Introduction to Business DSST
Dante/DSST Test Prep
Terms in this set (102)
Which of the following is the correct accounting equation to balance financial transactions?
a. Liabilities + Assets = Owner's Equity
b. Owner's Equity - Liabilities = Assets
c. Assets - Liabilities = Owner's Equity
d. Liabilities + Owner's Equity = Assets
The correct answer is C. Choices A, B, and D are incorrect because Choice C is the correct accounting equation to balance financial transactions.
Companies often practice data mining to
a. balance their financial statements
b. reevaluate employee performance
c. reveal the shopping patterns and trends of their customers
d. prevent identity theft
The correct answer is C. Data mining is the application of technology to search and organize data to reveal useful information about customer habits, demographics, and other factors that affect customer buying patterns.
Which of the following accurately describes a profit center?
a. the department or product line with the highest profit margin
b. an independent business unit responsible for its own costs and profits
c. the financial group responsible for calculating and managing assets
d. the beneficiaries of a corporation's profits
The correct answer is B. Choice A is incorrect because the highest performing group or product is often referred to as the "cash cow." Choice C is incorrect because finance departments are not typically independent centers. Choice D is incorrect because profits are allocated to stakeholders and/or shareholders via dividends.
One of the major disadvantages of a sole proprietorship is
a. unlimited liability
b. lack of continuity
c. double taxation
d. limit on profits allowed by law
The correct answer is A. Choice B is incorrect because this is a disadvantage of a partnership where one or more members may opt to leave, thereby changing the composition of ownership and management. Choice C is incorrect as this applies to corporations. Choice D is incorrect as this does not apply to any form of business ownership.
If a tender offer is made and accepted, the result for a corporation would be
a. the master partner retains at least 50 percent ownership and complete management control.
b. a transfer of ownership and management against the will of the corporation's existing management.
c. limited control focused on serving the specific needs of the organization's members.
d. limitations on the financial and managerial abilities based on the resources of one person.
The correct answer is B. Choice A is incorrect as this describes the structure of a master limited partnership. Choice C is incorrect as this describes the structure of cooperatives. Choice D is incorrect as this describes a disadvantage of sole proprietorships.
Which of the following was NOT a result of the North American Free Trade Agreement (NAFTA)?
a. U.S. exports to Mexico increased significantly.
b. U.S. imports from Mexico and Canada rose significantly.
c. Direct foreign investment increased substantially.
d. Quotas and tariffs were lifted for trade between Europe and the United States.
The correct answer is D. NAFTA affected trade between the United States, Mexico, and Canada only. Trade between the United States and Europe was not affected by this particular agreement, so choice D cannot be true about NAFTA, and, therefore, is the correct answer to the question.
An employee who publicizes a company's illegal, unethical, or socially irresponsible actions is referred to as
a. a whistle-blower
b. an inside trader
c. a social auditor
d. an organizational stake-holder
The correct answer is A. Choice B is incorrect because this describes an individual who uses proprietary knowledge about a firm for profit or gain. Choice C is incorrect because this describes one who conducts an analysis of a firm's success in meeting socially responsible goals. Choice D is incorrect because this describes an individual who has a vested interest in a company's performance.
All of the following represent the major differences between service and goods manufacturing operations EXCEPT
a. interaction with customers
b. the customer's presence in the process
c. quality considerations
d. the tangibility and storable nature of the product
The correct answer is D. Choice A, B, and C are major differences between manufacturing goods versus services operations so all are accurate, and, therefore, the incorrect answers to the question.
If stockholders band together to force a board of directors to make a certain decision, they have formed a
b. management information system
d. strategic alliance
The correct answer is A. Choice B is incorrect because this describes a technology system that informs management decisions by providing key data, reports, schedules, and plans. Choice C is incorrect because this describes a subgroup charged with a specific project or task, working under a leadership or management team. Choice D is incorrect because this describes the process of two or more companies collaborating to achieve a mutually agreed-upon goal while remaining independent organizations.
Typically, the key differences between leadership and management are that
a. leaders are responsible for making decisions and implementing changes, whereas managers wield no such power
b. managers interact on a daily basis with staff members, whereas leaders do not
c. leaders develop, communicate, and direct the vision of the company, whereas managers focus on outlining the process, monitoring results, and working towards outcomes
d. leaders are responsible for the ethical decision-making process, whereas managers are responsible for the strategic decision-making process
The correct answer is C. Choices A, B, and D are all roles and responsibilities typically shared by leadership and management, and, therefore, the wrong answers to the question.
One section of the USA Patriot Act of 2001 was designed to
a. ensure proper operation and competition between banking institutions
b. reduce terrorism by requiring banks to know each customer's true identity
c. give incentives for U.S.-based companies to invest their money in U.S. markets
d. ensure that only qualified borrowers receive loans
The correct answer is B. Choice A is incorrect because it describes the Interstate Banking Efficiency Act. Choices C and D are incorrect because there is no such legislation to date.
