PBL Business Principles2002 NLC

Indicate whether the sentence or statement is true or false. Mark "A" if the statement is True or "B" if it is False.

Expenses, minus revenues, equal profits. F

Businesses are organized for profit and to provide goods and services for people to improve their standard of living. T

Not-for-profit organizations must apply business concepts similar to those of profit-seeking ones. T

Good management skills guarantee profits in the private enterprise system. F

To increase productivity, Theory Z managers believe that employee involvement is necessary. T

Lifetime employment is one of the rights granted to citizens in a private enterprise system. F

The belief on which capitalism was founded, is that competition among business firms best serves the needs of society. T

Freedom of choice in a private enterprise system includes the right to choose one’s employment. T

Profits may be described in the form of machines and buildings. F

According to Maslow’s hierarchy of needs, the lowest level needs are physical. T

Mark the correct answer on your scantron sheet for each of the following questions.

Each of the following are considered businesses except A

a.U.S. Postal Service.

b.UPS.

c.FedEx.

d.AOL Time Warner.

To ensure success in the private enterprise system, firms must D

a.be organized as corporations.

b.believe that high prices will automatically ensure high profits.

c.be regulated by government.

d.find a basis for competitive differentiation.

John recently sold his Ford Taurus to a personal friend. This sale of his automobile illustrates the right to B

a.freedom of choice.

b.private property.

c.profit.

d.set ground rules for competitive activity.

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PBL Business Principles2002 NLC

Our country's economy was primarily based on ______in the colonial days. B

a.gold mining

b.agriculture

c.real estate

d.mass production

Real progress was not realized during the time of the American Industrial Revolution until A

a.a railroad system was built.

b.a good relationship was formed with England.

c.the introduction of the automobile occurred.

d.a reliable system of telephone communication was established.

The Internet can trace its roots back to the military in the A

a.1960s.

b.1970s.

c.1980s.

d.1990s.

The factor credited with much of the increase in U.S. productivity is D

a.lower wages.

b.more exports.

c.more imports.

d.technology.

A characteristic of outsourcing is that it B

a.reduces the diversity of the workforce.

b. leads to more temporary workers.

c.increases staffing requirements.

d.increases costs.

To prosper over the long term, a company A

a.must consider business ethics.

b.should maximize profits.

c.should minimize social responsibility.

d.should maximize revenues.

Which of the following company representatives must be involved in order for a company to operate at the highest set of ethical standards? D

a.The CEO

b.Managers

c.Only customers

d.Everyone

The major regulatory agency in the area of competitive practices is the C
Department of Defense.
Justice Department.
Federal Trade Commission.
Federal Communications Commission.

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PBL Business Principles2002 NLC

The federal government’s first effort to regulate business activity was the A

a.Sherman Antitrust Act.

b.Clayton Act.

c.Federal Trade Commission Act.

d.Wheeler-Lea Act.

The law that prohibits price discrimination in selling products at unreasonably low prices in order to eliminate competition is the D

a.Sherman Antitrust Act.

b.Celler-Kefauver Antimerger Act.

c.Federal Trade Commission Act.

d.Robinson-Patman Act.

Consumers are guaranteed, by law, access to their credit records under the B

a.Clayton Act.

b.Fair Credit Reporting Act.

c.Consumer Credit Protection Act.

d.Federal Trade Commission Act.

The impact of government regulation on competition is that it D

a.always results in lower prices for consumers.

b.always results in higher prices for consumers.

c.usually results in reduced profits for companies.

d.can sometimes cause a deterioration in services and performance.

One of the major issues facing governments in the area of electronic commerce on the Internet is B

a.deregulation.

b.regulation.

c.locating systems for telecommunications.

d.tying contracts.

Groups which are specifically identified by the federal equal employment opportunity laws include all except B

a.Vietnam-era veterans.

b.obese persons.

c.handicapped persons.

d.persons over age 40.

The buying of foreign goods, raw materials, and services is known as D
dumping.
exporting.
counter trade.
importing.

