock 5. Obtaining a trademark, patent, or copyright 6. Filling for licenses or permits at the local, state, and federal levels. 7. Purchasing an existing business or real estate 8. Creating valid contracts 9. Hiring employees and independent contractors 10. Extending credit and collecting debts.

question

A sole proprietorship is usually operated by more than one person. a. True b. False

answer

False

question

Banks are more open to lending money to sole proprietorship than to any other type of business. a. True b. False

answer

False

question

At least one general partner must be responsible for the debts of the limited partnership. a. True b. False

answer

True

question

Most businesses incorporate in the states where they do most of their business. a. True b. False

answer

True

question

Small businesses generally only issue common stock. a. True b. False

answer

True

question

A joint venture can occur with a minimum of three groups or partners. a. True b. False

answer

False

question

A major disadvantage of sole proprietorships is that profits earned by a sole proprietorship are subject to the special state and federal income taxes that corporations pay. a. True b. False

answer

False

question

A syndicate is a long-term, permanent association of individuals or firms. a. True b. False

answer

False

question

A vertical merger occurs between firms that operate at different but related levels of production and marketing. a. True b. False

answer

True

question

The vast majority of economists and financial analysts agree that mergers are good for the U.S. economy. a. True b. False

answer

False

question

Which of the following types of business ownership is the easiest to start? a. Corporation b. Master limited partnership c. Sole proprietorship d. General partnership e. Limited partnership

answer

Sole proprietorship

question

Which form of business has unlimited liability for all owners? a. sole proprietorship b. master limited partnership c. C-corporation d. closed corporation e. limited partnership

answer

a. sole proprietorship

question

There are approximately ________ partnerships in the United States. a. 3 million b. 3.8 million c. 750,000 d. 975,000 e. 2 million

answer

a. 3 million

question

Once a not-for-profit corporation is approved it must meet guidelines of the ______ to obtain tax-exempt status. a. registered state. b. Internal Revenue Service. c. Small Business Association. d. registered county. e. Small Business Development Center.

answer

b. Internal Revenue Service

question

alien corporation

answer

a corporation chartered by a foreign government and conducting business in the United States

question

board of directors

answer

the top governing body of a corporation, the members of which are elected by the stockholders

question

closed corporation

answer

a corporation whose stock is owned by relatively few people and is not sold to the general public

question

common stock

answer

stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others

question

corporate officers

answer

the chairman of the board, president, executive vice presidents, corporate secretary, treasurer, and any other top executive appointed by the board of directors

question

corporation

answer

an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts

question

dividend

answer

a distribution of earnings to the stockholders of a corporation

question

domestic corporation

answer

a corporation in the state in which it is incorporated

question

foreign corporation

answer

a corporation in any state in which it does business except the one in which it is incorporated

question

general partner

answer

a person who assumes full or shared responsibility for operating a business

question

general partnership

answer

a business co-owned by two or more general partners who are liable for everything the business does

question

hostile takeover

answer

a situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger

question

joint venture

answer

an agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time

question

limited liability

answer

a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock

question

limited partner

answer

a person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership

question

limited-liability company (LLC)

answer

a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership

question

merger

answer

the purchase of one corporation by another

question

not-for-profit corporation

answer

a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit

question

open corporation

answer

a corporation whose stock can be bought and sold by any individual

question

partnership

answer

a voluntary association of two or more persons to act as co-owners of a business for profit Less common form of ownership than sole proprietorship or corporation No legal limit on the maximum number of partners; most have only two Large accounting, law, and advertising partnerships have multiple partners Partnerships are usually a pooling of special talents or the result of a sole proprietor taking on a partner

question

preferred stock

answer

stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners

question

proxy

answer

a legal form listing issues to be decided at a stockholders' meeting and enabling stockholders to transfer their voting rights to some other individual or individuals

question

proxy fight

answer

a technique used to gather enough stockholder votes to control a targeted company

question

S-corporation

answer

a corporation that is taxed as though it were a partnership

question

sole proprietorship

answer

A business that is owned (and usually operated) by one person The simplest form of business ownership and the easiest to start Many large businesses began as a small struggling sole proprietor ships The most popular form of business ownership

question

stock

answer

the shares of ownership of a corporation

question

stockholder

answer

a person who owns a corporation's stock

question

syndicate

answer

a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital

question

tender offer

answer

an offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares

question

unlimited liability

answer

a legal concept that holds a business owner personally responsible for all the debts of the business

question

sole proprietorship - advantages

answer

Ease of start-up Pride of ownership Retention of all profits No special taxes Flexibility of being your own boss

question

sole proprietorship - disadvantages

answer

Unlimited liability Lack of continuity Lack of money Limited management skills Difficulty in hiring employees

question

Corporations make up about ________ percent of all business and account for ________ of all sales revenues. a. 19; 82 b. 32; 40 c. 8; 50 d. 5; 92 e. 10; 90

answer

a. 19; 82

question

Which of the following is not a disadvantage of a corporation? a. Expense of formation b. Conflict within the corporation c. Increased paperwork d. Raising money e. Difficulty of formation

answer

d. Raising money

question

Which of the following is not a right of corporations? a. The right to buy property b. The right to start a business c. The right to all profits d. The right to sue e. The right to enter into a contract

answer

c. The right to all profits

question

A way for the firm to grow is through the takeover of another firm. a. True b. False

answer

a. True

question

Non-profit laws are only federal and thus, the same laws exist in all fifty states. a. True b. False

answer

b. False

question

Shares of ownership of a corporation are called stock. a. True b. False

answer

a. True

question

A partnership can have a legal limit of no more than 12 partners. a. True b. False

answer

b. False

question

One or more members of a board of directors are required for a corporation. a. True b. False

answer

a. True

question

Limited partners participate in day-to-day business activities and operations. a. True b. False

answer

b. False

question

Double taxation is a drawback of corporation business ownership. a. True b. False

answer

a. True

question

In the eyes of the law, the owner of a sole proprietorship and the business are one and the same. a. True b. False

answer

a. True

question

A way for a firm to grow is through the takeover of another firm. a. True b. False

answer

a. True

question

Corporate officers are appointed by the board of directors. a. True b. False

answer

a. True

question

Which of the following is not a qualification for S-corporation status? a. No more than 12 stockholders b. Only one class of stock c. Individuals, estates, or certain trusts as stockholders. d. Decision agreed to by all stockholders. e. Must be a domestic corporation

answer

a. No more than 12 stockholders

question

Most corporations grow by expanding their own present operations. a. True b. False

answer

a. True

question

There are approximately ________ million nonfarm sole proprietorships in the United States. a. 32 b. 40 c. 23 d. 55 e. 12

answer

c. 23

question

If you earn 90 cents for each stock share that you own in XYZ corporation, you have earned a a. tender offer. b. cooperative. c. dividend. d. proxy. e. stock share.

answer

c. dividend.

question

Legally the sole proprietor of a business is the business. True False

answer

False

question

Legally the sole proprietor of a business is the business. True False

answer

False

question

Legally the sole proprietor of a business is the business. True False

answer

False

Environment of Business & Business Ownership – Flashcards

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