MGMT 1010 MIDTERM QUESTIONS AND ANSWERS
What are the 6 external environments that affect Businesses - Answers - global
business, political-legal, economic, technological, sociocultural, domestic business
environment
Global Business Environment - Answers - the international forces that affect a business
Technological Environment - Answers - all the ways by which firms create value for their
constituents
Political Legal Environment - Answers - The relationship between business and
government
Sociocultural Environment - Answers - the customs, mores, values, and demographic
characteristics of the society in which an organization functions
Economic Environment - Answers - relevant conditions that exist in the economic
system in which a company operates
Domestic business environment - Answers - The environment in which a firm conducts
its operations and derives its revenues
Equilibrium Price - Answers - Profit maximizing price at which the quantity of goods
demanded and the quantity of goods supplied are equal
Gross Domestic Product (GDP) - Answers - Total value of all goods and services
produced within a given period by a national economy through domestic factors or
production
Profits - Answers - difference between a business's revenues and its expenses
Stakeholders - Answers - groups, individuals, and organizations that are directly
affected by the practices of an organization and who therefore have a stake in its
performance
Planned economy - Answers - economy that relies on a centralized government to
control all or most factors of production and to make all or most production and
allocation decisions
Market economy - Answers - economy in which individuals control production and
allocation decisions through supply and demand
, communism - Answers - political system in which the government owns and operates all
factors of production
Capitalism - Answers - system that sanctions the private ownership of the factors of
production and encourages entrepreneurship by offering profits as an incentive
Mixed Market economy - Answers - economic system featuring characteristics of both
planned and market economies
Privatization - Answers - process of converting government enterprises into privately
owned companies
Socialism - Answers - planned economic system in which the government owns and
operates only selected major sources of production
Demand - Answers - the willingness and ability of buyers to purchase a good or service
Supply - Answers - the willingness and ability of producers to ofer a good or service for
sale
Law of Demand - Answers - principle that buyers will purchase (demand) more of a
product as its price drops and less as its price increases
Law of supply - Answers - principle that producers will offer (supply) more of a product
for sales as its price rises and less as its price drops
Cooperatives - Answers - Form of ownership in which a group of sole proprietorships or
partnerships agree to work together for common benefits
Corporations - Answers - Business that is legally considered an entity serrate from its
owners and is liable for its own debts; owners' liability extends to the limits of their
investment
Describe the different segments of small business enterprises - Answers - Services,
retailing, construction, wholesaling, finance and insurance, manufacturing,
transportation, other
Reasons for small business failure - Answers - Managerial incompetence or
inexperience, neglect, weak control systems, insufficient capital
Advantages of Sole Proprietorships - Answers - Freedom, easy to form, simplicity, tax
benefits
NAFTA - Answers - Agreement to gradually eliminate tariffs and other trade barriers
among the united states, canada, and mexico
What are the 6 external environments that affect Businesses - Answers - global
business, political-legal, economic, technological, sociocultural, domestic business
environment
Global Business Environment - Answers - the international forces that affect a business
Technological Environment - Answers - all the ways by which firms create value for their
constituents
Political Legal Environment - Answers - The relationship between business and
government
Sociocultural Environment - Answers - the customs, mores, values, and demographic
characteristics of the society in which an organization functions
Economic Environment - Answers - relevant conditions that exist in the economic
system in which a company operates
Domestic business environment - Answers - The environment in which a firm conducts
its operations and derives its revenues
Equilibrium Price - Answers - Profit maximizing price at which the quantity of goods
demanded and the quantity of goods supplied are equal
Gross Domestic Product (GDP) - Answers - Total value of all goods and services
produced within a given period by a national economy through domestic factors or
production
Profits - Answers - difference between a business's revenues and its expenses
Stakeholders - Answers - groups, individuals, and organizations that are directly
affected by the practices of an organization and who therefore have a stake in its
performance
Planned economy - Answers - economy that relies on a centralized government to
control all or most factors of production and to make all or most production and
allocation decisions
Market economy - Answers - economy in which individuals control production and
allocation decisions through supply and demand
, communism - Answers - political system in which the government owns and operates all
factors of production
Capitalism - Answers - system that sanctions the private ownership of the factors of
production and encourages entrepreneurship by offering profits as an incentive
Mixed Market economy - Answers - economic system featuring characteristics of both
planned and market economies
Privatization - Answers - process of converting government enterprises into privately
owned companies
Socialism - Answers - planned economic system in which the government owns and
operates only selected major sources of production
Demand - Answers - the willingness and ability of buyers to purchase a good or service
Supply - Answers - the willingness and ability of producers to ofer a good or service for
sale
Law of Demand - Answers - principle that buyers will purchase (demand) more of a
product as its price drops and less as its price increases
Law of supply - Answers - principle that producers will offer (supply) more of a product
for sales as its price rises and less as its price drops
Cooperatives - Answers - Form of ownership in which a group of sole proprietorships or
partnerships agree to work together for common benefits
Corporations - Answers - Business that is legally considered an entity serrate from its
owners and is liable for its own debts; owners' liability extends to the limits of their
investment
Describe the different segments of small business enterprises - Answers - Services,
retailing, construction, wholesaling, finance and insurance, manufacturing,
transportation, other
Reasons for small business failure - Answers - Managerial incompetence or
inexperience, neglect, weak control systems, insufficient capital
Advantages of Sole Proprietorships - Answers - Freedom, easy to form, simplicity, tax
benefits
NAFTA - Answers - Agreement to gradually eliminate tariffs and other trade barriers
among the united states, canada, and mexico