An absolute advantage in a good or service occurs when a country C

a.can maintain a monopoly by forbidding foreign imports.

b.can maintain a monopoly by levying high taxes on imports.

c.can maintain a monopoly by being the lowest-cost producer.

d.is the world's only producer of a good or service.

A trade deficit occurs when A

a.imports exceed exports.

b.foreign-aid payments exceed exports.

c.imports are sold at low profits.

d.there is a net flow of money into a country.

When a businessperson invests in foreign countries, he/she may be contributing to his/her own country's C

a.balance of payments surplus.

b.trade surplus.

c.balance of payments deficit.

d.ability to export more domestically produced goods.

An increase in imported goods is realized through C

a.revaluation of a nation's currency.

b.free trade.

c.devaluation of a nation's currency.

d.the upward adjustment of a country's exchange rate.

Guran (a hypothetical country) is restricting the number of automobiles that can be imported. Which of the following statements best describes what Guran is doing?

a.Exchange control

b.Import quota

c.Revenue tariff

d.Protective tariff

When a foreign country produces automobiles that cost more in that country than they do in the United States, that country is likely to be accused of A

a.dumping.

b.protective tariffs.

c.an import quota.

d.a managed trade agreement.

The primary purpose for the founding of the World Bank was to A

a.lend money to less-developed countries.

b.primarily help Germany and Japan after World War II.

c.finance General Agreement on Tariffs and Trade expansion.

d.help North American Free Trade Agreement accords be implemented.

The North American Free Trade Agreement (NAFTA) can be expected to B

a.increase the number of low-wage jobs in the U.S.

b.vastly increase trade among the member nations.

c.increase trade restrictions among the member nations.

d.result in political unification of the member countries.

Other nations look to ______as a model for a climate that encourages entrepreneurship. D

a.Japan

b.Germany

c.Korea

d.the United States

New ventures are formed primarily to B

a.solve problems that people have experienced when visiting a foreign country.

b.solve problems that people have experienced when at work or at home.

c.satisfy the requirements of venture capitalists.

d.generate job opportunities for friends and relatives.

Characteristically, the Internet C

a.has created numerous opportunities exclusively for entrepreneurs.

b.has made it more difficult for small companies to compete with larger firms.

c.is both a challenge as well as an opportunity for entrepreneurs.

d.can contribute little to the growth of entrepreneurship.

All of the following traits are characteristics of entrepreneurs except C

a.tolerance for ambiguity.

b.creativity.

c.lack of tolerance for failure.

d.self-confidence.

Macroeconomics is the study of C

a.local taxes.

b.individual businesses and decisions.

c.the total economy.

d.individual decisions concerning spending and taxes.

The willingness and ability of sellers to provide goods and services for sale in a market is referred to as A

a.supply.

b.the equilibrium price.

c.microeconomics.

d.demand.

The basic measure of economic growth may be defined as B

a.producer price index.

b.gross domestic product.

c.consumer price index.

d.total of all goods and services produced.

If buyers' incomes decrease, the demand curve will shift to the _____ and the price will ______. B

a.right; fall

b.left; fall

c.right; rise

d.left; rise

All of the following statements about demand curves are false except when the price C

a.rises, demand increases.

b.falls, demand decreases.

c.falls, demand increases.

d.falls, supply increases.

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PBL Business Principles2002 NLC

Each of the following statements can result in shifts of the demand curve to either the right or left except A

a.a change in the cost of inputs.

b.a change in the number of buyers.

c.a change in the income of buyers.

d.buyers' attitudes about the future.

The supply curve slopes A

a.upward and to the right.

b.downward and to the right.

c.downward and to the left.

d.horizontally.

A shortage will result when C

a.production quantities are rising.

b.prices are falling.

c.price is below the equilibrium point.

d.the demand curve is shifting to the left.

An economic system in which private property is eliminated is known as D

a.Socialism.

b.Capitalism.

c.Monopoly.

d.Communism.

