Canadian Business Final Exam Review Questions With Complete Solutions

Stake holders importance correct answer: o Ppl who are affected by the business o Stakeholders are affected by what businesses do. Non-profit organizations raise funds and use them to support charitable activities. Importance of Entrepreneurship correct answer: new products, improve economic wealth, improve market competition, further research Factors of Production correct answer: The five Factors of Production include: land, labour, capital goods, entrepreneurship, and knowledge. service sector replaced manufacturing correct answer: o The service sector has replaced manufacturing as the principal provider of jobs due to technology, outsourcing and specialized industries ex. health, education, legal services Economics correct answer: the study of how society manages its scarce resources Capitalism correct answer: An economic system based on private ownership of capital Free markets correct answer: Markets that are allowed to operate without undue interference from the government Socialism/Communism correct answer: o Socialism based on the premise that some businesses should be owned by the government. o Communism, the government owns almost all major production facilities and dictates what gets produced and by whom. Mixed Economy of Canada correct answer: part capitalist and part socialist, some businesses are privately owned, but taxes tend to be high to distribute income more evenly among the population Importance of Exports/Imports correct answer: Creates jobs, bring new potential for sales, may increase countries profits, new products, absolute advantage Reaching Global Markets correct answer: Exporting, licensing, franchising, contract manufacturing, joint ventures, strategic alliances, and foreign direct investment. multinational corporation correct answer: An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management 7 categories correct answer: Crown Corporations Laws and Regulations The Bank of Canada Taxation and Financial Policies Government Expenditures Purchasing Policies Services Federal Responsibilities correct answer: 1. National Defense 2. Space Program 3. Postal Service Provincial Responsibilities correct answer: Education, Health Care, Welfare, the Environment, Provincial Police, Provincial Parks; Licensing Municipal responsibilities correct answer: libraries local police local schools fire departments public transport building permits parks and recreation garbage and recycling collection Government Expenditures correct answer: Business- subsidies, support research, development and competitive. Consumers- dispersing funding for such things as: social services, job creation, health and education Purchasing Policies correct answer: - favour local businesses - trade barriers - new jobs - start businesses - support research Sole Proprietorship Advantages correct answer: Easiest to start Least regulated Single owner keeps all the profits Taxed once as personal income Sole Proprietorship Disadvantages correct answer: unlimited liability Lack of money Limited management skills Difficulty in hiring employees Partnerships Advantages correct answer: More talent and money More fundraising capability Relatively easy to form Limited liability for limited partners Tax benefits Partnerships Disadvantages correct answer: Unlimited liability Division of profits Disagreements among partners Difficult to terminate Corporation Advantages correct answer: Limited liability Unlimited life Separation of ownership and management Transfer of ownership is easy Easier to raise capital Corporation Disadvantages correct answer: high initial cost extensive paperwork Double tax