BUS I EXAM 1 UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. Ross wants to invest some money that he just inherited.
He found that his bank offers a savings
account paying a guaranteed 3% rate of return. However,
he would like to earn a higher
return. Ross should keep in mind that to earn a higher
return on his money he:
A. will have to invest overseas.
B. should invest in a business that has a very stable and
predictable rate of return.
C. will probably have to accept a higher level of risk.
D. will probably have to engage in illegal activities.
Answer:
C
Question:
2. Carrie, a student at Metropolitan Community College,
dreams of starting her own business. In
an effort to learn as much as she can about small
business management, she talked to four
friends who each offered their advice. Which of these
suggestions is likely to help Carrie the
most?
A. The best way to learn about running a business is by
getting hands-on experience. You should
quit school and put your dream into action.
B. Take courses related to small business management
and look for a job with a successful
businessperson, preferably in your field of interest.
C. Since every business is unique, don't worry about
advice from others. Go to a bank, get a
business loan, and live your dream.
D. Starting and managing a small business requires little
more than common sense. If your idea is
unique, hard work will guarantee your success.
Answer:
B
,Question:
3. Which of the following statements would a follower of
Adam Smith be most likely to make?
A. The federal government should use its ability to spend
and tax to guide the decisions of
businesses and consumers.
B. Market economies are flawed because they put too
much emphasis on economic growth and not
enough on environmental problems.
C. Overpopulation is the main danger confronting
modern economies.
D. If people are given the freedom to follow their own
interests, theoretically their efforts will lead to
economic growth that benefits society as a whole.
Answer:
D
Question:
4. A separation between ownership and management is
most likely to occur in a:
A. Sole proprietorship.
B. General partnership.
C. Corporation.
D. Limited liability partnership.
Answer:
C
Question:
5. According to the invisible hand concept, the best way for
a society to encourage the creation of
jobs and the production of the products most wanted by
consumers would be to:
A. Permit government owned industries, such as
telecommunications, transportation, and energy,
and operate these firms as nonprofit organizations.
B. Allow private ownership of businesses, but make use of
extensive regulation to force businesses
to behave in a socially desirable way.
C. Allow entrepreneurs personal freedom to follow their
own self-interest.
D. Impose high taxes on individuals, and use the revenue
to subsidize businesses to encourage
them to produce the maximum rate of output.
Answer:
C
,Question:
6. Compared to partnerships and sole proprietorship's, a
major advantage of the C (conventional)
corporation as a form of business ownership is that it:
A. Has the ability to raise more money.
B. Is easier and less expensive to form.
C. Qualifies for simplified tax treatment.
D. Creates unlimited liability for its owners.
Answer:
A
Question:
7. Which of the following is normally considered a
disadvantage of the corporate form of
business?
A. Unlimited liability of owners.
B. Difficult transfer of ownership.
C. Limited life.
D. Double taxation of earnings.
Answer:
D
Question:
8. A detailed written statement that describes the nature of
the business, the target market, the
firm's competitive advantages, as well as the owner's
resources and qualifications is a:
A. business plan.
B. entrepreneurial mission statement.
C. profit and loss statement.
D. professional action plan.
Answer:
A
Question:
9. Bankers and potential investors are likely to read ___________
first.
A. the executive summary
B. the marketing plan
C. the qualifications of the management team
D. the analysis of the competition
Answer:
A
, Question:
10. Whether a consumer thinks a product provides the best
value depends upon:
A. the actual product benefits.
B. the consumer's perceptions.
C. the global situation.
D. the laws covering the product's manufacture.
Answer:
B
Question:
11. There is evidence that the recession is coming to an end
for Intelligent Engine Company. New
orders are coming in at a steady pace, and management
is confident that new contracts will
take them through the next couple of years. The company
has started investing again, but
not in people. Employees total the same as when the
company and its competitors faced
their lowest revenues of the decade. Due to __________________
, the company is
producing more product and services with less people.
A. the lack of skilled labor
B. new competition
C. social changes
D. technological advancement
Answer:
D
Question:
12. Adam Smith believed that countries would prosper if
businesspeople were free to start and run
their own businesses. Businesspeople would make a
profit by providing the goods, services
and ideas that others in the economy wanted, and they
would hire others to help increase
those profits, leading to social and economics benefits
for many. This idea was called the
__________.
A. kinked demand theory.
B. invisible hand.
C. spending multiplier.
D. demand accelerator.
Answer:
B
CORRECT ANSWERS
Question:
1. Ross wants to invest some money that he just inherited.
He found that his bank offers a savings
account paying a guaranteed 3% rate of return. However,
he would like to earn a higher
return. Ross should keep in mind that to earn a higher
return on his money he:
A. will have to invest overseas.
B. should invest in a business that has a very stable and
predictable rate of return.
