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Business
Q:
The distribution process includes promotion of goods and services by sellers and resellers.
Q:
Stocks areA) promises to repay loans. B) a liability of a proprietorship.C) a liability of a corporation. D) shares of ownership in a corporation.
Q:
Everything else equal, the higher the DFL is for a firm, the closer its operations are to its financial breakeven point.
a. True
b. False
Q:
What is relationship marketing, and how does it benefit an international marketer?
Q:
Suppose your donut shop earns $24,000 in total revenues per month with explicit costs of $12,000 and opportunity costs of $8,000. Your economic profit isA) $16,000. B) $12,000. C) $4,000. D) zero.
Q:
What has become the primary vehicle for doing business in many foreign countries? Explain and justify your answer.
Q:
The degree of financial leverage gives an indication of how a change in EBIT will affect EPS.
a. True
b. False
Q:
Behavioral economics suggests that people face human limitations that prevent them from examining every possible choice available to them, with the implication thatA) the consumer optimum implied by utility theory is an inappropriate approach to deriving demand curves.B) the consumer optimum implied by utility theory is an appropriate approach to deriving demand curves.C) marginal utility is always equal to zero. D) marginal utility is always negative.
Q:
What is the mode of entry chosen by most consumer services firms to enter a foreign market? What is the reason for this?
Q:
Financial breakeven analysis can be used to help evaluate the impact various forms of financing, such as debt and equity, will have on the riskiness of a firm.
a. True
b. False
Q:
What is utility analysis? What is the goal of this analysis?
Q:
Companies today must be ready to provide after-sale services in the international marketplace if they are to dominate the global arena. Explain why this is true.
Q:
If a firm has no preferred stock, its financial breakeven point is the sales level that results in net income equal to zero.
a. True
b. False
Q:
The absolute price elasticity of demand would be the lowest forA) automobiles. B) Pizza Hut pizza.C) salt. D) movie tickets.
Q:
What is the ISO 9000 certification? Why would a company need this?
Q:
The purpose of financial breakeven analysis is to determine the level of sales a firm needs in order to cover the fixed and variable costs associated with producing and selling inventory items.
a. True
b. False
Q:
Is a uniform per-unit tax on firms that cause an externality an optimal policy for correcting the externality? Explain.
Q:
Discuss how a customer determines the quality of a product. Give a specific example to illustrate your answer.
Q:
The closer a firm is to its operating breakeven point, the greater is the absolute value of the degree of operating leverage.
a. True
b. False
Q:
The threshold income level originally used to determine official poverty statistics was based onA) an income three times the amount of money needed to purchase a nutritionally adequate diet.B) standards provided by the United Nations based on studies done in poor countries around the world.C) the highest income of the lowest one-fifth of families in the country. D) a per capita income of $1,000 in 1958 prices.
Q:
What are the three trends that spur demand for technologically advanced products?
Q:
The higher a firm's operating leverage, the higher is its business risk.
a. True
b. False
Q:
For a monopsonist, the marginal factor cost curve will be above the supply of labor curve. The marginal factor cost curve is above the supply curve becauseA) the monopsonist will take advantage of labor and offer them lower wages.B) in order for the monopsonist to sell an additional unit of the good, the price of the good must be lowered.C) in order for the monopsonist to hire more labor the monopsonist must also purchase more capital.D) the monopsonist will have to pay all workers a higher wage rate than the current wage rate if it wants to hire more workers.
Q:
Describe the five stages of Rostow's model of economic development.
Q:
Alternative methods for producing a given product often have different degrees of operating leverage and hence have different breakeven points and degrees of risk.
a. True
b. False
Q:
Suppose a firm employs only capital and labor as inputs. Explain how the firm should allocate its inputs in order to maximize profits in a perfectly competitive market.
Q:
Explain the concept of derived demand. Provide an illustration.
