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Isom 125 Test 1 Review 2

Agricultural commodities are usually sold under which competitive environment?
Pure Competition
The functions of organizing, staffing, planning, and controlling are most closely associated with
Managers
A continuing rise in prices over a period of time refers to
Inflation
When a country devalues its currency, this encourages the sale of its
domestic goods to foreign countries
If a business is to be successful in the long run, it must produce quality products, operate efficiently, and be
socially responsible
The legal documents that identify the basic agreements between partners are called:
Articles of partnership
In creating a corporation, once the articles of incorporation are filed with the appropriate state office, the state may then issue a corporate
charter
When a group of investors borrows money to buy a company or division, using the company’s assets to guarantee the loan, it is called a(n)
leverage buyout
Because many countries do not permit foreign companies to purchase and operate facilities in their countries, a company wishing to do business in such a country may share the business costs with a firm from the host country by forming a
joint venture
_______ exists when there are many small businesses selling one standardized product
pure competition
A corporation that operates in several countries but without significant ties to any of them is a(n)
multinational
A specific amount of money levied on each unit of a product brought into the country is a(n):
fixed tariff
A group of nations or companies that band together to act as a monopoly is known as a:
cartel
All of the following are advantages of a corporation except
lower frequency of taxation
The U.S. has a trade deficit because
the U.S. imports more products than it exports
When two companies combine to form a new company, it is called a(n):
merger
Which of the following organizational forms is most expensive to set up?
corporation
When a firm is facing a hostile takeover attempt, it may issue a poison pill, which is
when the firm allows stockholders to buy up shares lower than market value
Common stockholders do not have the right to
receive dividends before preferred stockholders
20. When Lever Brothers changes the formula of its bar soap to match different countries’ water conditions and washing habits, this is an example of a:
strategic alliance
The effective translation of product names can be crucial to the success of a foreign marketing effort because of:
cultural barriers
When Nike has its athletic shoes produced by companies in Asia, the Nike name still appears on the shoes. This illustrates
contract manufacturing
Economic expansion occurs when
an economy is growing and people are spending more money
In a socialist system, citizens are dependent on ______ for many goods and services
the government
An important advantage of a corporation is its
limited liability
_______ can be harmful if individuals’ incomes do not increase at the same pace as rising prices because it reduces their buying power
inflation
When a firm’s products are standardized in all countries
advertising may have to be modified
28. The function concerned with obtaining and managing money and using it effectively is called
finance
Which of the following forms of business organization restricts the number and type of shareholder?
S corporation
Which of the following is an advantage of a partnership?
ease of formation
Ruji has realized that she does not like working for others. She wants to open a business in which she will have maximum control and the least interference from government regulation. Which business form might be best for her to use
sole proprietorship
Coca-Cola allows a Mexican firm to use its name, formula, and brands in return for a royalty. This arrangement is known as
licensing
Not all countries trading in international markets package goods in the same measurement units. Unlike the United States, most countries rely on
the metric system
34. The differences between the flow of money into and out of a country is called its:
balance of payments
An intermediary, or middleman, that markets goods in another country is acting as a(n):
export agent
When businesses can promote different features of their products and consumers are willing to pay more for products containing the features they desire, the competitive environment is probably
monopolistic competition
Which of the following forms of business ownership is directly limited by the life of its ownership?
sole proprietorships
When two computer companies joined together in hopes of obtaining a competitive advantage on a worldwide basis, this exemplifies a
strategic alliance
_____ have both tangible and intangible characteristics
products
McDonald’s had to adapt its menus to reflect local preferences in India because
cows are sacred to many Indians, and many are vegetarians
41. The purchase of overseas production and marketing facilities is
a direct investment
Thomas thinks that organizing as a partnership would be best because
it would allow them to rely on their own financial resources and talents
Why was the World Bank formed?
an money to underdeveloped to developing countries
______ is the study of how resources are distributed for the production of goods and services within a social system
economics
The American economic system is best described as _____ because the government regulates business to preserve competition and protect consumers and employees
modified capitalism
46. When Apple introduced the iPad, the price of and demand for netbook and notebook computers were high. As a result:
other suppliers introduced competing products to take advantage of the demand
The right of common stockholders to have the opportunity to purchase new shares of stock is called a
a preemptive
The organizational form that many consider to be blend of the best characteristics of corporations, partnerships, and sole proprietorships is the
limited liability company
Which of the following makes short-term loans to member countries with trade deficits and provides foreign currencies to member nations?:
international monetary fund
Corporations distribute profits to their owners in the form of
dividends
Increased unemployment can reduce consumer demand for goods and services, leading to
deflation
Which countries were merged into one market by NAFTA?
Canada, U.S., and Mexico
53. A forum to discuss trade problems and negotiate a reduction of trade barriers was first provided by the:
general agreement of tariffs and trade
A change in administration in a foreign government that is hostile to foreign trade is an example of a(n)
political power
Advertising, personal selling, coupons, and sweepstakes are forms of___
promotion
Which stockholders usually have the right to vote and control the board of directors?
common
The group of individuals elected by the stockholders to oversee the general operation of a corporation are known as the
board of directors
Financial resources are also known as
capital
Trends have gradually changed the U.S. to a(n)_____ economy focused on making life easier for busy consumers
service
Joint ventures are popular in situations that call for
larger investments
Because it virtually controls the world’s deposits of gem-quality diamonds, DeBeers Consolidated Mines, Ltd. has a(n)
absolute advantage
Because Colombia can produce coffee so much more efficiently than other items produced there, it has which of the following advantages?
comparative
63. Customizing products, promotion, and distribution according to cultural, technological, and national differences indicates a:
multinational strategy
The fact that the U.S. company 3M owns a film-manufacturing facility in Italy is an example of:
a direct investment
Aand has been asked to join a new partnership that is developing wind energy technologies. Because the business is high risk, he does not want to be liable for the firm’s debts if the project should fail. He could still participate as a:
limited partner
A written authorization assigning a stockholder’s voting privilege to another is a:
proxy
A favorable balance of trade exists when a country:
exports more than it imports
67. When there is only one business providing a product in a given market, there exists:
monopoly
68. A favorable balance of trade exists when a country:
exports more than it imports
_______ relates to the number of goods and services that consumers are willing to buy at different prices at a specific time
demand
The type of corporation represented by organizations such as the National Aeronautics and Space Administration (NASA) and the U.S. Postal Service is called
quasi-public
Factors of production are:
resources used to produce goods and services
A budget surplus, when a nation spends less than it takes in from taxes, is the opposite of a(n):
budget deficit
In a capitalist system, individuals own and operate ____ businesses:
the majority of
All of the following are advantages of a sole proprietorship except:
unlimited liability
75. Economic circulation occurs when:
spending declines

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