C. will probably have to accept a higher level of risk.
D. will probably have to engage in illegal activities.
Answer:
C
Question:
2. Carrie, a student at Metropolitan Community College,
dreams of starting her own business. In
an effort to learn as much as she can about small
business management, she talked to four
friends who each offered their advice. Which of these
suggestions is likely to help Carrie the
most?
A. The best way to learn about running a business is by
getting hands-on experience. You should
quit school and put your dream into action.
B. Take courses related to small business management
and look for a job with a successful
businessperson, preferably in your field of interest.
C. Since every business is unique, don't worry about
advice from others. Go to a bank, get a
business loan, and live your dream.
D. Starting and managing a small business requires little
more than common sense. If your idea is
unique, hard work will guarantee your success.
Answer:
B
,Question:
3. Which of the following statements would a follower of
Adam Smith be most likely to make?
A. The federal government should use its ability to spend
and tax to guide the decisions of
businesses and consumers.
B. Market economies are flawed because they put too
much emphasis on economic growth and not
enough on environmental problems.
C. Overpopulation is the main danger confronting
modern economies.
D. If people are given the freedom to follow their own
interests, theoretically their efforts will lead to
economic growth that benefits society as a whole.
Answer:
D
Question:
4. A separation between ownership and management is
most likely to occur in a:
A. Sole proprietorship.
B. General partnership.
C. Corporation.
D. Limited liability partnership.
Answer:
C
Question:
5. According to the invisible hand concept, the best way for
a society to encourage the creation of
jobs and the production of the products most wanted by
consumers would be to:
A. Permit government owned industries, such as
telecommunications, transportation, and energy,
and operate these firms as nonprofit organizations.
B. Allow private ownership of businesses, but make use of
extensive regulation to force businesses
to behave in a socially desirable way.
C. Allow entrepreneurs personal freedom to follow their
own self-interest.
D. Impose high taxes on individuals, and use the revenue
to subsidize businesses to encourage
them to produce the maximum rate of output.
Answer:
C
,Question:
6. Compared to partnerships and sole proprietorship's, a
major advantage of the C (conventional)
corporation as a form of business ownership is that it:
A. Has the ability to raise more money.
B. Is easier and less expensive to form.
C. Qualifies for simplified tax treatment.
D. Creates unlimited liability for its owners.
Answer:
A
Question:
7. Which of the following is normally considered a
disadvantage of the corporate form of
business?
A. Unlimited liability of owners.
B. Difficult transfer of ownership.
C. Limited life.
D. Double taxation of earnings.
Answer:
D
Question:
8. A detailed written statement that describes the nature of
the business, the target market, the
firm's competitive advantages, as well as the owner's
resources and qualifications is a:
A. business plan.
B. entrepreneurial mission statement.
C. profit and loss statement.
D. professional action plan.
Answer:
A
Question:
9. Bankers and potential investors are likely to read ___________
first.
A. the executive summary
B. the marketing plan
C. the qualifications of the management team
D. the analysis of the competition
Answer:
A
, Question:
10. Whether a consumer thinks a product provides the best
value depends upon:
A. the actual product benefits.
B. the consumer's perceptions.
C. the global situation.
D. the laws covering the product's manufacture.
Answer:
B
Question:
11. There is evidence that the recession is coming to an end
for Intelligent Engine Company. New
orders are coming in at a steady pace, and management
is confident that new contracts will
take them through the next couple of years. The company
has started investing again, but
not in people. Employees total the same as when the
company and its competitors faced
their lowest revenues of the decade. Due to __________________
, the company is
producing more product and services with less people.
A. the lack of skilled labor
B. new competition
C. social changes
D. technological advancement
Answer:
D
Question:
12. Adam Smith believed that countries would prosper if
businesspeople were free to start and run
their own businesses. Businesspeople would make a
profit by providing the goods, services
and ideas that others in the economy wanted, and they
would hire others to help increase
those profits, leading to social and economics benefits
for many. This idea was called the
__________.
A. kinked demand theory.
B. invisible hand.
C. spending multiplier.
D. demand accelerator.
Answer:
B