Q:
The higher the percentage of a firm's total costs that are fixed, the higher the degree of operating leverage and the lower the operating breakeven point.
a. True
b. False
Q:
Marginal revenue product isA) marginal physical product times marginal factor cost. B) marginal physical product times marginal revenue.C) average physical product times marginal revenue. D) marginal physical product times the wage rate.
Q:
Three factors affect the demand in international industrial markets differently than in consumer markets. What are these factors?
Q:
Two firms which have the same operating leverage must also have the same ROA, since operating leverage and ROA both measure the effective utilization of assets by the firm.
a. True
b. False
Q:
A theory of regulatory behavior, which states that regulators must take into account the preferences of legislators, producers, and consumers, is theA) capture theory.B) share-the-gains, share-the-pains theory. C) public interest theory.D) general interests theory.
Q:
In countries with strong cultures, particularly those with collectivistic and high-context cultures, ________ will be the single most important source of information about the development of new industrial products and services.
A) knowledge of the local language and customs
B) understanding competitive trends
C) the use of technology
D) constant and close communication with customers
E) direct and assertive follow-up
Q:
When a small change in sales results in a large change in operating income, one possible reason is that the firm is employing a relatively high degree of operating leverage.
a. True
b. False
Q:
A situation where a consumerʹs willingness to use an item depends on how many others use it isA) a positive-sum game. B) a network effect. C) price-leadership. D) a vertical merger.
Q:
The key functions of global account managers revolve around the notions of intelligence gathering, coordination with the customer's staff, and
A) managing the marketing mix.
B) adapting practices to the changing environment.
C) increasing post-purchase sales
D) attending trade shows.
E) gauging demand in various environments.
Q:
Today, computer simulations models can calculate multiple breakeven charts providing management with an idea of how the firm's breakeven point would change under different assumptions for key variables.
a. True
b. False
Q:
Refer to the above figure. The above figure shows the cost structure of a firm producing an information product. Which curve represents average fixed cost?A) Curve 1 B) Curve 2C) Curve 3 D) Any of the 3 could be AFC.
Q:
Jamal has been the sales representative for the western region for ten years, calling on the same customers repeatedly. Other companies have brought in reps from their home countries, but Jamal finds his customers prefer to deal with him. Jamal demonstrates qualities associated with
A) relationship marketing.
B) in-country advantage.
C) sales orientation.
D) consistency.
E) efficiency.
Q:
Other things held constant, if a firm is operating at a profit and then sales increase, the degree of operating leverage will decline.
a. True
b. False
Q:
The demand curve for the product of a monopolistic competitor isA) downward sloping. B) horizontal.C) vertical. D) unitary elastic.
Q:
What is true of commercial relationships in countries with collectivistic and high-context cultures?
A) The commercial relationship is limited to a one-time provision of the goods or service.
B) Efficiency and innovation matter more than long-term relationship building.
C) Trust is a crucial aspect of commercial relationships.
D) The focus of the relationship is on price and value-for-money.
E) Customer loyalty is fleeting and short-lived.
Q:
If EBIT doubles when sales doubles, then the firm's degree of operating leverage must be exactly two.
a. True
b. False
Q:
Paul attends the London Book Fair every year to represent his company and show its products to publishers from other countries. He also meets with individual publishers to discuss distributing their books in the U.S. The London Book Fair is
A) an industry forum.
B) a commerce opportunity.
C) a commercial storefront.
D) a market expander.
E) a trade show.
Q:
What affects the price elasticity of demand for a monopolistʹs product?
Q:
The DOL is an index number that measures the effect of a change in sales price on the operating breakeven point.
a. True
b. False
Q:
_______ provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products.
A) Catalogs
B) Direct mail campaigns
C) Banners
D) Trade shows
E) Specialty advertising blogs
Q:
In an increasing-cost industry, an increase in industry output will
A) lead to a higher market price.
B) lead to a lower market price.
C) shift each firmʹs average fixed cost curve down.
D) shift each firmʹs short run supply curve down.