The main function of the Federal Deposit Insurance Corporation (FDIC) is
a. to ensure that interest rates are appropriate to keep inflation in check
b. to review and eliminate the rules that restrict business activity and ensure a broader range of competition
c. to ensure financial coverage for taxes, insurance premiums, and salaries for key personnel in the event that a company is unable to conduct business for a period of time
d. to maintain confidence and stability in the U.S. financial system by guaranteeing the safety of individual deposits and monitoring the practices of financial institutions
The correct answer is D. Choice A is incorrect because this is a function of the Federal Reserve System. Choice B is incorrect because this describes deregulation. Choice C is incorrect because this describes business interruption insurance.
Setting goals helps organizations to achieve all of the following EXCEPT
a. support of their organizational strategy
b. a means to assess performance
c. efficient allocation of resources
d. a day-to-day action plan
The correct answer is A. An organizational strategy is a broad set of plans designed to help a company achieve its organizational goals; it's not an end result of goal setting. Choices B, C, and D are all key results of organizational goal setting, and, therefore, the wrong answers to the question.
What is the difference between a job description and job specifications?
a. A job description details the level of experience needed to fill a position, whereas job specifications detail the day-to-day tasks.
b. A job description details the duties and responsibilities of the job, whereas the job specifications detail the working conditions.
c. A job description details the duties, responsibilities, working conditions, and all of the resources used to perform the job, whereas job specifications outline skill level, abilities, and qualifications required to fulfill the position.
d. The terms are synonymous.
The correct answer is C. Choice A is incorrect because the descriptions are reversed. Choice B is incorrect because both are part of a job description; neither represents specifications. Choice D is incorrect because each term has a unique meaning.
Which of the following accurately describes exchange rates?
a. agreed-upon price for goods within a supply chain
b. barter system for good and services
c. interest rate the Federal Reserve System charges lending institutions
d. rate at which currency of one nation can be exchanged for currency of another nation
The correct answer is D. Choice A is incorrect because this describes a negotiated and/or fixed price between suppliers and/or manufacturers that work together for a common goal. Choice B is incorrect because this describes the exchange of goods or services in lieu of money payment. Choice C is incorrect because this describes a discounted rate.
Which management function is primarily responsible for the development, pricing, promotion, and placement of goods and/or services?
a. marketing managers
b. operations managers
c. information managers
d. financial managers
The correct answer is A. Choice B is incorrect because this function is generally responsible for production, inventory, and quality control. Choice C is incorrect because this function is generally responsible for designing and implementing systems to gather, organize, and disseminate information. Choice D is incorrect because this function is generally responsible for planning and overseeing accounting functions and financial resources.
Primarily, the marketing strategy of an organization focuses on the
a. increased utility of a product or service
b. reduced cost of a product or service
c. competitive advantage of a product or service
d. overall value of a product or service
The correct answer is D. Choices A, B, and C are incorrect because these factors represent only part of the equation when determining a product or service's value. Value is a feature considered to be the sum of the individual features of utility, cost, or competition, choice D.
Which of the following accurately describes workforce diversity?
a. the organizational structure and how it is affected by the various levels of management and subordinate workers
b. the array of options for manufacturing and distributing a product
c. the range of workers' attitudes, beliefs, values, and behaviors as well as gender, ethnicity, and physical abilities
d. the range of workers' experience, education, and qualifications
The correct answer is C. Choices A, B and D are incorrect. Workforce diversity refers to personal characteristics such as culture, race, religion, and age as well as other characteristics such as values and beliefs.
An organization that sells products to other businesses for resale purposes is considered a
d. distribution channel
The correct answer is B. Choice A is incorrect because a retailer sells products directly to end users. Choice C is incorrect because a merchandiser is the party responsible for getting the right products to the right place in the correct quantities and specifications. Choice D is incorrect because a distribution channel is a network of interdependent companies that moves a product from producer to end user.
Which of the following is NOT considered a characteristic of money?
The correct answer is B. The key word is "NOT." Choices A, C, and D are all characteristics of money, and, therefore, the wrong answer to the question. Choice B relates to a business's performance.
Most McDonald's, Dunkin Donuts, Subway, and Domino's Pizza outlets are
a. franchise businesses
b. management businesses
c. privately held businesses
d. cooperative businesses
The correct answer is A. Choice B is incorrect because it is not a type of business ownership. Choice C is incorrect because it refers to a business whose stock is not traded publicly. Choice D is incorrect because it refers to a group of sole proprietors or partnerships that agree to work together for a common benefit.
Long-term borrowing from sources outside a company is referred to as
a. a secured loan
c. trade credit
d. debit financing
The correct answer is D. Choice A is incorrect because it is a loan for which the borrower must provide secured collateral. Choice B is incorrect because it refers to a legal asset that may be seized if a debt is not repaid. Choice C is incorrect because it is the granting of credit by one firm to another.
An oligopoly exists when
a. an industry or market has a single producer and, therefore, can set prices
b. an industry or market has only a handful of sellers with the power to influence prices
c. gross domestic product is adjusted to account for changes in value and price
d. there is a difference between a business's revenue and its expenses
The correct answer is B. Choice A is incorrect because this describes a monopoly. Choice C is incorrect because this how Real Gross Domestic Product (Real GDP) is assessed. Choice D is incorrect because this is how an organization measures its profits or losses.