______is the market structure which consists of large number of buyers and sellers. None of these individuals has a significant influence on price. C

a.Monopoly

b.Oligopoly

c.Pure competition

d.Socialism

All of the following are involved in human relations skills except A

a.controlling .

b.communicating.

c.leading.

d.motivating.

Because A was the longest answer, it was given away.

The planning that helps to prepare for emergencies is D

a.tactical.

b.strategic.

c.operational.

d.contingency.

Managers define the organization's desired performance by D

a.missions.

b.opportunities.

c.standards.

d.objectives.

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PBL Business Principles2002 NLC

The characteristic of an autocratic leader is that they A

a.make decisions on their own.

b.believe in minimal supervision.

c.are open-minded leaders.

d.involve subordinates in making decisions.

Because A was the longest answer, it was given away.

An organization structured to serve different parts of the world is usually departmentalized by C

a.process.

b.product.

c.geography.

d.function.

A direct flow of authority from the top manager to subordinates is the ______form of organizational structure. B

a.functional organization

b.line organization

c.matrix organization

d.line-and-staff organization

All of the following will impact staffing needs except B

a.expansion into a new market.

b.an increase in the number of suppliers in the industry.

c.the need to lower operating expenses.

d.adaptation of new technology.

A more significant source for finding qualified job candidates in the future will be D

a.employee referrals.

b.newspaper want ads.

c.colleges and universities.

d.the Internet.

Which of the following would be the best example of on-the-job training?

a.Online training programs

b.Conferences

c.Apprenticeship programs

d.Instructional training with special machines

All of the following are examples of flexible working arrangements except C

a.flextime.

b.the compressed work week.

c. severance packages.

d.job sharing plans.

The answer was too obvious.

The earliest teams were known as B

a.work teams.

b.quality circles.

c.problem-solving teams.

d.management teams.

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PBL Business Principles2002 NLC

The purpose of a socio-emotional team member is for B

a.recording ideas.

b.resolving conflicts.

c.goal evaluations.

d.more than one task.

Members of a team who work at different locations C

a.will never form an effective team.

b.will never share common attitudes and goals.

c.can form a cohesive team if opportunities are created to allow them to interact.

d.should be moved to one location to complete their assignment.

What is a team leader's most important contribution to conflict resolution? A

a.Effective communication skills

b.Leadership skills

c.Motivation skills

d.Compromising skills

One may convey ______in nonverbal communications. D

a. formal speech

b.rank in the organization

c. beliefs

d.attitudes

The division of work into its simplest components is called B

a.mechanization.

b.specialization.

c.operations management.

d.flexible production.

A production to reduce a raw material to its component parts in order to extract one or more marketable products is known as a(n) C

a.synthetic production system.

b.intermittent production system.

c.analytic production system.

d.flexible production system.

To design parts and buildings on computer screens, engineers use the process called B

a.computer-aided manufacturing (CAM).

b.computer-aided design (CAD).

c.computer-integrated manufacturing (CIM).

d.Program Evaluation and Review Technique (PERT).

The most important consideration in determining where to locate a petroleum refinery would be B

a.physical characteristics.

b.proximity to raw materials.

c.labor supply.

d.location of customers.

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PBL Business Principles2002 NLC

Of the following layouts, which would be the most appropriate for manufacturers of bulky, large, heavy, or fragile products? B

a.Process layout

b.Fixed-position layout

c.Customer-oriented layout

d.Product layout

Shortages characterize a market situation called a(n) A

a.seller's market.

b.buyer's market.

c.inverted market.

d.market glut.

The period in the history of marketing characterized by the notion that a good product will sell itself was referred to as the A

a.production era.

b.sales era.

c.marketing era.

d.relationship era.

When data is collected for the first time through observation or surveys the data is known as C

a.secondary data.

b.external data.

c.primary data.

d.a marketing information system.

Consumers purchase certain products frequently, immediately, and with little effort and these purchases are known as d

a.shopping goods.

b.specialty goods.

c.capital goods.

d.convenience goods.

