ETS Major Business Field Test Questions With
Answers #6
In marketing research, a firm might consider using secondary data over primary data
because
A) secondary data usually cost less
B) secondary data are usually more accurate
C) primary data are usually non specific
D) primary data are likely to be outdated - correct answer a) secondary data usually
cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the
A) enforcement of internal policies
B) settlement of legal disputes
C) restructuring of outstanding loans
D) compliance with federal regulations - correct answer a) enforcement of internal
policies
The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold - correct answer (C) current
assets less short-term liabilities
Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow
requires two pounds of raw material and one hour of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per month. All costs are considered costs of production.
How many pillows must Dreamland produce and sell each month to earn a monthly
gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700 - correct answer (D) 700
,VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow
requires two pounds of raw material and one hour of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per month. All costs are considered costs of production.
Another firm has offered to produce "Old Softy" pillows and sell them to Dreamland for
$12 each. Dreamland cannot avoid the factory lease payments, but can avoid all labor
costs if it does not produce these pillows. Under these conditions, how many "Old Softy"
pillows must Dreamland sell to earn monthly gross profits of $1,000?
(A) 417
(B) 500
(C) 625
(D) 875 - correct answer (C) 625
Dreamland VC per unit = $12
FC = $4,000
CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
Which of the following statements about a systems flowchart is true?
(A) It is used in systems design to define and describe each piece of data.
(B) It is a method of writing programs using only three basic constructs: sequence,
selection, and repetition.
(C) It documents the sequence of processing steps that take place in an information
system.
(D) It documents the logical design of an information system. - correct answer (D) It
documents the logical design of an information system.
Which of the following statements about the tort of negligence is true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
(C) It requires proof of some intentional conduct.
,(D) It requires proof of breach of a statutory or common-law duty. - correct answer (C) It
requires proof of some intentional conduct.
On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31
bank statement shows a balance of $4,905. Other information is available as follows:
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service
charge does.
2. A customer's $40 insufficient funds check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May
What is the correct cash balance on May 31?
(A) $4,905
(B) $5,080
(C) $5,166
(D) $5,204 - correct answer (B) $5,080
Cash Balance 5,123.00
Service charge (3.00)
NSF Check from customer (40.00)
Correct cash balance 5,080.00
Within the context of the capital asset pricing model (CAPM), the risk measure known
as beta is often computed by regressing the return of the company's stock against the
(A) return on the company's bonds
(B) return on the market portfolio
(C) change in the gross domestic product
(D) change in the consumer price index - correct answer (B) return on the market
portfolio
A project consists of 150 jobs. The expected completion time for each job is given in
days. The project has three critical paths with two jobs in common, J and K. In order to
finish the project one day early, the completion time should be reduced one day for
(A) each of the 150 jobs
(B) each of the jobs on the three critical paths
(C) either Job J or Job K
(D) both Job J and Job K - correct answer (C) either Job J or Job K
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by
10 percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the
world petroleum market?
(A) Price will increase, but quantity will remain unchanged.
, (B) Price will increase, but quantity is indeterminate.
(C) Quantity will increase, but price is indeterminate.
(D) Both price and quantity will increase. - correct answer (B) Price will increase, but
quantity is indeterminate.
Which of the following would most likely occur as a result of the United States
government's imposing tariffs on foreign steel imports?
(A) The price of steel produced in the United States would decrease.
(B) The price of imported steel in the United States would decrease. (C) Employment in
the United States steel industry would increase. (D) Government tax revenue would fall.
- correct answer (C) Employment in the United States steel industry would increase.
In an economy the unemployment rate is 10 percent and the inflation rate is 1 percent.
An appropriate fiscal policy in this phase of the business cycle would be to
(A) increase government spending
(B) increase income taxes
(C) decrease transfer payments
(D) decrease the money supply - correct answer (A) increase government spending
Which of the following is an appropriate Federal Reserve action to stimulate the United
States economy?
(A) Selling government bonds on the open market
(B) Increasing the discount rate
(C) Reducing the reserve requirement
(D) Cutting taxes - correct answer (C) Reducing the reserve requirement
If the spread between the spot and forward exchange rates of two currencies equals the
interest rate difference between the two countries, this phenomenon is referred to as
(A) purchasing-power equality
(B) commodity arbitrage
(C) currency hedging
(D) interest-rate parity - correct answer (D) interest-rate parity
A firm that would like to know whether it has enough cash to meet its bills would be
most likely to use which category of financial ratio?
(A) Liquidity
(B) Leverage
(C) Efficiency
(D) Profitability - correct answer (A) Liquidity
Answers #6
In marketing research, a firm might consider using secondary data over primary data
because
A) secondary data usually cost less
B) secondary data are usually more accurate
C) primary data are usually non specific
D) primary data are likely to be outdated - correct answer a) secondary data usually
cost less
In organizational decision making, managers are able to exercise the greatest degree of
discretion in the
A) enforcement of internal policies
B) settlement of legal disputes
C) restructuring of outstanding loans
D) compliance with federal regulations - correct answer a) enforcement of internal
policies
The term "net working capital" refers to
(A) inventories, receivables, and current notes and investments
(B) assets divided by liabilities
(C) current assets less short-term liabilities
(D) net assets left over after subtracting cost of goods sold - correct answer (C) current
assets less short-term liabilities
Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow
requires two pounds of raw material and one hour of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per month. All costs are considered costs of production.