When faced with making an ethical decision in a business situation, which of the following is least likely to be taken into consideration?
a. options that only affect the outcome or consequence
b. options that impose and enforce rules fairly and impartially
c. options that pertain only to individuals' rights, liberties, and privileges
d. options that impact who the end users will be and how they will use the product/service
The correct answer is D. The key phrase is "least likely." Choices A, B, and C are common guiding principles in establishing proper business conduct, and so are not the correct answers to the question.
Which of the following statements most accurately describes the benefits of work teams for an organization?
a. Teams are more flexible and responsive to a changing environment.
b. Team members require lower pay than individual workers.
c. Teams eliminate the need for individual performance evaluations because workers are evaluated as a group.
d. Work teams are expected to work out their own conflicts or issues, thus, eliminating the need for human resource intervention.
The correct answer is A. Choice B is incorrect because pay scales are based on an individual's contribution to an organization regardless of whether he/she works in a team environment. Choice C is incorrect because individuals are generally evaluated on their individual contribution to the group as well as on the group's performance as a whole. Choice D is incorrect because HR is expected to perform the same functions whether dealing with individuals or groups.
Enterprise software enables organizations to
a. produce large quantities while offering customers unique, customizable features
b. organize and manage activities across product lines, departments, and locations
c. store and access the programs used by all computers connected to a network
d. collect, store, and retrieve electronic data
The correct answer is B. Choice A is incorrect because it explains the process of mass-customization. Choice C is incorrect because it describes an application server. Choice D is incorrect because it refers to data warehousing.
Which of the following statements is NOT true of a socialist society?
a. The workforce is highly incentivized to work harder to create more inventive and innovative products and services.
b. The population relies heavily on the government to provide healthcare, education, and most, if not all, of its social services.
c. Small business owners are heavily taxed.
d. Profits from government business are equally distributed to the population.
The correct answer is A. Choices B, C, and D are incorrect answers because they are all true statements about socialist societies, and the question is asking for the wrong statement as the answer.
The principle that more money can be gained by investing in securities with a higher, rather than lower, fluctuation rate is
a. asset allocation
b. risk-return relationship
d. price-earnings ratio
The correct answer is B. Choice A is incorrect because this describes the relative amount of funds invested in a number of different investment options (high, medium, or low risk). Choice C is incorrect because this describes the purchase of several kinds of investments rather than a single class of assets. Choice D is incorrect because this describes the current price of a stock divided by the firm's current annual earnings per share.
All of the following are major factors affecting how the businesses of today will do business in the future EXCEPT
a. environmental management and sustainability
b. emerging technologies
c. government intervention and regulation
d. corporate culture
The correct answer is D. Choices A, B, and C currently have and will have in the future a significant impact on what companies produce and how they manufacture, market, and sell products and services. Choice D does not change the way business is conducted, but rather is changed by the way business is conducted.
Which type of plan focuses on established objectives and specific actions?
a. tactical plan
b. directional plan
c. strategic plan
d. contingency plan
The correct answer is A. Choice B is incorrect because a directional plan is devised when managers face uncertainty in their environment and wish to maintain flexibility in order to respond to unexpected changes. Choice C is incorrect because strategic plans are intended to formulate objectives and encompass broad issues. Choice D is incorrect because it identifies ways companies will respond to change.
Which of the following is an economic system in which the government owns and operates only selected major sources of production?
The correct answer is C. Choice A is incorrect because privatization describes a process, not a system, of converting government enterprises into privately owned companies. Choice B is incorrect because capitalism describes a system in which government sanctions private ownership and encourages entrepreneurship. Choice D is incorrect because communism describes a system in which the government owns and operates all sources of production.
An insurance professional who evaluates the financial implications of risk and uncertainty is an
The correct answer is C. Choice A is incorrect because the responsibility of an assessor is to calculate the value of property for purposes of taxation. Choice B is incorrect because an adjuster investigates insurance claims to assign a value to a loss. Choice D is incorrect because an appraiser calculates the value of property, often for insurance coverage or resale purposes.
The process of adapting and communicating the nature of a product to a target market refers to
a. product branding
b. product substitution
c. product placement
d. product positioning
The correct answer is D. Choice A is incorrect because branding refers to creating an image for a product. Choice B is incorrect because product substitution is the act of replacing the demanded product with another product that meets the same needs. Choice C is incorrect because product placement is the use of a real product by a television or film character, or in music, games, or any other media where viewers can easily see and identify it.
Which of the following statements about securities is NOT true?
a. The market value of a share is usually greater than the book value.
b. Capital gains are described as the earnings from buying and selling a share of stock.
c. A dividend is the introductory price of a share of a company new to the market.
d. The secondary securities market trades only existing stocks and bonds.
The correct answer is C. A dividend, choice C, is the payment to a shareholder based on the number of shares held and the company's earnings. Choices A, B, and D are correct statements and, therefore, not the answer to the question.
Active listening involves all of the following EXCEPT
a. finishing the thought or idea of a speaker before he/she is through
b. making eye contact with the speaker
c. asking questions
d. paraphrasing what the speaker has said once the speaker has finished
The correct answer is A. Choices B, C, and D are all behaviors associated with active listening and are, therefore, not the correct answer to the question.
