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Exam 1: Exploring the World of Business and Economics

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Question 1

True/False

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According to Adam Smith, under laissez-faire capitalism, each person should be allowed to work toward his or her own economic gain without government interference.

A) True
B) False

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Question 2

Multiple Choice

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During 2012, Just-the-One Jewelry had sales revenues of $1,500,000. This retailer also had expenses that totaled $800,000. What is the firm's profit or loss amount?

A) $2,300,000
B) $1,500,000
C) $800,000
D) $700,000
E) It is impossible to calculate profit or loss with the above information.

F) C) and D)
G) All of the above

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D

Question 3

Multiple Choice

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When consumers spend their money to purchase Apple iPads or computers with an Intel processor, or when they discontinue buying such items as compact discs, they are telling resource owners

Adam Smith developed the concept of the invisible hand to explain how all economic activity should be based on a nation's needs and not the individual's needs.

Typical service businesses in the U.S. include real estate, repair companies, and restaurants.

France, a socialist economy, does not have which of the following goals?

Today, managers and employees are no longer concerned about cultural diversity.

Monetary policies exert the government's influence on the amount of savings and expenditures by altering the tax structure and changing the levels of government spending.

What effect did the Industrial Revolution and the golden age of invention have on the development of American business?

Specialization is meant to increase the efficiency of industrial workers.

Satellite Communications Jonathan worked for Satellite Communications for twenty years. In the time that he worked there, he learned a lot about the company and how it operated. The company met its sales and revenue goals every year. However, most of the employees had similar educational and cultural backgrounds. He believed that the company could do much better if it cultivated an environment that promoted many different ideas. Additionally, Satellite Communications was mostly focused on how much revenue it earned in a given year. Jonathan felt that the most important goal should be to satisfy customers. He believed financial success would result from focusing on customers. After a lot of consideration, Jonathan decided to open his own business called Universal Communications and hire employees that reflected a more diverse customer base. He was happy to have this opportunity because it was a dream that he had always had. He had always wanted to make his own decisions about what his company would produce and how. The only aspect of the business he was unsure of was pricing, yet he knew this would be important for his ultimate success. -Refer to Satellite Communications. Which company has the correct objective?

Capital or capital goods as recognized by economists would include all of the following except

When economists study the national economy or global economy, they are using a ____ approach.

Economics is the study of how wealth is created and distributed.

The national debt in the United States is about $15.2 trillion.

Productivity can best be described as

For firms like Walmart, competition

Consumer goods make up about one-third of our nation's gross national product.

Which of the following statements is false?

An entrepreneur combines four kinds of resources into a business. What would be the effect on the business if any one were left out?