Q1. 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

Q2. Why are lenders most willing to loan to corporations?

a. Continuity and legal status are assured.

b. Links with owners and founders are established.

c. Professional management teams can be changed.

d. Commitment to expansion is readily available.

e. Brand and marketing strategies can be diversified.

Q3. What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts?

a. corporation

b. partnership

c. cooperative

d. conglomerate

e. nonprofit

Q4. Who are the owners of a corporation?

a. board of directors

b. financial officers

c. stockholders

d. top managers

e. entrepreneurs

Q5. 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

Q6. Two businesses, Rio Books and Devereaux Holdings, collaborate to create and run a new bookselling business. What is this action called?

a. corporatization

b. vertical merger

c. joint venture

d. strategic alliance

e. institutional investment

Q7. American Business Machines is organized as a corporation. Its income will be taxed at the corporate level and also on shareholder returns as dividends. What is this situation known as?

a. dual costs

b. double taxation

c. regulatory costs

d. double ownership

e. financial balancing

Q8. An S corporation has stock that is widely held and available for sale to the general public.

a. True

b. False

Q9. 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

Q10. 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

Q11. What is the economic condition characterized by widespread increased prices without increased purchasing power?

a. unemployment

b. inflation

c. expansion

d. deflation

e. recession

Q12. A city of 150,000 people has a large commercial sector bringing in businesses from the surrounding region. In 2010, there was 2.75 million square feet of commercial space available. Five years later, after a building boom, there was 5.5 million square feet of commercial space available. Which effect will most likely occur?

a. The equilibrium price of commercial real estate will not be affected.

b. The increase in the supply of commercial real estate will lead to a corresponding increase in its price.

c. The price of commercial real estate will decrease, absent a dramatic increase in demand.

d. The increase in the supply of commercial real estate will lead to an increase in resource prices.

e. The increase in supply will cause a corresponding increase in demand.

Q13. 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

Q14. The point at which the supply curve and the demand curve intersect is the market price.

a. True

b. False

Q15. The customs, values, and demographic characteristics of the society in which an organization functions are the principal elements of the political-legal environment.

a. True

b. False

Q16. 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.

Q17. Which course of action should the Federal Reserve take if it wishes to reduce inflation and curb consumer spending?

a. The Federal Reserve should buy securities.

b. The Federal Reserve should sell securities.

c. The Federal Reserve should decrease the reserve requirement.

d. The Federal Reserve should lower the discount rate.

e. The Federal Reserve should sell securities and lower the discount rate.

Q18. The technological environment includes only electronics and telecommunications used to perform business activities.

a. True

b. False

Q19. 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.

Q20. What does productivity measure?

a. the total value of all goods and services produced by a national economy

b. how much a system produces with the resources needed to produce it

c. how much output is necessary to produce a certain level of demand

d. the standard of living relative to purchasing power parity

e. how much gross national product results from inputs of labor

Q21. 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

Q22. What must every corporation do in maintaining and reporting its financial status?

a. purchase stocks on margin

b. use creative accounting practices

c. support increased stock prices

d. aim to maximize predicted profit margins

e. conform to generally accepted accounting principles

Q23. What act was passed in 2002 as a response to a number of highly publicized accounting scandals?

a. Sarbanes-Oxley Act

b. McCain-Feingold Act

c. Securities and Exchange Act

d. Accounting Standards Act

e. Dodd-Frank Act

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. 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

Q26. What is it called when two or more firms agree to collaborate on wrongful acts?

a. monopolizing

b. consumerism

c. collusion

d. brokering

e. business as usual

Q27. 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.

Q28. IBP, a leading meat-processing firm, has a long record of breaking environmental protection, labor, and food processing laws and then trying to cover up its offenses. What type of stance has IBP adopted to social responsibility?

a. accommodative

b. obstructionist

c. pragmatic

d. defensive

e. proactive

Q29. Zach's company has appointed him to boost the business's level of corporate social responsibility. Which of the following would MOST likely be an appropriate step for Zach toward achieving this task?

a. extending employees' hours while paying them the same

b. placing less priority on the satisfaction of investors

c. reducing the company's number of charitable contributions

d. offering employees better health benefits while still increasing the company's profit

e. suspending standards designed to protect the environment

Q30. Ethical standards relating to business practices are fairly consistent around the world.

a. True

b. False

Q31. Critics of protectionism charge that it drives up prices by reducing competition.

a. True

b. False

Q32. Many governments require that products sold in their particular country be at least partly made there. This policy involves what type of laws?

a. quota laws

b. local content laws

c. business practice laws

d. free trade laws

e. subsidy laws

Q33. Which of the following statements best describes the effects of subsidies?

a. A subsidy essentially lowers the prices of foreign goods rather than raising the prices of domestic goods.

b. A subsidy essentially raises the prices of domestic goods rather than lowering the prices of foreign goods.

c. A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods.

d. A subsidy essentially raises the prices of foreign goods while also raising the prices of domestic goods.

e. A subsidy essentially lowers the prices of foreign goods while also lowering the prices of domestic goods.

Q34. Free market economies often establish some system of quotas and/or tariffs.

a. True

b. False

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. Globalization refers to the process by which countries around the world are becoming more self-sufficient.

a. True

b. False

Q37. 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

Q38. 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.

Q39. ABC Company in the United States has given exclusive rights to XYZ Company in Switzerland to manufacture its products. What is this is an example of?

a. a foreign direct investment

b. a licensing arrangement

c. a branch office setup

d. a strategic alliance

e. an import-export relationship

Q40. 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