BU 106
Introduction to Business
Midterms Exam Review (Qns & Ans)
2025
1. What is the primary goal of financial management in a
business?
- A. Maximizing revenue
- B. Minimizing costs
- C. Maximizing shareholder wealth (ANS)
- D. Maintaining liquidity
- Rationale: The primary goal of financial management is to
maximize shareholder wealth, as it reflects the business's success
and growth potential.
©/2025
,2. Which of the following is a characteristic of a perfectly
competitive market?
- A. Few sellers
- B. Product differentiation
- C. High barriers to entry
- D. Price takers (ANS)
- Rationale: In a perfectly competitive market, firms are price
takers, meaning they accept the market price as given because
there are many sellers and identical products.
3. What type of organizational structure is characterized by a flat
hierarchy and wide span of control?
- A. Tall structure
- B. Matrix structure
- C. Flat structure (ANS)
- D. Functional structure
- Rationale: A flat organizational structure has fewer levels of
management and a wider span of control, allowing for faster
decision-making and communication.
ANSANSANS Fill-in-the-Blank Questions
©/2025
, 4. A __________ is a formal written document that describes the
nature of a business and how it will operate.
- ANS: Business plan
- Rationale: A business plan outlines the goals, strategies, and
operational plans of a business.
5. The __________ effect occurs when a small change in
consumer demand results in a larger change in demand for the
inputs required to produce the product.
- ANS: Bullwhip
- Rationale: The bullwhip effect describes how small
fluctuations in demand can cause significant variations in the
supply chain.
ANSANSANS True/False Questions
6. Outsourcing is the process of bringing outsourced activities
back in-house.
- ANS: False
- Rationale: Outsourcing involves contracting external
organizations to perform business functions, while bringing
activities back in-house is known as insourcing.
7. A monopoly market structure has many buyers and sellers.
- ANS: False
©/2025
Introduction to Business
Midterms Exam Review (Qns & Ans)
2025
1. What is the primary goal of financial management in a
business?
- A. Maximizing revenue
- B. Minimizing costs
- C. Maximizing shareholder wealth (ANS)
- D. Maintaining liquidity
- Rationale: The primary goal of financial management is to
maximize shareholder wealth, as it reflects the business's success
and growth potential.
©/2025
,2. Which of the following is a characteristic of a perfectly
competitive market?
- A. Few sellers
- B. Product differentiation
- C. High barriers to entry
- D. Price takers (ANS)
- Rationale: In a perfectly competitive market, firms are price
takers, meaning they accept the market price as given because
there are many sellers and identical products.
3. What type of organizational structure is characterized by a flat
hierarchy and wide span of control?
- A. Tall structure
- B. Matrix structure
- C. Flat structure (ANS)
- D. Functional structure
- Rationale: A flat organizational structure has fewer levels of
management and a wider span of control, allowing for faster
decision-making and communication.
ANSANSANS Fill-in-the-Blank Questions
©/2025
, 4. A __________ is a formal written document that describes the
nature of a business and how it will operate.
- ANS: Business plan
- Rationale: A business plan outlines the goals, strategies, and
operational plans of a business.
5. The __________ effect occurs when a small change in
consumer demand results in a larger change in demand for the
inputs required to produce the product.
- ANS: Bullwhip
- Rationale: The bullwhip effect describes how small
fluctuations in demand can cause significant variations in the
supply chain.
ANSANSANS True/False Questions
6. Outsourcing is the process of bringing outsourced activities
back in-house.
- ANS: False
- Rationale: Outsourcing involves contracting external
organizations to perform business functions, while bringing
activities back in-house is known as insourcing.
7. A monopoly market structure has many buyers and sellers.
- ANS: False
©/2025
