MGRADES
MBA 5113 Business Foundations UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Business - CORRECT ANSWER - any activity that provides goods or services to
consumers for the purpose of making profit.
Profit - CORRECT ANSWER - selling a good/service for more than its cost..
Some organizations are established to provide social or educational services, earning profit is not
their objective - nonprofit organizations (ex. Habitat for Humanity, American Red Cross).
Owner - CORRECT ANSWER - - their primary role is to invest money in the business.
They organize the business idea and bring necessary resources together.
Employees - CORRECT ANSWER - hired by owners; work for the business and help
achieve owners' goals.
Customers - CORRECT ANSWER - the ultimate goal of owners and employees is to
satisfy customers.
Triple bottom line - CORRECT ANSWER - framework for social responsibility.
People - social concerns
Planet - environmental concerns
Profits - economic concerns
Factors affecting productivity: - CORRECT ANSWER - Capital/labor ratio: It is a
measure of whether enough investment is being made to make effective use of labor hours.
Scarcity of some resources
Work-force changes
,MGRADES
Innovations and technology
Regulatory effects
Bargaining power
Managerial factors
Quality of work life
Slope - CORRECT ANSWER - rise/run
Causation - CORRECT ANSWER - A graph is a summary of empirical observations.
It says nothing about cause and effect.
Economics - CORRECT ANSWER - Study of how society (business) chooses to allocate
scarce resources (land, labor, capital, etc.) to satisfy virtually unlimited wants (meet various
business objectives, profits, etc.).
KEY ECONOMIC IDEAS - CORRECT ANSWER - Scarcity Implies CHOICE which
implies OPPORTUNITY COST
OPPORTUNITY COST - CORRECT ANSWER - Value of benefits foregone by choosing
one alternative over another.
ECO Profits
ACC Profits - CORRECT ANSWER - ECO Profit= TR-EC-IC
ACC Profit= TR-EC
Ceteris Paribus - CORRECT ANSWER - Everything else being held equal.
To test for market effects on price, must hold other factors, e.g., costs and demand factors,
constant.
, MGRADES
Three Basic Economic Questions - CORRECT ANSWER - WHAT to produce: We have
to sacrifice less desired activities and goods.
HOW to produce: find an optimal method of producing goods and services
FOR WHOM to produce: focuses on how an economy's output is distributed across members of
society
Production possibilities - CORRECT ANSWER - The alternative combinations of goods
and services that could be produced in a given time period with all available resources and
technology
Economic Resources - CORRECT ANSWER - Land - including natural resources
Labor - number and skills of workers
Capital - machinery, buildings, networks
Entrepreneurship - skill in creating products, services, and processes
production possibilities curve - CORRECT ANSWER - A curve showing the different
combinations of two goods or services that can be produced in a full-employment, full-
production economy where the available supplies of resources and technology are fixed.
Economic growth: - CORRECT ANSWER - An increase in output (real GDP).
An expansion of production possibilities outward.
Investment: - CORRECT ANSWER - Expenditures on (production) of new plant and
equipment (capital) in a given time period, plus changes in inventories.
Productivity - - CORRECT ANSWER - output per unit of input, e.g., output per labor
hour.
MBA 5113 Business Foundations UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Business - CORRECT ANSWER - any activity that provides goods or services to
consumers for the purpose of making profit.
Profit - CORRECT ANSWER - selling a good/service for more than its cost..
Some organizations are established to provide social or educational services, earning profit is not
their objective - nonprofit organizations (ex. Habitat for Humanity, American Red Cross).
Owner - CORRECT ANSWER - - their primary role is to invest money in the business.
They organize the business idea and bring necessary resources together.
Employees - CORRECT ANSWER - hired by owners; work for the business and help
achieve owners' goals.
Customers - CORRECT ANSWER - the ultimate goal of owners and employees is to
satisfy customers.
Triple bottom line - CORRECT ANSWER - framework for social responsibility.
People - social concerns
Planet - environmental concerns
Profits - economic concerns
Factors affecting productivity: - CORRECT ANSWER - Capital/labor ratio: It is a
measure of whether enough investment is being made to make effective use of labor hours.
Scarcity of some resources
Work-force changes
,MGRADES
Innovations and technology
Regulatory effects
Bargaining power
Managerial factors
Quality of work life
Slope - CORRECT ANSWER - rise/run
Causation - CORRECT ANSWER - A graph is a summary of empirical observations.
It says nothing about cause and effect.
Economics - CORRECT ANSWER - Study of how society (business) chooses to allocate
scarce resources (land, labor, capital, etc.) to satisfy virtually unlimited wants (meet various
business objectives, profits, etc.).
KEY ECONOMIC IDEAS - CORRECT ANSWER - Scarcity Implies CHOICE which
implies OPPORTUNITY COST
OPPORTUNITY COST - CORRECT ANSWER - Value of benefits foregone by choosing
one alternative over another.
ECO Profits
ACC Profits - CORRECT ANSWER - ECO Profit= TR-EC-IC
ACC Profit= TR-EC
Ceteris Paribus - CORRECT ANSWER - Everything else being held equal.
To test for market effects on price, must hold other factors, e.g., costs and demand factors,
constant.
, MGRADES
Three Basic Economic Questions - CORRECT ANSWER - WHAT to produce: We have
to sacrifice less desired activities and goods.
HOW to produce: find an optimal method of producing goods and services
FOR WHOM to produce: focuses on how an economy's output is distributed across members of
society
Production possibilities - CORRECT ANSWER - The alternative combinations of goods
and services that could be produced in a given time period with all available resources and
technology
Economic Resources - CORRECT ANSWER - Land - including natural resources
Labor - number and skills of workers
Capital - machinery, buildings, networks
Entrepreneurship - skill in creating products, services, and processes
production possibilities curve - CORRECT ANSWER - A curve showing the different
combinations of two goods or services that can be produced in a full-employment, full-
production economy where the available supplies of resources and technology are fixed.
Economic growth: - CORRECT ANSWER - An increase in output (real GDP).
An expansion of production possibilities outward.
Investment: - CORRECT ANSWER - Expenditures on (production) of new plant and
equipment (capital) in a given time period, plus changes in inventories.
Productivity - - CORRECT ANSWER - output per unit of input, e.g., output per labor
hour.