Production operations plans are designed to support
a. the supply chain
b. operations capability
c. the company's business strategy
d. the company's sales forecast
The correct answer is C. Choice A is incorrect because this describes the flow of services and materials from raw materials through distribution to the end user. Choice B is incorrect because this describes how systems are designed to meet priorities with maximum proficiency. Choice D is incorrect because the sales forecast is achieved by implementing the business strategy and is only one component in planning for production.
Which of the following is a promotional activity?
a. press release
b. securing a new distribution channel
c. re-inventing a product
d. value packaging
The correct answer is A. Choice B is incorrect because this is a distribution, or placement activity. Choice C is incorrect because this is a product development activity. Choice D is incorrect because this describes how marketers create a bundle of attributes that increase the features and benefits of the product or reduce the overall cost.
In which of the following scenarios is collective bargaining likely to occur?
a. a small firm where the employees are all stakeholders
b. a medium-sized firm where 20 percent or more of its employees are partners
c. a large organization whose employees are union members
d. any-sized firm or organization in which employees are encouraged to participate in the company's decision-making process
The correct answer is C. Collective bargaining refers to negotiations between labor unions and organizations that employ union workers. Choice A, B, and D are incorrect because they do not state that the employees are union members.
Small businesses often realize great success in their ability to provide a product or service to a small segment of the population. These segments are called
a. private label markets
b. niche markets
c. institutional markets
d. sector markets
The correct answer is B. Choice A is incorrect because this describes a brand name that has been commissioned from a manufacturer and the market segment it serves. Choice C is incorrect because this describes large-scale, nongovernmental buyers such as hospitals, universities, and churches. Choice D is incorrect because it does not relate to any aspect of markets.
Selling domestic goods or services in a foreign country is commonly known as
The correct answer is C. Choice A is incorrect because licensing is an agreement to use a product, process, or service of a company. Choice B is incorrect because importing is bringing goods or services into a country from another country for sale. Choice D is incorrect because franchising is a form of license in which the buyer uses the brand, logo, and products of another company.
The core components of continuous improvement include all of the following EXCEPT
a. achieving the lowest possible production costs
b. an intense focus on the internal, as well as external, customer
c. employee empowerment
d. constant quality improvement
The correct answer is A. Choice B, C, and D are all essential aspects of continuous improvement and are, therefore, not the correct answers to the question, which asks for the item that is not a core component of continuous improvement.
An individual who initiates a business venture, organizes the necessary resources, and assumes the risks and rewards of the venture is described as
a. a chief executive officer
b. a president
c. an entrepreneur
d. an owner-operator
The correct answer is C. Choice A is incorrect because this describes the top manager of an organization, but not necessarily the individual who founded the company or who assumes all of its responsibilities, risks, and rewards. Choice B is incorrect because this describes the company leader, but not necessarily the individual who founded the company or who assumes all of the responsibilities, risks, and rewards. Choice D is incorrect because this describes the individual who owns and runs the company, but did not necessarily found the company. The owner-operator may also have backers who assume at least some of the rewards if not risks and responsibilities.
Which of the following will reduce an organization's working capital?
a. decrease in accounts receivable
b. decrease in inventory
c. decrease in accounts payable
d. decrease in materials costs
The correct answer is A. Choices B, C, and D are incorrect because a decrease in any of these areas will increase an organization's working capital.
Typically, a contingent workforce provides organizations with which of the following benefits?
a. lower hourly pay rate
b. flexible, cost-effective means to respond to a rapidly changing environment
c. highly motivated and dedicated workforce
d. menu of employee benefits rather than a one-size-fits-all package
The correct answer is B. Choice A is incorrect because contingent workers often receive a slightly higher hourly pay rate. Choice C is incorrect because contingent workers have no long-term vested interest in a particular company. Choice D is incorrect because a contingent workforce may or may not receive employee benefits.
A nonprofit organization may violate ethics if it
a. practices attrition
b. implements an affirmative action plan
c. diverts donated funds to ancillary operations
d. partners with a for-profit organization
The correct answer is C. Choice A is incorrect because this describes the process of not filling job openings that are created by resignations or retirement. Choice B is incorrect because it refers to actively recruiting, hiring, and developing members of a protected class. Choice D is incorrect because this is not considered an unethical practice so long as it does not violate any laws or the mission or practices of the nonprofit organization.
The product life cycle begins when
a. a product is conceptualized
b. a product is branded
c. a product reaches the market
d. a product's earnings exceed the cost of development
The correct answer is C. A product life cycle begins only when the product reaches the market, therefore, choices A, B, and D are incorrect.
A fleet of cars that are for sale on a dealership's lot at any given time are considered
a. fixed assets
b. current assets
c. long-term liabilities
d. owner's equity
The correct answer is B. Choice A is incorrect because fixed assets have long-term use or value, such as land or equipment. Choice C is incorrect because this refers to debt that is not due for at least one year. Choice D is incorrect because this refers to the amount of money an owner would receive after all assets are sold and all liabilities are paid.
