MGT 100 Exam 1

Q1. Suppose BrightLights Online Video purchases another company, QuikFlix. What is this an example of?

a. merger

b. spin-off

c. divestiture

d. acquisition

e. collapse

Q2. The board of directors of a corporation reports to the officers of the corporation.

a. True

b. False

Q3. 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

Q4. Lucy has organized her craft shop as a sole proprietorship. Her sister has warned Lucy about the legal principle holding her responsible for paying off all of the debts of the business. What is the name of this principle?

a. unlimited liability

b. limited liability

c. privity

d. unrestricted debt

e. accountability

Q5. Franchisees may be obligated to contribute a percentage of sales to parent corporations.

a. True

b. False

Q6. What is the most important advantage of general partnerships?

a. the unlimited liability of the partnership

b. the ability to grow with the addition of new talent and money

c. the ease of implementing an effective control system

d. the increased role of luck

e. the need for minority partners

Q7. Kent and Patrick have decided to start a landscaping business. One of the first things that they do is sign a document that describes the investments and responsibilities of the partners and makes provisions for the allocation of profits and dissolution of the business. What is the name of this document?

a. articles of incorporation

b. partnership charter

c. partnership agreement

d. corporate charter

e. financial proposal

Q8. What is the most effective way for an entrepreneur to become a competent manager?

a. working alone

b. relying on luck

c. getting a college degree

d. being open to opportunities

e. working for a successful company first

Q9. When can a sole proprietorship legally be dissolved?

a. sales exceed $1 million

b. the partners reorganize the firm's structure

c. earnings are less than $500,000

d. the owner donates profits

e. the owner dies

Q10. Which type of business is legally considered a separate entity from its owners and is liable for its own debts?

a. sole proprietorship

b. corporation

c. limited partnership

d. cooperative

e. general partnership

Q11. If, in the long run, international trade improves the standards of living in participating countries, why might some countries want to place trade barriers such as extra taxes on imported products?

a. Imported products compete with domestic products and thus put pressure on local business.

b. Imported products are usually not as good quality as domestically made products.

c. Generating government revenue is often more economically valuable than free trade.

d. This is necessary to keep a country's currency strong.

e. International trade tends to lead to political tension.

Q12. How would supply affect the aggregate output of an economy?

a. Supply would decrease aggregate output.

b. Increases in both would cause inflation.

c. Aggregate output would grow with supply.

d. Supply would have no direct effect on aggregate output.

e. Aggregate output would increase the money supply.

Q13. The global business environment encompasses many international forces that influence the outcomes of companies doing business in foreign countries. Which of the following scenarios would best count as evidence of globalization?

a. Diamonds mined in Country X are sold on the markets in Country Y. The proceeds are then used to fund a coup against the government in Country X.

b. A natural disaster disables factories in Country X that produce computer chips for Company Y. Company Y reduces the number of employee shifts and raises the price of its products.

c. Farmers in Country X have lost most of their wheat crops due to a drought. The market price for wheat triples and the government pays the farmers for a percentage of the lost wheat.

d. Country X has almost mined all of its available natural energy sources. The government has been investing in alternative energy research for years and now an efficient synthetic energy source has been developed.

e. Country X has raised the tax on oil products. As a result more people are taking public transportation and reducing unnecessary car travel.

Q14. In the United States, milk is produced on thousands of farms, with no producer dominating the market. Producers sell milk at the going price and are unable to influence this price. Millions of gallons of milk are purchased every day. What type of competition is the market for milk?

a. a monopoly

b. an oligopoly

c. perfect competition

d. monopolistic competition

e. a cooperative

Q15. Which is the best explanation for why standard of living only increases through productivity?

a. The more goods that are available, the lower prices will be.

b. More goods are available without having to come by additional resources.

c. Productivity increases the money supply in an economy.

d. Purchasing power increases when there is more consumer choice.

e. Prices are determined by the standard of living.

