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Exam 1: Taking Risks and Making Profits Within the Dynamic Business Environment

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Question 21

True/False

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Susan quit her job in a big city to take a less stressful position in a small town located in a scenic area.She earns less money at her new job and has had to cut back on her purchases of material goods,but she has more leisure time and really enjoys the clean air and scenic beauty of her new home.Susan has accepted a lower standard of living in order to enjoy a higher quality of life.

A) True
B) False

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Question 22

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Nolivia is a small and poor nation,but its current president has a genuine desire to create more wealth for Nolivia citizens.The president has received recommendations from several of her advisors.Which of the following recommendations is likely to create the most wealth for Nolivia?

A) Acquire more land by invading a neighboring country that is even poorer and weaker than Nolivia.
B) Use foreign aid from other nations to purchase more tools and machinery.
C) Establish a business environment that promotes and rewards entrepreneurship.
D) Establish barriers to trade to protect Nolivia businesses from foreign competition.

E) A) and D)
F) A) and C)

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Question 23

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Since businesses strive to earn a profit,their owners benefit at the expense of the rest of society.

The continuing increase in the number of U.S.workers in the service sector means that more and more workers are employed in low-wage positions.

As you consider the factors of production,which of the following did management theorist,Peter Drucker believe to be one of the most important contributing factors to increasing our nation's wealth?

A(n) ____________ is a person who assumes the risk of starting a business.

Outsourcing means selling goods and services to people in other countries.

Jay and Jim Spears own a lawn irrigation system business.They perform installations and maintenance of these systems.Several of their customers are golf courses,but they serve a large group of residential customers as well.When they started the business ten years ago,they made a pact to always operate within the legal limits of the law,but lately,the competition is eating them alive.Local competitors have hired illegal immigrants to perform the manual labor.They do not pay taxes on these employees - they just pay them in cash at the end of the week.Employment taxes are a burden for small businesses.Jay and Jim do not want to hire illegal workers.There's a risk if you permit an illegal worker to drive a truck;or,if he/she has an accident on the job.You have just studied business ethics in your class.You inform this partnership that:

Improved distribution systems have led to more global trade.

Shelby recently started selling her invention: A bed that looks like it floats in mid-air.The bed is actually suspended by magnetic forces.Shelby is a(n) :

The global environment,

The customers,employees,stockholders,suppliers,creditors,and others who stand to gain or lose by the policies and activities of a business represent the firm's:

The growth of Hispanic owned businesses:

Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.

Insourcing creates new jobs,and helps offset the number of jobs being outsourced.

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

After several years of study as a part-time student,Alex recently earned a degree in marketing at a local college.The growth in global markets may increase Alex's job opportunities,but it will also require him to continually update his skills or seek further education.

Planet Earth Developers is a large nation-wide construction company with home offices in Lansing,MI.The local media often remarks about the pristine landscaping that surrounds the home office that sits on a 30-acre complex.At the back end of the complex are several large warehouses and garages that hold large equipment.The grounds surrounding these warehouses look like a well-maintained park.Across the street from the garages are several shops and businesses.The CEO,"Planet Paul" (as his employees call him) ,often talks about how thankful he is that the town permits him to store the company equipment at that site,and vows to always maintain the premises for his neighbors (the other businesses that thrive in that area) ,not to mention that he asks 100 employees to come to work there everyday.Which of the following statements describes Planet Paul's business philosophy?

Insourcing refers to the practice of global companies setting up design and production facilities in the United States.

World-class businesses attempt to meet the needs of: