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Chap 4-6

exporting refers to selling domestically produced goods and services in foreign countries.

true

less developed countries do not represent as lucrative a market for US firms because of their lower per capita incomes.

false

a country that can produce goods for less than any other country has an absolute advantage

true

Due to low labor costs China has a comparative advantage in producing airplanes.

false

An unfavorable balance of trade is known as a trade surplus.

False

A trade deficit exists when a nations imports exceed its exports

True

Exchange rates are set by the various national governments

false

National governments sometimes take deliberate action to devalue their currencies as a way to increase exports and stimulate foreign investment

True

Since exchange rates are volatile, US companies do not consider them when establishing prices for their products overseas.

false

Compared with the US, Europeans value employee benefits more than low unemployment and business efficiency

true

A US company operating in the European Union is not required to adhere to European regulations, such as mandatory vacation time

False

The Foreign Corrupt Practices Act regulates the payment of bribes by US firms to officials in foreign countries where such practices are customary.

False

If a country that produces wine decides to enact a tariff on imported wine to match the countrys domestic price, this would be an example of protective tariff

True

If the price of an imported product sells for less in the US than it does in the producing, the producing country could be accused of dumping

true

Exchange controls affect both exporters and importers

True

The government of a less-developed country wants to build several new healthcare facilities in rural areas and improve port facilities to promote exports. The world bank might lend money to help the country finance these construction projects.

True

the International Monetary Fund was created to promote trade through financial cooperation

True

All members of the European Union have adopted the euro as their currency

False

A firm in the Czech Republic buys US agricultural products paying for the products with crude oil. This is an example of countertrade.

True

One advantage of using foreign subcontractors is that forms have almost total control over the business practices of their subcontractors

False

Retailers and service firms with annual sales of less than $6 million are considered to be small businesses.

True

Any firm with fewer than 1,000 employees is considered a small business

False

Small businesses are more likely than large firms to employ the oldest workers, but not the youngest ones.

False

Outsourcing from a large corporation has a negative effect on small businesses.

False

Small businesses are more likely than larger businesses to outsource such functions as accounting and legal services.

True

Small businesses rely more heavily on debt financing than do larger firms

False

Most small business owners realize that personal credit cards carry excessive interest rates and they will avoid using them to finance their business.

False

Excessive government paperwork can cause some smal businesses to close down

True

Small businesses are required to pay state and local taxes but not workers compensation and Social Security

False

Financial forecasts are almost impossible to determine for new businesses and therefore omitted from the initial business plan.

False

The Small business Administration is the major lending source for small businesses needing additional funds

False

Another form of small business assistance is a set-aside program, whereby a percentage of government contracts must be designated to qualifying small businesses

True

A small business owner who sells the goods or services of the supplier is known as the franchisor

False

Although franchises are more likely than independent businesses to succeed, many franchises go out of business

True

Owners or corporations may owe personal income taxes on dividends, which are paid from after-tax corporate profits. This is an example of double taxation.

True

Not for profit corporations do not issue stock certificates and are exempt from paying income taxes

True

A vertical merger occurs between firms at different levels in the distribution channel.

True

Horizontal mergers are formed to ensure adequate supplies of raw materials.

False

A joint venture is a partnership between companies formed for a specific purpose. The companies share the investment, the risk, and the rewards.

True

Certain functions, such as municipal water supply, are considered to be so important to public welfare they are not entrusted to private ownership.

True

Owning a business by definition means that you are an entrepreneur

False

Classic entrepreneurs identify business opportunities and allocate available resources to tap into those markets.

True

Desire for self managment is the motivation that drives many entrepreneurs

True

Entrepreneurs are wealth creators

True

Entrepreneurs enjoy guaranteed job security because no one can fire them

False

Isaac started his own business because he was tired of worrying about corporate downsizing despite his highly positive annual reviews. This is a common motivation for becoming an entrepreneur.

true

Quality of life is rarely a motivation for becoming an entrepreneur since they work long hours

False

Compared with other countries the US has a relatively low level of entrepreneurship activity

False

There is very little government can do to encourage entrepreneurship

False

The aging of the US population has made it more difficult for entrepreneurs to find opportunities.

False

Generally entrepreneurs do not have a high energy level

False

Successful entrepreneurs have a high need to achieve

True

As a rule entrepreneurs believe in their ability to succeed

True

Some entrepreneurs have such confidence that they see what they want to see and while this can be an asset it can also be a limitation

True

Often entrepreneurs are not afraid of failure because there is little chance that they will fail

False

Entrepreneurs are not easily discouraged from a setback or failure

True

Entrepreneurs generally arent very creative people, just hard working and focused on specific problems

False

Entrepreneurs can tolerate the uncertainties associated with starting a new business

True

People should not attempt to convert their hobbies into a business since something that makes a person happy rarely turns into a successful business

false

Obtaining financing for an existing business is easier than it is for most start-up companies

True

The franchising concept eliminates risk for a new entrepreneur

False

A large percentage of start ups raise seed capital through banks

False

Banks cannot research an entrepreneurs' personal credit history when making lending decisions.

false

A new popular trend for debt financing of new ventures is called credit cards and lines of credit

true

Venture capitalists rarely take an equity stake in businesses in which they invest their funds

False

Entrepreneurial environments created within companies can help firms retain valuable employees who might otherwise leave to start their own businesses.

True

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