Multiple Choice Answers

An example of an economic entity is a:
town.
business.
nonprofit hospital.
church.
A firm issues periodic reports called:
financial statements.
summaries.
tax returns.
audits.
If the income statement covered a six month period ending on November 30, 2010, the third line of the income statement heading would read:
Month Ended November 30, 2010.
November 30, 2010.
Six month Period Ended November 30, 2010.
Month of November, 2010.

The financial statement that is prepared first is:
up to the accountant.
the income statement.
the balance sheet.
the statement of owner’s equity.

A firm paid cash to apply against a debt. To record this transaction, the accountant would:
debit Accounts Receivable and credit Cash.
debit Accounts Payable and credit Cash.
debit Cash and credit Accounts Payable.
credit Cash and credit Accounts Payable.

The normal balance of an account is the __________ side of the account.
increase
decrease
left
right

The journal entry to record the payment of a monthly utility bill would include a debit to __________ and a credit to __________.
Utilities Expense; Capital
Capital; Cash
Utilities Expense; Cash
Utilities Expense; Accounts Payable

When a trial balance is in balance:
adjusting entries are not required.
the general ledger is free of errors.
the debit account balances equal the credit account balances.
the company has earned a net income.

Which of the following accounts is NOT closed?
Cash
Fees Income
Rent Expense
Joan Wilson, Drawing

After the closing entries are posted to the ledger, each revenue account will have:
a zero balance.
a debit balance.
a credit balance.
either a debit or a credit balance.
Companies may approach social responsibility through formal and informal dimensions such as:
strategic alliance, licensing, and direct investments.
legal compliance, philanthropic giving, and whistle blowing.
ethics, regulators, and rules for behavior.
committees, training, and common sense.
A firm operates multiple businesses that are not logically associated with one another. The firm is practicing:
multiple product strategy.
single product strategy.
related diversification.
unrelated diversification.

in the rational decision making process, when a manager is considering the decision’s feasibility, satisfactoriness, and consequences, the manager is:
evaluating alternatives.
selecting an alternative.
recognizing and defining the decision situation.
identifying alternatives.

According to your textbook, the most common reasons that new business fail include:
lack of planning and unrealistic expectations for success.
bad luck, poor investments, and untrained personnel.
inexperience, neglect, weak control, and insufficient capital.
wasteful expenditures, indecisiveness in leadership, unethical behavior, and social irresponsibility.

A firm systematically delegates power and authority throughout the organization to middle  and lower level managers. This firm is practicing:
delegation.
authority replacement.
responsibility coordination.
decentralization.

The set of organizational activities directed at attracting, developing, and maintaining the effective workforce is called:
occupational relations and investment management.
human resource management.
labor relations management.
human capital investment.

An employee who says, “I feel very angry that I have been passed over for this promotion” is exhibiting which component of an attitude?
Affective component
Cognitive component
Intentional component
Cognitive dissonance component

A firm has decided to use alternative forms of work arrangements. These arrangements could include:
empowerment, participation, and recognition.
merit pay, incentive pay, and additional time off.
job sharing, telecommuting, and flexible work schedules.
stock options, gain sharing, and collective bargaining.

In a particular organization, the operations manager communicates with other managers in the organization, for example the marketing manager. This is an example of __________ communication in which communication occurs more among managers than among non managers.
subordinate
departmental
vertical
horizontal

Sometimes conflict is used by management to force change on an organization. Conflict can be stimulated by:
matching work habits of employees.
hiring outsiders to shake things up.
compromise.
expanding the resource base.

BU320 : Marketing Principles
Supply chain management involves __________ the efforts of suppliers, manufacturers, warehouses and stores.
separating
distinguishing
creating back up systems for
integrating

The goal of customer relationship management is to:
manage every customer relationship differently.
manage every customer relationship to maximum potential profitability.
reduce inefficient relationships through customer care.
identify and build loyalty among a firm’s customers.

using profit as the sole guide for corporate action can lead to short term profits but:
increased corporate social responsibility options.
long term loss of customers.
more complicated measurement challenges.
increased tax liabilities.
compared to the B2C process, the information search and alternative evaluation steps in the B2B process are:
centrally planned.
less focused on customer value creation.
identical.
more formal and structured.

after defining objectives and research needs, the next step in the marketing research process involves:
evaluation.
processing.
analysis.
design.
between concept testing and market testing, a firm should engage in which stage of the product development process?
Product development
Marketing research
Brainstorming
Determining potential ROI

A static demand curve assumes:
income is derived from demand.
price is constant and fixed costs change.
everything except price remains constant.
a change in quantity demanded causes a change in price.

