MBA 5113 Business Foundations Exam #1
Review With Complete Solutions
Business - answer Any activity that provides goods or services to consumers for the
purpose of making a profit
3 Participant Roles in a business - answer Owners, Employees, Customers
Owner's role in a business - answer Invest Money and organize business ideas and bring
resources together
Employee's role in a business - answer hired by owners to work for the business and
help achieve owner's goals
Customer's role in a business - answer Ultimate goal of owners and employees is to
satisfy customers
Balanced Scorecard - answer Framework to provide a "Balance" between financial and
other measures that are important for sustained long term performance. - Out of
Harvard
What are the 4 dimensions in a Balanced Scorecard - answer Financial, Customer,
Internal Business Process, Learning & Growth
Triple Bottom Line - answer Scorecard with the framework for Social Responsibility
adopted by companies such as "Starbucks & Ben & Jerry's"
3 key Elements in the Triple bottom line include - answer People, Planet, Profit
"People" in the Triple Bottom Line - answer Social Concerns
"Planet" in the Triple Bottom Line - answer Environmental Concerns
"Profit" in the triple bottom line - answer Economic Concerns
Tree Diagram - answer Decision tool that calculates probability to record all possible
outcomes/ alternatives - "Calculated Risk" tool for decision making
Economic Profits = - answer Total Revenue
- (Explicit Decisions)
- (Implicit Decisions)
Accounting Profits = - answer Total Revenue
- (Explicit Decisions)
,Implicit Costs - answer Economic Opportunity Costs
Explicit Costs - answer Accounting Costs such as Fixed & Variable Assets
Economic Profit is used for - answer Making business decisions
Examples of Implicit Costs - answer Interest Foregone, Wage Foregone, Rent Foregone
Accounting Profit - answer Track Financial Performance
Ceteris Paribus - answer Only 1 variable is changing EVERYTHING ELSE IS HELD
CONSTANT/ EQUAL.
3 Basic Economic Questions - answer WHAT, HOW, for WHO - to produce
Production Possibilities - answer The alternative combination of goods & services that
could be produced in a given period of time.
4 factors of Production - answer Land, Labor, Capital, Entrepreneurship
Land - answer All natural resources to produce goods and services
Labor - answer # of skilled workers to complete task
Capital - answer All fixed Assets such as Machinery, Buildings, factory, networks
Entrepreneurship - answer Skill in creating products, services, and processes
Entrepreneurship is also described as - answer Creativity / Ability to solve problems
Production Possibilities Curve - answer A graph/ curve that describes the maximum
amount of one good that can be produced for every possible level of production of the
other good.
, Anything in the interior of the Production Possibilities Curve - answer We are operating
where all factors of production are not being utilized
Investment - answer Expenditures of Production (New Plant) and Capital (Equipment)
Exterior (outward) of Production Possibilities Curve - answer Only through Investment
Productivity is defined as - answer Output per unit of input
Human Capital - answer The knowledge and skills possessed by the workforce
Capitalism - answer An economic system based on private ownership of capital
Communism - answer An economic system in which the central government directs all
major economic decisions
Property Rights in Capitalism - answer Owners have a right to the property
The factors of production in Capitalism - answer Factors of Production are provided by
private individuals (Owners of Company)
What to produce in Capitalism - answer Resides with the Market a.k.a consumers
Property ownership, Factors of Production, What to be produced in a command
economy - answer The Central Government owns all the land, determines how the
factors of production should be deployed and determines what should be produced
Market Mechanism (invisible hand) - answer The Market defines what is produced
Review With Complete Solutions
Business - answer Any activity that provides goods or services to consumers for the
purpose of making a profit
3 Participant Roles in a business - answer Owners, Employees, Customers
Owner's role in a business - answer Invest Money and organize business ideas and bring
resources together
Employee's role in a business - answer hired by owners to work for the business and
help achieve owner's goals
Customer's role in a business - answer Ultimate goal of owners and employees is to
satisfy customers
Balanced Scorecard - answer Framework to provide a "Balance" between financial and
other measures that are important for sustained long term performance. - Out of
Harvard
What are the 4 dimensions in a Balanced Scorecard - answer Financial, Customer,
Internal Business Process, Learning & Growth
Triple Bottom Line - answer Scorecard with the framework for Social Responsibility
adopted by companies such as "Starbucks & Ben & Jerry's"
3 key Elements in the Triple bottom line include - answer People, Planet, Profit
"People" in the Triple Bottom Line - answer Social Concerns
"Planet" in the Triple Bottom Line - answer Environmental Concerns
"Profit" in the triple bottom line - answer Economic Concerns
Tree Diagram - answer Decision tool that calculates probability to record all possible
outcomes/ alternatives - "Calculated Risk" tool for decision making
Economic Profits = - answer Total Revenue
- (Explicit Decisions)
- (Implicit Decisions)
Accounting Profits = - answer Total Revenue
- (Explicit Decisions)
,Implicit Costs - answer Economic Opportunity Costs
Explicit Costs - answer Accounting Costs such as Fixed & Variable Assets
Economic Profit is used for - answer Making business decisions
Examples of Implicit Costs - answer Interest Foregone, Wage Foregone, Rent Foregone
Accounting Profit - answer Track Financial Performance
Ceteris Paribus - answer Only 1 variable is changing EVERYTHING ELSE IS HELD
CONSTANT/ EQUAL.
3 Basic Economic Questions - answer WHAT, HOW, for WHO - to produce
Production Possibilities - answer The alternative combination of goods & services that
could be produced in a given period of time.
4 factors of Production - answer Land, Labor, Capital, Entrepreneurship
Land - answer All natural resources to produce goods and services
Labor - answer # of skilled workers to complete task
Capital - answer All fixed Assets such as Machinery, Buildings, factory, networks
Entrepreneurship - answer Skill in creating products, services, and processes
Entrepreneurship is also described as - answer Creativity / Ability to solve problems
Production Possibilities Curve - answer A graph/ curve that describes the maximum
amount of one good that can be produced for every possible level of production of the
other good.
, Anything in the interior of the Production Possibilities Curve - answer We are operating
where all factors of production are not being utilized
Investment - answer Expenditures of Production (New Plant) and Capital (Equipment)
Exterior (outward) of Production Possibilities Curve - answer Only through Investment
Productivity is defined as - answer Output per unit of input
Human Capital - answer The knowledge and skills possessed by the workforce
Capitalism - answer An economic system based on private ownership of capital
Communism - answer An economic system in which the central government directs all
major economic decisions
Property Rights in Capitalism - answer Owners have a right to the property
The factors of production in Capitalism - answer Factors of Production are provided by
private individuals (Owners of Company)
What to produce in Capitalism - answer Resides with the Market a.k.a consumers
Property ownership, Factors of Production, What to be produced in a command
economy - answer The Central Government owns all the land, determines how the
factors of production should be deployed and determines what should be produced
Market Mechanism (invisible hand) - answer The Market defines what is produced