How many pillows must Dreamland produce and sell each month to earn a monthly
gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700 - correct answer (D) 700
,VC = (2 lbs*$3)+$4 = $10
FC = $2,000+$4,000 = $6,000
CM per unit = $20-(VC) $10=$10
$1,000 = (units sold*$10)-$6,000
Units sold = ($1,000+$6,000)/$10 = 700 pillows
Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow
requires two pounds of raw material and one hour of direct labor to manufacture.
Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed
supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year
lease for $4,000 per month. All costs are considered costs of production.
Another firm has offered to produce "Old Softy" pillows and sell them to Dreamland for
$12 each. Dreamland cannot avoid the factory lease payments, but can avoid all labor
costs if it does not produce these pillows. Under these conditions, how many "Old Softy"
pillows must Dreamland sell to earn monthly gross profits of $1,000?
(A) 417
(B) 500
(C) 625
(D) 875 - correct answer (C) 625
Dreamland VC per unit = $12
FC = $4,000
CM per unit = $20-(VC) $12=$8
(GP) $1,000 = (units sold*$8)-$4,000
Units sold = ($1,000+$4,000)/$8 = 625 pillows
Which of the following statements about a systems flowchart is true?
(A) It is used in systems design to define and describe each piece of data.
(B) It is a method of writing programs using only three basic constructs: sequence,
selection, and repetition.
(C) It documents the sequence of processing steps that take place in an information
system.
(D) It documents the logical design of an information system. - correct answer (D) It
documents the logical design of an information system.
Which of the following statements about the tort of negligence is true?
(A) It cannot be used as a basis for liability for defective products.
(B) It is a strict liability tort with no defenses.
(C) It requires proof of some intentional conduct.
,(D) It requires proof of breach of a statutory or common-law duty. - correct answer (C) It
requires proof of some intentional conduct.
On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31
bank statement shows a balance of $4,905. Other information is available as follows:
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service
charge does.
2. A customer's $40 insufficient funds check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May
What is the correct cash balance on May 31?
(A) $4,905
(B) $5,080
(C) $5,166
(D) $5,204 - correct answer (B) $5,080
Cash Balance 5,123.00
Service charge (3.00)
NSF Check from customer (40.00)
Correct cash balance 5,080.00
Within the context of the capital asset pricing model (CAPM), the risk measure known
as beta is often computed by regressing the return of the company's stock against the
(A) return on the company's bonds
(B) return on the market portfolio
(C) change in the gross domestic product
(D) change in the consumer price index - correct answer (B) return on the market
portfolio
A project consists of 150 jobs. The expected completion time for each job is given in
days. The project has three critical paths with two jobs in common, J and K. In order to
finish the project one day early, the completion time should be reduced one day for
(A) each of the 150 jobs
(B) each of the jobs on the three critical paths
(C) either Job J or Job K
(D) both Job J and Job K - correct answer (C) either Job J or Job K
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by
10 percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the
world petroleum market?
(A) Price will increase, but quantity will remain unchanged.
, (B) Price will increase, but quantity is indeterminate.
(C) Quantity will increase, but price is indeterminate.
(D) Both price and quantity will increase. - correct answer (B) Price will increase, but
quantity is indeterminate.
Which of the following would most likely occur as a result of the United States
government's imposing tariffs on foreign steel imports?
(A) The price of steel produced in the United States would decrease.
(B) The price of imported steel in the United States would decrease. (C) Employment in
the United States steel industry would increase. (D) Government tax revenue would fall.
- correct answer (C) Employment in the United States steel industry would increase.
In an economy the unemployment rate is 10 percent and the inflation rate is 1 percent.
An appropriate fiscal policy in this phase of the business cycle would be to
(A) increase government spending
(B) increase income taxes
(C) decrease transfer payments
(D) decrease the money supply - correct answer (A) increase government spending
Which of the following is an appropriate Federal Reserve action to stimulate the United
States economy?
(A) Selling government bonds on the open market
(B) Increasing the discount rate
(C) Reducing the reserve requirement
(D) Cutting taxes - correct answer (C) Reducing the reserve requirement
If the spread between the spot and forward exchange rates of two currencies equals the
interest rate difference between the two countries, this phenomenon is referred to as
(A) purchasing-power equality
(B) commodity arbitrage
(C) currency hedging
(D) interest-rate parity - correct answer (D) interest-rate parity
A firm that would like to know whether it has enough cash to meet its bills would be
most likely to use which category of financial ratio?
(A) Liquidity
(B) Leverage
(C) Efficiency
(D) Profitability - correct answer (A) Liquidity