When electronic data interchanges (EDIs) are used to describe new products and provide pictures and information they support the __________ function in the four P’s of marketing.
product
price
promotion
place

The three elements in any IMC strategy are the consumer, the channels, and:
direct marketing feedback.
the Web track software.
the results.
event sponsorship.

The “Got Milk?” ads are an extremely effective __________ campaign.
brand focused
consumer generated
primary demand
selective demand

C11V : Macroeconomics
1 Each of the following were elements of the New Deal EXCEPT:
relief, recovery, and reform.
a massive employment program.
unemployment insurance and bank deposit insurance.
a balanced budget.
2 John Maynard Keynes noted that:
we could print all the money we want and still have scarcity.
“to secure the greatest amount of pleasure with the least possible outlay should be the aim of all economic effort.”
the general notion that scarcity is due to not having enough money is an illusion.
Both a and c
3 How does a decrease in supply affect equilibrium price and quantity?
A decrease in supply leads to a lower equilibrium price and a lower equilibrium quantity.
A decrease in supply leads to a lower equilibrium price and a higher equilibrium quantity.
A decrease in supply leads to a higher equilibrium price and a lower equilibrium quantity.
A decrease in supply leads to a higher equilibrium price and a higher equilibrium quantity.
4 In general, __________ by unanticipated inflation.
creditors and debtors are both helped
creditors and debtors are both hurt
creditors are helped and debtors are hurt
creditors are hurt and debtors are helped
5 Each of the following is an indirect tax EXCEPT the __________ tax.
gasoline
telephone
corporate income
excise
6 Say’s law:
was a basic pillar of classical economics.
was a basic pillar of Keynesian economics.
was formulated during the Great Depression.
proves that we can never have full employment.
7 Barter transactions:
involve directly exchanging goods for other goods.
can occur without the “double coincidence of wants.”
are less costly than transactions involving money.
involve the use of money as a medium of exchange.
8 cross saving is the total of __________ saving.
personal and business
personal and government
business and government
personal, business, and government

9 Lorenz curves tell us about the:
absolute distribution of income.
relative distribution of income.
incidence of malnutrition.
poverty line.

10 Which statement is TRUE?
The U.S. is both the world’s leading creditor nation and the leading debtor nation.
The U.S. is neither the world’s leading creditor nation nor the world’s leading debtor nation.
The U.S. is the world’s leading creditor nation and not the world’s leading debtor nation.
The U.S. is the world’s leading debtor nation and not the world’s leading creditor nation.

C13V : Microeconomics
1 Which of the following is NOT demonstrated by a production possibility curve?
Scarcity
Opportunity cost
Necessity for choice due to scarcity
Price
2 The market price __________ the equilibrium price.
can be higher than, but never lower than
can be lower than, but never higher than
can be higher than, or lower than
is always equal to
3 The poverty line is set:
by the U.S. Bureau of the Census (based on family food budgets).
at the same income level right now as it’s been since 1982.
so high that over 30% of all Americans are officially poor.
by the United Nations for every country in the world.
4 If a monopolist has a straight line demand curve, then its marginal revenue curve will:
be the same as the demand curve.
fall twice as quickly as the demand curve.
lie below the demand curve at all points.
cross the demand curve.

5 As long as total utility is increasing, we know that marginal utility is:
positive.
decreasing.
increasing.
negative.

6 A key reason that our gasoline prices elevated rapidly from 2006 to 2008 was:
tight global supplies and high prices.
the war in the Middle East.
greed by oil exporting countries.
inflation.
7 In order for real wages to grow:
productivity must grow.
productivity must fall.
money wages must grow.
money wages must fall.
8 The substitution effect and the output effect work in the:
same direction some of the time.
same direction all of the time.
opposite direction some of the time.
opposite direction all of the time.
9 The law of demand holds for:
individuals, but not for markets.
markets, but not for individuals.
both individuals and for markets.
neither individuals nor for markets.

10 A firm will maximize its profits or minimize its loss at the output where:
the difference between price and marginal cost is at its maximum.
total cost equals total revenue.
marginal cost equals marginal revenue.
total revenue equals variable cost