44. Best Buy stores would most likely be classified as
a. service businesses.
b. sole proprietorships.
c. a marketing intermediary.
d. manufacturing establishments.
e. perfect competition.
45. A local retailer calls its customers when it receives merchandise that they may be interested in, provides individual
service to each customer, provides forms and phone numbers for complaints and comments, and has a 100 percent
satisfaction guarantee. Which objective is this business working hard to accomplish?
a. Making a profit
b. Achieving low employee turnover
c. Satisfying the needs of its customers
d. Increasing the owner’s wealth
e. Keeping up with the current technology
46. The ultimate objective of every firm, such as IBM, Hewlett-Packard, JC Penney, and Cengage Learning, must be
to
a. sell either to other firms or to consumers.
b. satisfy the needs of its customers.
c. pay out money to cover the various expenses of doing business.
d. know that people generally buy a product and store it.
e. make it impossible to satisfy customers.
47. In the mid–1970s, American auto manufacturers produced big gas-guzzling cars and tried to sell them to consumers
who needed fuel-efficient transportation. This happened because manufacturers
a. lost sight of consumers’ needs.
b. attempted to satisfy consumers’ needs.
c. followed consumers’ wants too closely.
d. knew the economy would rise again.
e. did not expect a profit.
48. When a firm’s sales revenues are greater than its expenses, the firm has a
a. profit.
b. loss.
c. positive cash flow.
d. financial resource.
e. factor of production.
49. When a firm’s expenses are greater than its sales revenue, the firm has a
a. profit.
b. loss.
c. negative cash flow.
d. recession.
e. depression.
50. The relationship between sales and profits can be written as
a. sales revenues + expenses = profit.
b. loss + profit = sales revenue.
c. profit − expenses = sales revenue.
d. expenses + loss = sales revenue + profit.
e. sales revenue − expenses = profit.
51. During 2013, Just-the-One Jewelry had sales revenues of $1,500,000. This retailer also had expenses that totaled
$800,000. What is the firm’s profit or loss amount?
a. $2,300,000
b. $1,500,000
c. $800,000
d. $700,000
e. It is impossible to calculate profit or loss with the above information.
52. Andrew Cooper decides to become a part owner of a corporation. As a part owner, he expects to receive a profit
as payment because he has assumed the risk of
a. serious inflation eroding the purchasing power of his investment.
b. being paid before the suppliers and employees are paid.
c. losing his home, car, and life savings.
d. losing the money he has invested in the corporation and not receiving profits.
e. the company giving all of the profits to local communities.
53. At the end of the year, an individual, small business owner has made $65,000 in profit. Who does that profit belong
to?
a. The company’s CEO and top managers
b. The banks from which the business borrowed money
c. All employees of the small business
d. The consumers of the business’ products
e. The owner of the business
54. For a business, stakeholders represent
a. investors in the business.
b. lenders that have provided loans.
c. suppliers that have extended credit to the firm in search of profit for the firm..
d. employees who work for the firm.
e. all of the different people or groups who are affected by the business.
55. is the study of how wealth is created and distributed.
a. Economics
b. Business
c. Marketing
d. Capitalism
e. Finance
56. Microeconomics is the study of
a. global economies.
b. the entire U.S. economy.
c. the decisions made by individuals.
d. the national unemployment rate.
e. productivity in other countries.
57. The study of an individual’s economic decisions would be an example of
a. macroeconomics.
b. microeconomics.
c. fiscal policy.
d. monetary policy.
e. national economic policy.
58. When economists study the national economy or global economy, they are using a(n) approach.
a. macroeconomics
b. microeconomics
c. fiscal
d. monetary
e. intuitive
59. According to economists, natural resources, labor, capital, and entrepreneurship are called
a. free resources.
b. competitive resources.
c. factory resources.
d. factors of manufacturing.
e. factors of production.
60. A natural resource, as recognized by economists, would include which of the following?
a. Crude oil
b. Buildings
c. Tools
d. Machinery
e. Equipment
61. The work performed to produce goods and services is referred to as
a. land.
b. financial resources.
c. material resources.
d. capital goods.
e. labor.
62. Matt Newell, a former Air Force pilot, decides to operate a helicopter tour company to provide customers with
breathtaking views of the Rocky Mountains. He obtains a loan and purchases the necessary land, facilities,
advertising, and five helicopters for his business. What important factor of production has he overlooked in creating
his business?
a. Equipment
b. Capital
c. Labor
d. Entrepreneurship
e. Natural resources
63. Capital or capital goods as recognized by economists would include all of the following except
a. crude oil.
b. facilities.
c. money.
d. machinery.
e. computer equipment.