If investors wish to purchase short-term, low-risk security, they would most likely invest in
a. a money market mutual fund
b. an IPO
c. individual stocks
The correct answer is A. Choice B is incorrect because it stands for "initial public offering" of the stock of a company and can be a risky investment. Also, stocks are not typically a short-term investment. Choice C is incorrect because investing in individual stocks is not typically short-term or low-risk. Choice D is incorrect because, although bonds are low risk because they guarantee a specified amount of return to the investor, they are long-term, not short-term, investments.
When an organization creates a new use for an existing product, it is an example of
The correct answer is D. Choices A, B, and C are incorrect. Innovation, choice D, is the process of taking a creative or existing idea and turning it into an alternate, useful product, service, or process.
Which of the following is used to measure economic growth?
b. standard of living
d. interest rates
The correct answer is B. Choices A and C are incorrect because these are measures of economic stability, not growth. Choice D is incorrect because interest rates, as they apply to economic growth, are a tool the federal government uses to manipulate the availability and cost of credit to borrowers, not a measure of economic growth.
As a function of human resources, companies often perform compensation administration. What are companies evaluating during this process?
a. if the prices of their goods and services are consistent with fair market prices
b. if pay levels are meeting consistent and adequate standards for the demands and requirements of jobs
c. if managers and their teams are properly aligned based on the personalities and professional strengths and weaknesses of the manager and each team member
d. if job descriptions are consistent with the actual work performed
The correct answer is B. Choice A is incorrect because compensation does not refer to pricing, which is a function of marketing, not human resources. Choice C and D are incorrect because both refer to the HR process of performance evaluation, equity for employee salaries.
Premiums are used to
a. display or demonstrate a product
b. entitle a consumer to a discount
c. grab customers' attention as they move through a store
d. stimulate purchases
The correct answer is D. Choice A is incorrect because it describes a presentation, trade show activity, or demonstration. Choice B is incorrect because this describes a coupon. Choice C is incorrect because this is referred to as a point-of-sale or point-of-purchase display.
A labor-intensive business relies heavily on
The correct answer is B. A labor-intensive business is defined as a business that is dependent on the services of people rather than capital, equipment, or goods. Therefore, choices A, C, and D are incorrect answers to the question.
The dollar amount an insured party must absorb before receiving reimbursement is the
The correct answer is A. Choice B is incorrect because this is the fee charged for insurance coverage. Choice C is incorrect because liability means fault or responsibility for an incident. Choice D is incorrect because the casualty means the actual physical loss from an incident.
A primary function of financial accounting is
a. preparing financial reports for shareholders and the public
b. preparing financial reports for internal users
c. investigating financial issues for legal purposes
d. establishing and overseeing the guidelines that govern the financial practices and reporting activities
The correct answer is A. Choice B is incorrect because it is a function of managerial accounting. Choice C is incorrect because it is a function of a forensic accountant. Choice D is incorrect because it is a function of a management advisory board or service.
The Internet has increased the number of direct sales to customers often at the expense of
The correct answer is C. Choice A is incorrect because the wholesaler remains the first line of distribution from the manufacturer to the end user. Choice B is incorrect because the channel of distribution usually has no or little impact on the manufacturer. Choice D is incorrect because the consumer is the receiver of goods and, therefore, can benefit from the convenience and savings of direct sales.
Which of the following is NOT a contributing factor to the increase in corporate bankruptcy filings?
a. increased availability of credit
b. corporate reorganizations
c. "fresh-start" provision of bankruptcy laws
d. use of bankruptcy as a financial tactic
The correct answer is B. Choices A, C, and D are all considered to be major factors that account for the increase in corporate bankruptcy filings, and, therefore, incorrect answers to the question. Because choice B is not a factor, it is the correct answer to the question.
An example of nondirect selling is
b. mail-order catalogs
d. door-to-door sales
The correct answer is A. Choices B, C, and D are all examples of direct sales.
All of the following are restrictions on property rights EXCEPT
b. eminent domain
c. express authority
The correct answer is C. Choice A entitles utility companies to lay pipe, cable, or wire on, above, or under private property. Choice B allows the government to claim, for a fair price, private land for public use. Choice D governs how private land can be used, that is, for residential or commercial purposes. Only choice C is not a restriction, and, therefore, the correct answer to the question.
A limited partnership restricts members from
a. participating in outside investments
b. active involvement in day-to-day operations
c. filing individual tax returns
d. retiring or resigning without consent
The correct answer is B. Choices A, C, and D are typically not restrictions when entering into a limited partnership agreement.
A union settlement dictated by a neutral third-party is considered
c. a lockout
d. a boycott
The correct answer is B. Choice A is incorrect because in mediation a decision cannot be imposed by a third party. Choice C is incorrect because it occurs when employers deny workers access to the workplace. Choice D is incorrect because this occurs when union members, and possibly nonunion members, refuse to buy goods or services from a targeted employer.
Which of the following would be most useful to business travelers?
c. hot spots
The correct answer is C. Hot spots refer to access points for Wi-Fi, or wireless fidelity, and enable computer users to log on easily to the Internet or to a company's Intranet. Choice A is incorrect because choice C is broader than a company's Intranet and, therefore, more useful. Choice B, which stands for wide area network, is incorrect because like Choice A, it is too narrow an answer. Choice D, local area network, is incorrect because it also is too narrow an answer.