Variations in products and segmented marketing campaigns first appear in which stage? A

a.Growth stage

b.Maturity stage

c.Introductory stage

d.Decline stage

During which stage of development do the firm’s financial outlays increase significantly?B

a.New product idea generation stage

b.Prototype development stage

c.Test marketing stage

d.Commercialization

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PBL Business Principles2002 NLC

Costs that remain stable in a business, regardless of the production level achieved, are called B

a.inflexible costs.

b.fixed costs.

c.variable costs.

d.production costs.

An integrated marketing communication plan would include all of the following except D

a.direct mail.

b.sales promotions.

c.public relations.

d.distribution.

To differentiate its products, a firm often applies a concept known as A

a.positioning.

b.the marketing mix.

c.personal selling.

d.product valuation.

To improve their image, companies use C

a.sales promotion.

b.creative selling.

c.public relations.

d.order processing.

The collection of raw facts and figures is known as A

a.data.

b.information.

c.a management information system.

d.the basis for business decision making.

The entity that maintains one of the largest databases is B

a.IBM.

b.the U.S. Census Bureau.

c.the Federal Trade Commission (FTC).

d.Microsoft.

All of the following are examples of hardware except D

a.input devices.

b.graphics cards.

c.modems.

d.operating systems.

Of the following, which one is a storage device? A

a.Zip drive

b.Modem

c.Monitor

d.Scanner

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PBL Business Principles2002 NLC

Of the following, which was the first type of computer developed? C

a.Minicomputer

b.Supercomputer

c.Mainframe computer

d.Personal computer

Accounting information is used by the Internal Revenue Service to C

a.evaluate credit risk.

b.approve new issues of stocks and bonds.

c.evaluate tax liabilities.

d.plan and control.

The primary role of an accountant is to A

a.determine how efficiently the organization accomplishes its objectives.

b.determine how much money the organization is making or losing.

c.determine the cost of goods and services provided by the organization.

d.prepare the organization's tax return.

Assets include all of the following except B

a.inventory.

b.bank loans.

c.patents.

d.cash.

When a good or service is sold on credit, which balance sheet account would be affected? A

a.Accounts receivable

b.Accounts payable

c.Notes payable

d.Accruals

Property and buildings that a firm expects to use for more than ______are considered fixed assets. C

a.one month

b.six months

c.one year

d.two years

Typically, the title held by the senior financial manager is D

a.treasurer.

b.controller.

c.chief operations officer (COO).

d.chief financial officer (CFO).

Which investment would be considered closest to cash? A

a.A treasury bill

b.Shares of common stock

c.Bond issued by a small city

d.Farmland

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PBL Business Principles2002 NLC

Of the following sources of capital, which has to be repaid in the shortest amount of time? A

a.A bank loan

b.A bond

c.A venture capital investment

d.Retained earnings

A long-term financing source might include all of the following except C

a.commercial banks.

b.investors.

c.suppliers.

d.pension funds.

A source of funds for commercial banks would most likely come from D

a.the government.

b.the sale of securities.

c.stockholders.

d.depositors.

Selling stock to the investing public for the very first time is known as which of the following? B

a.Rights offering

b.Initial public offering

c.Secondary sale

d.Investment offering

Junk bonds are classified with a rating of _____ and below. C

a.AAA

b.BBB

c.BB

d.B

The highest potential for growth in capital is found in D

a.preferred stock.

b.bonds.

c.money market instruments.

d.common stock.

Stock prices are quoted in ______in the United States. A

a.dollars and cents

b.dollars and eighths of a dollar

c.dollars and sixteenths of dollar

d.dollars and thirty-seconds of a dollar

100.The agency which has the most federal regulatory responsibility over stock exchanges, broker-dealers, investment advisors, mutual funds, and public utility holding companies is the D

a.Federal Reserve Board.

b.Department of the Treasury.

c.IRS.

d.Securities & Exchange Commission.

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PBL Business Principles2002 NLC

2002 PBL BUSINESS PRINCIPLES ANSWER KEY

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