Q16. The technological environment includes only electronics and telecommunications used to perform business activities.

a. True

b. False

Q17. Which of the following best describes purchasing power parity?

a. total quantity of goods and services produced by an economic system

b. total quantity of goods and services that can be purchased with one paycheck

c. total quantity of goods and services that could have been purchased if one's pay rose in the same proportion as inflation

d. the principle that exchange rates are set so that prices of similar products in different countries are about the same

e. the principle that a market economy determines supply and demand for consumer products

Q18. The point at which the supply curve and the demand curve intersect is the market price.

a. True

b. False

Q19. Honata Automobiles is a South Korean-owned company. Honata has factories in Indonesia and Brazil. Which of the following is/are affected by the production of Honata automobiles?

a. Indonesia, Brazil, and South Korea's GDP

b. Indonesia and Brazil's GDP

c. South Korea's GDP

d. Indonesia and Brazil's GNP

e. Indonesia, Brazil, and South Korea's GNP

Q20. Which of the following would be included in the gross domestic product of Brazil?

a. the profits earned by a U.S.-owned automobile plant in Brazil

b. the profits earned by a Brazilian coffee company operating in the United States

c. the profits earned by a Brazilian coffee company operating in Peru

d. the profits earned by U.S. suppliers to Brazil operating in the United States

e. the profits earned by Peruvian companies operating outside Brazil

Q21. What is the term for an activity that may benefit the individual to the detriment of his or her employer?

a. agency dispute

b. leadership challenge

c. conflict of interest

d. proactive stance

e. ethical standard

Q22. 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

Q23. Which ethical norm considers whether a particular act optimizes the benefits to those who are affected by it?

a. utility

b. rights

c. justice

d. caring

e. respect

Q24. 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

Q25. 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

Q26. Accepting and offering bribes are a normal part of doing business in some parts of the world.

a. True

b. False

Q27. Small businesses must answer many of the same social responsibility questions as big businesses.

a. True

b. False

Q28. What is the term for an employee who detects and tries to put an end to a company's unethical, illegal, and/or socially irresponsible actions by publicizing them?

a. fast-track manager

b. whistle-blower

c. corporate lookout

d. government inspector

e. blue sky thinker

Q29. An individual's personal code of ethics is shaped by his or her life experiences.

a. True

b. False

Q30. Why has climate change become a major issue for both business and government?

a. The body of scientific evidence is inconclusive.

b. The solutions to the problems are unanimous.

c. The weather patterns are becoming increasingly uniform.

d. The change in climate patterns affects the entire planet.

e. The effects are confined to national boundaries.

Q31. Which organization created the classification of countries based on per capita income?

a. the World Bank

b. the World Trade Organization

c. the International Monetary Fund

d. the European Union

e. the United Nations Economic and Social Council

Q32. Ford, an American car company, purchased Volvo, which is based in Sweden. What is this an example of?

a. a multinational firm

b. a independent agency

c. a licensing arrangement

d. a foreign direct investment

e. a strategic alliance

Q33. Which of the following types of payments are usually received by an exporter as an ongoing payment calculated as a percentage of the license holder's sales?

a. flat fees

b. royalties

c. agent fees

d. subsidies

e. direct investments

Q34. Which of the following refers to the practice of selling a product abroad for less than the cost of production?

a. exporting

b. importing

c. dumping

d. safeguarding

e. offshoring

Q35. What typically happens to a country's balance of trade as the value of its currency falls?

a. It improves.

b. It declines.

c. It remains the same.

d. It fluctuates drastically.

e. It fluctuates moderately.

Q36. An import is a product made or grown abroad but sold domestically.

a. True

b. False

Q37. Which of the following refers to tariffs that are imposed strictly to raise money for the government?

a. revenue tariffs

b. protectionist tariffs

c. quota tariffs

d. subsidy tariffs

e. labor tariffs

Q38. Which of the following denotes a government order forbidding exportation and/or importation of a particular product from a particular country?

a. tariff

b. embargo

c. subsidy

d. local content law

e. business practice law

Q39. What is a difference between an international firm and a multinational firm?

a. Multinational firms design, produce, and market products in many nations, whereas international firms are based primarily in one nation.

b. International firms design, produce, and market products in many nations, whereas multinational firms are based primarily in one nation.

c. International and multinational firms are the same thing.

d. Multinational firms are concerned primarily with foreign markets, whereas international firms are concerned primarily with the domestic market.

e. International firms are concerned primarily with foreign markets, whereas multinational firms are concerned primarily with the domestic market.

Q40. National competitive advantage derives from four conditions, one of which is factor conditions. What do factor conditions include?

a. customers, suppliers, and labor

b. government quotas and subsidies

c. product quality, productivity, and profits

d. labor, capital, entrepreneurs, and physical resources

e. strategies, structures, and rivalries