Primarily, savings-and-loan companies were started to offer
a. financing for home mortgages
b. financing for larger, commercial businesses
c. financing for government initiatives
d. financing for small businesses or start-ups
The correct answer is A. Savings-and-loan companies were established to encourage savings and provide financing for homes, therefore, choices B, C, and D are incorrect answers to the question. While S&&L's today may offer a variety of loans, the key words in the question are "primarily" and "were started."
A trade deficit is the result of
a. a country's exporting more than it imports
b. a country's importing more than it exports
c. a poor exchange rate for a country's currency
d. a country's having a disproportionately high tax rate
The correct answer is B. Choice A is incorrect because this results in a trade surplus. Choices C and D are incorrect because neither choice is a factor in analyzing the balance of trade.
Which best describes the type of leadership needed for successful change?
a. transactional leadership
b. authoritative leadership
c. task-focused leadership
d. transitional leadership
The correct answer is D. Choice A is incorrect because this type of leadership involves routine and regimen. Choice B is incorrect because it is another name for transactional leadership. Choice C is incorrect because this type of leadership is focused on achieving a specific, narrow set of goals.
Offering a product for $19.99 is an example of
a. price skimming
b. odd-even pricing
d. penetration pricing
The correct answer is B. Choice A is incorrect because this is setting an initially high or inflated price to cover costs and generate profits for a new product. Choice C is incorrect because discounting reduces established prices. Choice D is incorrect because this is setting an initially low price to generate interest in or stimulate trial purchases of a new product.
There is no difference between the par value of a share of stock and its
a. market value
b. book value
c. face value
d. perceived value
The correct answer is C. Par value and face value of stock are the same. Choice A is incorrect because this reflects the price that buyers are willing to pay. Choice B is incorrect because this is the price an investor pays for a share of stock. Choice D is incorrect because this is the same as market value.
The common reference of Q-tip® to mean any type of cotton swab is an example of
a. brand loyalty
b. brand awareness
c. a national brand
d. brand maturity
The correct answer is B. Choice A is incorrect because this defines the regular purchases of a specific brand based on consumers' satisfaction rates. Choice C is incorrect because this describes a brand-name product that is produced by, widely distributed by, and carrying the name of the manufacturer. Choice D is incorrect because this identifies a stage in the product life cycle.
The major difference between Gross Domestic Product and Gross National Product is
a. where products are produced--within the country or outside its borders
b. the increase or decrease of currency value and price
c. total quantity produced
d. the uses of the product
The correct answer is A. Choice B is incorrect because this is the adjustment used to calculate the Real Gross Domestic Product. Choice C is incorrect because this is the measure of aggregate output. Choice D is incorrect because this is not a factor in either GDP or GNP.
Which of the following are commonly used companywide incentives?
a. pay for performance
c. employee stock purchase plans
d. merit salary systems
The correct answer is C. Choice C is also known as profit sharing. Choices A, B, and D are incorrect because all are individual, versus companywide, incentives and can be awarded on a discretionary basis.
Which best describes the trend toward manufacturing more energy efficient products based on increasing consumer demand?
a. social ethics
b. social obligation
c. social responsiveness
d. social responsibility
The correct answer is C. Social responsiveness is the ability to adapt to societal changes. Choice A is incorrect because social ethics is a set of rules or principles that define right and wrong conduct within society. Choice B is incorrect because this is the obligation to meet economic and legal responsibilities, but no more. Choice D is incorrect because this is a firm's obligation, beyond the law, to pursue goals that benefit society, but it does not address the ability to adapt to changes in product demand.
Changes in consumer demographics have the greatest impact on the
a. socio-cultural environment
b. technological environment
c. political-legal environment
d. competitive environment
The correct answer is A. Choice B is incorrect because this is impacted by new technologies or new uses for technology, not changes in consumer demographics. Choice C is incorrect because this is impacted by political activities, laws, and legislation, not changes in consumer demographics. Choice D is incorrect because this is impacted by sellers of similar products or services.
Socialism is a means to create
The correct answer is C. Choice A is incorrect because equality, not competition, is the desired goal of socialism. Choice B is incorrect because privatization is the antithesis of socialism. Choice D is incorrect because deregulation is the removal of government rules and restrictions on the economy, which is the opposite of the core principles of socialism.
Which of the following is true of the international marketing mix?
a. An effective domestic ad campaign will translate well into international markets.
b. U.S. market prices must be honored in markets abroad.
c. Distribution efficiency can be achieved by purchasing an established company overseas.
d. Redesigning products for use in foreign markets is perceived as false advertising.
The correct answer is C. Choice A is incorrect because cultural differences can cause adverse reactions to the use of certain symbols, images, and messages. Choice B is incorrect because marketers must consider the added costs of transporting and selling products overseas and adjust prices accordingly. Choice D is incorrect because it is often necessary to redesign a product, such as a mobile phone, for other countries.
Time deposits differ from demand deposits in that they
a. have a fixed term for withdrawal
b. are owned by the depositor
c. bear interest
d. are not considered liquid assets
The correct answer is A. Choices B and C are incorrect because these characteristics apply to both types of deposits. Choice D is incorrect because both types of deposits are considered liquid assets, although there are penalties for early withdrawal of a time deposit.