64. Steve Wilson, a chef at a major restaurant in San Francisco, wants to start his own restaurant. He surveys the
market, finds a suitable location, and calculates how much money he will need to lease the building and purchase
the necessary equipment and supplies. Steve visits his banker and requests a loan. The money Steve will receive
from the loan and the resources he will purchase with it are known as
a. capital.
b. profit.
c. revenue.
d. collateral.
e. stock.
65. For a Pepperidge Farm production facility, managers and employees would be
a. natural resources.
b. capital.
c. information resources.
d. labor.
e. the entrepreneurial resource.
66. A person who risks his or her time, effort, and money to start and operate a business is called a(n)
a. free-market specialist.
b. entrepreneur.
c. intrapreneur.
d. competitor.
e. profit taker.
67. Diane is passionate about soccer and decides to open her own soccer sporting goods store. She invests her money,
time, and effort into making the store a success. Diane can be best described as a(n)
a. capitalist.
b. laborer.
c. corporate owner.
d. entrepreneur.
e. competitor.
68. Which of the following scenarios would best exemplify Adam Smith’s view of best serving the interests of society?
a. Individuals are selected to fill certain positions within the economy of their nation according to the needs of
the nation as a whole.
b. Markets are carefully regulated to ensure that all individuals within a nation are treated fairly and charged
standardized prices.
c. A country only has a limited amount of space for college students and uses a type of lottery system to
determine who gets these spaces.
d. Government scarcely exists in this country, and transactions are based on a system of barter, or trading
goods, for other goods.
e. Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for
them.
69. Which of the following is not a feature of laissez faire capitalism?
a. Competition
b. Guaranteed income
c. Private ownership of wealth
d. Economic freedom
e. Limited role of government
70. An economic system in which individuals and businesses make the decisions about what to produce and what to
buy, and the market determines how much is sold and at what prices, is called a economy.
a. product
b. producer’s
c. market
d. planned
e. command
71. Olan Okowo recently moved to the United States with many hopes and dreams. However, he realizes that
economic freedom includes all of the following except the right to
a. guaranteed economic success.
b. use owned resources to produce a profit.
c. accept or reject any job offered.
d. sell a product at the price chosen.
e. buy any economic good or service producers sell.
72. In Adam Smith’s view, which of the following is not the role of government in business?
a. Providing defense against foreign governments
b. Regulating business activity
c. Ensuring internal order
d. Furnishing public works
e. Providing education
73. The United States, whose economy exhibits elements of both capitalism and socialism, has what is known as a(n)
economy.
a. planned
b. utilitarian
c. nationalized
d. mixed
e. centralized
74. All of the following would typically be considered consumer products except a
a. 2-liter of Coke.
b. DVD player.
c. prom dress.
d. high-powered drill press.
e. bag of dog food.
75. Approximately what portion of our nation’s total production is made up of consumer goods?
a. 70 percent
b. 50 percent
c. 40 percent
d. 20 percent
e. 10 percent
76. Which of the following represents the biggest customer of American business?
a. Government
b. Other businesses
c. Foreign governments
d. Consumers
e. The military
77. Households provide all of the following resources to businesses except
a. labor.
b. land.
c. dividends.
d. buildings.
e. capital.
78. When consumers spend their money to purchase Apple iPhones or computers with an Intel processor, or when they
discontinue buying such items as compact discs, they are telling resource owners
a. how to produce.
b. for whom to produce.
c. what to produce.
d. when to produce.
e. to avoid faddish products.
79. Gail Nelson begins her first job after graduating from college and starts putting money away in a savings account.
She believes she has removed this money from the circular flow between buyers and sellers that she studied in
Introduction to Business. Is Gail correct?
a. Yes, by putting this money into a savings account, only she has access to the funds and they are no longer
available to the circular flow.
b. No, even though she has saved this money, the bank will in turn invest the money back into the circular flow.
c. Yes, only direct investments into companies, such as purchasing ownership shares of that company, will put
her savings back into the circular flow.
d. Yes, the circular flow focuses on businesses and government, and therefore Gail‘s savings have no impact on
the circular flow.
e. No, because she earned this money from a company and because she paid taxes on it, it is always
considered part of the flow.
80. For the U.S. government to provide services, it collects revenue from
a. only individuals in the form of taxes.
b. only corporations in the form of taxes.
c. selling bonds to foreign governments.
d. both households and businesses in various forms of taxes.
e. selling manufactured goods overseas.
81. The government uses tax dollars to
a. invest in foreign bonds.
b. invest in foreign corporations.
c. purchase resources and products needed to provide services.
d. purchase other nations.
e. increase consumer income.
82. A system where the basic economic questions are determined, at least to some degree, through centralized
government planning is referred to as a economy.
a. command
b. capitalistic
c. mixed
d. laissez-faire
e. communal
83. Examples of command economies include
a. socialism and free enterprise.
b. capitalism and socialism.
c. socialism and market economy.
d. communism and capitalism.
e. socialism and communism.