MGT 100 midterm study guide UPDATED
Exam Questions and CORRECT Answers
Nature of Man - CORRECT ANSWER - Methods/different lenses of analyzing scenarios
in the economy and in management
4 Kinds of Profit Firms - CORRECT ANSWER - Sole
Proprietorship/Partnerships/LLC/Corporations
Sole Proprietorship - CORRECT ANSWER - Most businesses in America are sole
proprietorships. Individuals are taxed, not the company. Responsible for all losses and debts
Partnerships - CORRECT ANSWER - Same characteristics of a sole proprietorship--two
people.
LLC - CORRECT ANSWER - Limited Liability. Individuals in the LLC are taxed. No
shareholders.
Corporations - CORRECT ANSWER - Limited Liability (any loans are sole responsibility
of the company) not the people. Owned by shareholders. Taxed heavily
REMM - CORRECT ANSWER - Every individual cares about everything (irrational).
Willing to make tradeoffs. Resourceful (can see changes in environment). Changing preferences.
Individual wants are UNLIMITED. Each individual is a utility MAXIMIZER. If costs change,
REMM man is affected.
Sociological Man - CORRECT ANSWER - Individuals view themselves as product of
their cultural environment; make decisions in accordance with this. Not evaluators. If costs
change, sociological man isn't affected.
, Economic Man - CORRECT ANSWER - Only want is income. Short-run money
maximizer. (Reductive model of REMM). Reflects economists' desire for simplicity and
modeling--used as a foil by non-economists.
Psychological Man - CORRECT ANSWER - Human wants are arranged in the hierarchy
of needs. Behavior determined by roles, environment, and authority. Income effect: if income
falls, consumption decreases, and vice versa
Stanford Prison Experiment - CORRECT ANSWER - Prime example of psychological
man--people's actions were shaped by their roles and environment. Guards were jerks to
prisoners.
Hierarchy of Needs - CORRECT ANSWER - Maslow. Priorities of most important stuff
Political Man - CORRECT ANSWER - Unlike REMM, individual is a perfect agent who
evaluates resources, maximizes public goods over his own welfare.
Teachers vs Sumo Wrestlers - CORRECT ANSWER - Showed how individuals have the
incentive to cheat when their gain is great enough (REMM, debunks economic model of man).
Equity theory.
Why do Americans work more than Europeans? - CORRECT ANSWER - Europeans are
taxed so dad-gum much that all of their services (healthcare) are provided to them so they have a
lower incentive to work. (Hayek, socialism)
Operating Income = ? - CORRECT ANSWER - Revenue - Operating Costs (COS, R&D,
SGA)
Net Income = ? - CORRECT ANSWER - Revenue - All costs (including taxes, interest,
one time costs, etc.)
Gross Margin % = ? - CORRECT ANSWER - (Revenue - Cost of Sales)/Revenue
Exam Questions and CORRECT Answers
Nature of Man - CORRECT ANSWER - Methods/different lenses of analyzing scenarios
in the economy and in management
4 Kinds of Profit Firms - CORRECT ANSWER - Sole
Proprietorship/Partnerships/LLC/Corporations
Sole Proprietorship - CORRECT ANSWER - Most businesses in America are sole
proprietorships. Individuals are taxed, not the company. Responsible for all losses and debts
Partnerships - CORRECT ANSWER - Same characteristics of a sole proprietorship--two
people.
LLC - CORRECT ANSWER - Limited Liability. Individuals in the LLC are taxed. No
shareholders.
Corporations - CORRECT ANSWER - Limited Liability (any loans are sole responsibility
of the company) not the people. Owned by shareholders. Taxed heavily
REMM - CORRECT ANSWER - Every individual cares about everything (irrational).
Willing to make tradeoffs. Resourceful (can see changes in environment). Changing preferences.
Individual wants are UNLIMITED. Each individual is a utility MAXIMIZER. If costs change,
REMM man is affected.
Sociological Man - CORRECT ANSWER - Individuals view themselves as product of
their cultural environment; make decisions in accordance with this. Not evaluators. If costs
change, sociological man isn't affected.
, Economic Man - CORRECT ANSWER - Only want is income. Short-run money
maximizer. (Reductive model of REMM). Reflects economists' desire for simplicity and
modeling--used as a foil by non-economists.
Psychological Man - CORRECT ANSWER - Human wants are arranged in the hierarchy
of needs. Behavior determined by roles, environment, and authority. Income effect: if income
falls, consumption decreases, and vice versa
Stanford Prison Experiment - CORRECT ANSWER - Prime example of psychological
man--people's actions were shaped by their roles and environment. Guards were jerks to
prisoners.
Hierarchy of Needs - CORRECT ANSWER - Maslow. Priorities of most important stuff
Political Man - CORRECT ANSWER - Unlike REMM, individual is a perfect agent who
evaluates resources, maximizes public goods over his own welfare.
Teachers vs Sumo Wrestlers - CORRECT ANSWER - Showed how individuals have the
incentive to cheat when their gain is great enough (REMM, debunks economic model of man).
Equity theory.
Why do Americans work more than Europeans? - CORRECT ANSWER - Europeans are
taxed so dad-gum much that all of their services (healthcare) are provided to them so they have a
lower incentive to work. (Hayek, socialism)
Operating Income = ? - CORRECT ANSWER - Revenue - Operating Costs (COS, R&D,
SGA)
Net Income = ? - CORRECT ANSWER - Revenue - All costs (including taxes, interest,
one time costs, etc.)
Gross Margin % = ? - CORRECT ANSWER - (Revenue - Cost of Sales)/Revenue