Expedia.com, Travelocity.com, and Amazon.com are all examples of
a. shopping agents
b. bricks-and-mortar retailers
c. syndicated sellers
The correct answer is C. Choice A is incorrect because these are the intermediaries that help connect consumers with product and service information, but do not take possession of the product or receive a direct commission from a sale. Choice B is incorrect because this describes physical locations where consumers can buy product, in other words, stores. Choice D is incorrect because this describes individuals who use the telephone as a medium to sell directly to customers.
The primary difference between salaries and wages is that
a. wages are based on time worked, whereas salaries are based on performing a job
b. wages are not part of compensation systems, but salaries are
c. wages are paid to labor workers, and salaries are paid to knowledge workers
d. wages do not entitle employees to bonuses, whereas salaries do
The correct answer is A. Wages are paid based on quantifiable time worked, whereas salaries are paid based on performing a specified job regardless of time worked. The key words are "primary difference." All other factors are typically the same; therefore, choices B, C, and D are incorrect answers to the question.
Private enterprise requires
a. common, or joint, property rights
b. higher demand than supply
c. government intervention
The correct answer is D. Choice A is incorrect because private property rights, not common, or joint, property rights, are a critical element for a private enterprise system. Choice B is incorrect because demand and supply are not defining elements of private enterprise. Choice C is incorrect because private enterprise is defined by minimal government regulations and restrictions.
The nation's money supply is controlled by
a. stabilization policies
b. fiscal policy
c. monetary policy
d. wage and price controls
The correct answer is C. Choice A is incorrect because stabilization policies are intended to manage fluctuations in output and unemployment and to stabilize prices. Choice B is incorrect because this describes the use of government spending and revenue collection to influence the economy. Choice D is incorrect because these may be imposed by the federal government to counteract inflation.
When management and a labor union fail to agree on a contract, it often results in
a. an impasse
b. a strike
d. a hostile work environment
The correct answer is B. Choice A is incorrect because this is the term for the situation when a contract agreement is not reached, not the possible result of such a situation. Choice C is incorrect because this describes the process by which a company reduces its labor force, which is not the most likely result of a lack of agreement on a contract. Choice D is incorrect because this is a form of workplace harassment related to discrimination because of race, religion, gender, national origin, age, and similar personal characteristics.
Globalization is a result of
a. the interdependence of the world economy
b. the blending cultures
c. the balance of exchange rates
d. outsourcing jobs overseas
The correct answer is A. Globalization refers specifically to the process of the world economy's becoming a singular, interdependent system. Therefore, choices B, C, and D are incorrect answers to the question.
Divestiture occurs when
a. two firms combine
b. one firm purchases another firm
c. a firm sells one or more of its business units
d. a firm sets up on or more of its units as an independent corporation
The correct answer is C. Choice A is incorrect because this describes a merger. Choice B is incorrect because this describes an acquisition. Choice D is incorrect because this describes a spin-off.
The elements of the marketing mix include
The correct answer is C. The 4 P's of marketing include product, pricing, promotion, and place (distribution); therefore, choices A, B, and D are incorrect answers to the question.
Which of the following institutions makes loans to developing nations?
a. International Monetary Fund
b. World Bank
c. Federal Reserve System
d. World Trade Organization
The correct answer is B. Choice A is incorrect because this agency offers advice and financial assistance to all nations. Choice C is incorrect because this agency sets monetary policy for the United States and provides loans to the federal government through the sale of securities such as Treasury notes. Choice D is incorrect because this agency oversees trade agreements, settles trade disputes, and provides technical assistance and training to developing countries.
There is little difference between commercial paper and
b. corporate bonds
c. secured loans
d. promissory notes
The correct answer is D. Choice A is incorrect because collateral is required in a secured loan, whereas commercial paper represents an unsecured loan--or a promise to pay--where no legal assets are pledged in the event of nonpayment. Choice B is incorrect because corporate bonds are used for long-term loans, whereas commercial loans are short-term--1 to 270 days. Choice C is incorrect because commercial paper is equivalent to an unsecured, or nonsecured, loan.
The primary advantage of public relations efforts over advertising is the
a. timeliness of the information
b. credibility of the information
c. source of the information
d. depth of the information
The correct answer is B. Public relations typically uses credible third-party resources to disseminate company information such as newspapers, magazines, professional conferences that add to the perceived legitimacy of the message. Choice A is incorrect because timeliness is not often affected. Choice C is incorrect because both PR and advertising are company-generated. Choice D is incorrect because depth of information is not typically an issue.
During an employment interview, which of the following questions would be considered discriminatory?
a. Why do you want to leave your current position?
b. Are you willing/able to travel?
c. What religious holidays you observe?
d. Are you willing/able to take a physical exam?
The correct answer is C. Interviewers are not permitted to inquire about personal characteristics such as age, race, religion, or gender. They may, however, inquire about prior work-related conditions and about candidates' abilities to meet certain requirements to fulfill the job functions. Therefore, choices A, B, and D are incorrect answers to the question.
