Exam 1

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Question #1

A(n) _______ -based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.

A corporate responsibility

B compliance

C social

D integrity

Question #2

Making businesspeople more accountable for company actions may help restore trust in the free-market system and leaders in general.

A FALSE

B TRUE

Question #3

Ethical behavior requires more than following the law.

A TRUE

B FALSE

Question #4

Corporate social responsibility describes the firm’s:

A commitment to a management training program.

B exclusive responsibility to its stockholders.

C concern for the welfare of society.

D ability to plan for the unexpected.

Question #5

The first step when facing an ethical dilemma is to ask:

A “Is it ethical?”

B “Is it legal?”

C “Is it balanced?”

D “How will it make me feel about myself?”

Question #6

Effective corporate values start with employees and develop throughout the organization to include top management.

A TRUE

B FALSE

Question #7

Compliance-based ethics codes:

A use education, leadership, and accountability to reinforce the code.

B conform to laws and regulations.

C enable responsible employee conduct.

D create a “do-it-right” climate that emphasizes core values.

Question #8

The president of Auto Parts of America Corporation recently testified before Congress, urging them to limit the flow of imported automobile parts into the United States. He contended that these imports were priced lower than foreign producers were charging for them in their own countries. He believes foreign producers are:

A promoting free trade.

B exhibiting ethnocentricity.

C dumping.

D exercising trade deficits.

Question #9

According to the theory of comparative advantage, a country should buy from other countries those goods it produces most efficiently.

A TRUE

B FALSE

Question #10

Country A is extremely efficient in the mining of tin. However, its climate and terrain makes it difficult to produce corn. According to the theory of comparative advantage, Country A should:

A watch the global market to see which product is bringing the highest price.

B concentrate its production on tin and buy corn from an efficient producer.

C import the resources needed to produce corn.

D produce both tin and corn in order to remain self-sufficient.

Question #11

_____________ is buying products from another country.

A Importing

B Exporting

C Retailing

D Outsourcing

Question #12

____________ is the selling of products to another country.

A Dumping

B In-trading

C Importing

D Exporting

Question #13

An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.

A TRUE

B FALSE

Question #14

Under capitalism:

A Most of the means of production and distribution are privately owned and operated for profit.

B Markets operate to carry out the decisions made by central planners.

C Utilities, health care, education, and other important services are operated by the government.

D The primary function of the government is to distribute wealth more evenly.

Question #15

The economic and political system in which the government owns almost all the major factors of production is called:

A Capitalism.

B Ethnocentrism.

C Socialism.

D Communism.

Question #16

A major benefit of socialism is the:

A Emphasis on social equality.

B Ability to keep taxes low.

C Ability to stimulate rapid economic growth.

D Emphasis on private enterprise instead of public ownership.

Question #17

Which of the following is a basic right under capitalism?

A Freedom from taxation.

B The right to compete.

C Freedom of collusion.

D The right to vote.

Question #18

According to Adam Smith, the “invisible hand” refers to the government’s effort to always keep a check on the wealth creation of individuals, so that no one business would control a market for a particular good or service.

A FALSE

B TRUE

Question #19

Macroeconomics is the economic perspective that looks at the operation of a nation’s economy as a whole.

A TRUE

B FALSE

Question #20

The Internet and the emergence of an information-based economy are important parts of the ___________ environment in which businesses operate.

A economic and legal

B competitive

C technological

D global

Question #21

The global environment,

A has not affected the United States due to its strong gross domestic product.

B is shrinking.

C is far reaching and affects all the other business environments.

D is a new frontier.

Question #22

Since all businesses make a profit, starting a business is not risky.

A TRUE

B FALSE

Question #23

Starting a business always involves ________.

A loss

B profit

C risk

D revenue

Question #24

__________ is the amount a business earns after deducting what it spends for salaries and other expenses.

A Profit

B Revenue

C Interest

D Dividends

Question #25

Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

A FALSE

B TRUE

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