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Exam 1: Exploring the World of Business and Economics

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Question 71

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Home Inspirations Hailey works for her father in a family-owned business called Home Inspirations, a bedding company that has been in operation since the 1800s. When her father retires, Hailey plans on taking over the business. Hailey is aware of many things about the company that she likes, and a few things that she does not. She has particularly noted that when the economy has low unemployment and high total income, sales are great. However, any other time, sales are not so good. Currently, all of the bedding items are created in one place and everyone works on various tasks every day. Hailey is thinking about streamlining the production process so that individuals would be responsible for only one task. She believes that if production would increase, she could sell her products at a lower price and increase revenue. She knows that most bedding products available in the market are very similar in nature and satisfy the same need. However, if she were able to lower prices, this might give her company the competitive advantage that it needs. She would then be able to invest money in differentiating her products by providing unique features, building the brand name, and offering services such as free delivery. She is also considering selling her products on the Internet. Hailey knows that her father does not like change very much, but she feels these changes are important for the future of the company. -Refer to Home Inspirations. Which of these statements is true?

A) Hailey feels that e-business is an important avenue to venture into.
B) Home Inspirations is in a depressive economy.
C) Hailey feels that the barter system is working well.
D) The economy has a high standard of living.
E) The company's sales are obviously in equilibrium.

F) A) and B)
G) C) and D)

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Question 72

Multiple Choice

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A market or industry with only one seller is referred to as

A) a limited command system.
B) a monopoly.
C) an oligopoly.
D) monopolistic competition.
E) a perfect competitive market.

F) D) and E)
G) A) and D)

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Question 73

Multiple Choice

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In a socialist economy, key industries owned by the government include all except

When a firm's expenses are greater than its sales revenue, the firm has a

All of the following are material resources for Toyota Motor Company except

Fluctuations in a nation's economy are referred to as its

Cultural diversity represents

A nation's economy fluctuates instead of growing at a steady pace every year. These fluctuations are generally referred to as the business cycle. Describe the four different phases of the business cycle.

The consumer price index (CPI) and the producer price index (PPI) actually measure the same economic factors.

Tim Garner owns and operates his own small automobile repair shop. However, the prices he can charge are fixed, and he rents his land and building from the government. Most of his friends work for industries owned by the government. Tim's country is most likely a(n) ____ economy.

Exxon Mobil and Shell are two of the relatively few sellers in the oil-refining industry. Due to the tremendous capital investment required to enter this industry, these companies are insulated significantly from the threat of new competitive entrants and thus have considerable control over price. This market situation is referred to as a(n)

Adam Smith is the person who actually organized American business as we know it today.

A local retailer calls its customers when it receives merchandise that they may be interested in, provides individual service to each customer, provides forms and phone numbers for complaints and comments, and has a 100 percent satisfaction guarantee. Which objective is this business working hard to accomplish?

Perfect competition is characterized by

During which stage of the business cycle would a company such as Intel begin to focus on being more value conscious in its production decisions?

The ultimate goal of every business firm should be to satisfy the needs of its customers.

An example of a command economy is

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. When hiring people, Jonathan thinks it is important to consider

Which of the following economic terms describes the total value of a nation's goods or services that have been adjusted for inflation?

In a socialist economy, the key industries are owned and controlled by the government.