Competition is regulated through
a. antitrust laws
d. buy-sell agreements
The correct answer is A. Choice B is incorrect because these protect ownership rights to inventions. Choice C is incorrect because these safeguard the ownership rights to literary, musical, and artistic works. Choice D is incorrect because these safeguard the sale or purchase of an ownership interest in a firm or corporation.
Promoting products through blogs, mass e-mail, and word-of-mouth is known as
a. viral marketing
b. one-to-one marketing
c. word-of-mouth marketing
d. value marketing
The correct answer is A. Choices B, C, and D are incorrect because they are not actual marketing strategies or terms.
An organization's Intranet site and Internet site differ in that
a. the Intranet site has less storage capacity
b. the internet site is publicly accessible and the Intranet site is for internal use only
c. only the Internet site requires access to the worldwide web
d. only the Internet site can offer e-commerce capabilities
The correct answer is B. Choices A, C, and D are not true statements about either Intranet or Internet sites.
A majority of consumables are considered
a. capital items
b. convenience items
c. specialty items
d. promotional items
The correct answer is B. Choice A is incorrect because these are expensive and long-lasting products, such as machinery, that are typically not used for consumption. Choice C is incorrect because these are typically expensive and extremely valuable products such as customized racing cars. Choice D is incorrect because these are tools used to stimulate sales.
Assuming out-of-pocket costs for an incident versus submitting an insurance claim is known as
a. risk retention
b. risk control
c. risk avoidance
d. risk transfer
The correct answer is A. Choice B is incorrect because risk control is the practice of minimizing the frequency or severity of loss from activities. Choice C is incorrect because risk avoidance is the practice of ceasing to participate in a risky activity. Choice D is incorrect because risk transfer is the practice of transferring the company's potential loss to another company such as an insurance company.
Nonprofit corporations are NOT required to
a. Report earnings
b. Pay taxes
c. Practice equal opportunity employment
d. File articles of incorporation
The correct answer is B. Nonprofit organizations are subject to the same laws and regulations as other organizations with the exception of the requirement to pay taxes. Therefore, choices A, C, and D are incorrect answers to the question.
Royalty fees are based on
a. projected earnings
b. profits earned
c. gross sales
d. percentage of market share
The correct answer is C. Royalty fees are based on gross sales and typically calculated by percentages. Therefore, choices A, B, and D are incorrect answers to the question.
The advantage of direct mail advertising is
a. reaching a large audience
b. short lead time
c. low cost
d. less space limitations for the message than with other media
The correct answer is D. Choice A is incorrect because direct mail is used to target smaller, specified audiences. Choice B is incorrect because planning and execution are often more time- consuming than other forms of media. Choice C is incorrect because of the relatively high cost of buying mailing lists and postage and producing materials.
An illustration of the quantity of units that will be purchased at a number of different price points is a
a. supply curve
b. demand curve
c. bell curve
d. differential curve
The correct answer is B. Choice A is incorrect because this illustrates the quantity of units that will be supplied (offered for sale), but not necessarily purchased, at a number of different price points. Choice C is incorrect because this illustrates a number that is typical, or average, for normal distribution. Choice D is incorrect because this is a math term used in geometry applications.
Municipal bonds are issued by
a. a government unit
b. over-the-counter brokers
c. global stock exchanges
d. discount brokers
The correct answer is A. Municipal bonds are issued only by state and local governments; therefore, choices B, C, and D are incorrect answers to the question.
When employees receive a bonus for reducing the company's operating costs through work efficiencies, it is called
The correct answer is B. Choice A is incorrect because this is the distribution of funds based on profits earned above a certain goal. Choice C is incorrect because this is an incentive to learn new skills and become more proficient at one's job. Choice D is incorrect because this is paid to sales personnel based on a percentage, or actual number, of revenue brought in.
Customer exposure to the greatest amount of merchandise in a store is achieved with a
a. grid layout
b. free-flow layout
c. process layout
d. loop layout
The correct answer is D. Choice A is incorrect because in this layout, customers can skip or avoid the areas or rows that they are not interested in. Choice B is incorrect because there is no established traffic pattern, and customers can skip or avoid certain areas. Choice C is incorrect because this pertains to product manufacturing, not merchandising, where all similar equipment and workers are grouped together in the same area to complete specific tasks.
There is little difference between the internal environment of an organization and the
a. external environment
b. corporate culture
c. domestic environment
d. socio-cultural environment
The correct answer is B. Choice A is incorrect because this considers all of the factors outside of the organization's environment. Choice C is incorrect because this is a specific area, or environment, in which a firm conducts operations and derives revenue. Choice D is incorrect because this describes the customs, values, and characteristics of the society in which an organization functions.
The most significant difference between a joint venture and a strategic alliance is
d. revenue sharing
The correct answer is A. Shared ownership by all parties is a basic element of a joint venture, but not a strategic alliance.
Collusion refers to
a. withholding product information from consumers
b. responding to increased demand with overly steep prices
c. two or more companies collaborating to commit a fraudulent act
d. an employee who publicizes a company's fraudulent acts
The correct answer is C. Choice A is incorrect because this wold be a violation of the rights of consumers. Choice B is incorrect because this is considered price gouging. Choice D is incorrect because this descibes whistle-blowing.
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