Q:
What has become the primary vehicle for business-to-business promotion and selling in many foreign countries?
A) trade shows
B) in-office visits by sales teams
C) TV advertising
D) local radio advertising
E) transit media
Q:
Operating costs include variable costs, depreciation and interest charges.
a. True
b. False
Q:
In the above figure, at output levels between 5 units and 13 units, A) the firmʹs accounting profits are negative.B) total revenue equals total costs.C) the firmʹs economic profits are positive.D) the firm is breaking even.
Q:
Restrictions on cross-border data flows are potentially the most damaging to industries that
A) are fragmented.
B) focus on domestic production.
C) generate revenue from the sale of physical products across borders.
D) rely on information transfers across countries.
E) are concentrated in nature.
Q:
Breakeven analysis can be used to determine how large sales of a new product must be for the firm to achieve profitability, but it is not useful in studying the effects of a general expansion in the firm's operations.
a. True
b. False
Q:
If average variable costs are increasing while average total costs are decreasing, thenA) marginal cost must lie between average variable and average total costs.B) marginal cost must equal average variable cost. C) marginal cost must equal average total cost.D) fixed costs must be zero.
Q:
At the firm's operating breakeven point, total revenues and total variable costs are exactly equal.
a. True
b. False
Q:
When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of General Motors stock from another party, General Motors receives
A) the dollar value of the transaction.
B) only the par value of the common stock.
C) nothing.
D) the dollar amount of the transaction, less brokerage fees.
Q:
What is the most serious threat to the continued expansion of international services trade?
A) free trade
B) capitalism
C) globalization
D) foreign trade zones (FTZs)
E) protectionism
Q:
In knowledge-based services, such as consulting, engineering, education, and information technology, ________ are a key driver of success and failure.
A) income taxes
B) intellectual property issues
C) free trade zones (FTZs)
D) exchange rate regulations
E) tariffs on the import of goods
Q:
One limitation of operating breakeven analysis is that variable cost must be assumed constant throughout the analysis in order to completely analyze changes in fixed investment.
a. True
b. False
Q:
Economic profit is alwaysA) greater than accounting profit. B) equal to accounting profit.C) less than accounting profit.D) equally likely to be either greater or less than accounting profit.
Q:
One situation where operating breakeven analysis can be valuable is when a firm plans to increase fixed investment in order to lower variable cost, such as labor costs.
a. True
b. False
Q:
Alcare Advertising has just signed a contract with Miramar cosmetics company to create ads for Miramar's products. Miramar wants Alcare to come up with creative ideas for its recent expansion into South Asian markets of India and Indonesia. In order to accommodate Miramar, Alcare has now opened offices in two Indian cities and one Indonesian city. In this context, Alcare is a
A) head hunter.
B) client follower.
C) bargain hunter.
D) bet padder.
E) risk avoider.
Q:
One piece of evidence that possibly supports the bounded -rationality assumption of behavioral economics is that experiments appear to have shown thatA) people make different decisions in calm situations than in situations in which emotions come into play.B) people make the same decisions in calm situations than in situations in which emotions come into play.C) total utility is maximized when marginal utility is equal to zero.D) total utility is declining when marginal utility is negative.
Q:
Two key objectives of financial planning and control are to avoid cash squeezes and to improve profitability.
a. True
b. False
Q:
What is true of business services?
A) Most business services companies enter international markets to service their local clients abroad.
B) Services are intangible and so cannot be produced in one country and exported to another.
C) The removal of trade barriers poses a serious threat to the continued expansion of international services trade.
D) Firms should avoid providing after-sales services as the costs do not justify the benefits.
E) The perception of quality of a business service depends solely on the average per capita income of the buyer's country.
Q:
What is marginal utility? Why is the term ʺmarginalʺ important in utility analysis?
Q:
To determine the amount of additional funds needed, you may subtract the expected increase in liabilities (a source of funds) from the sum of the expected increases in retained earnings and assets (both uses of funds).
a. True
b. False
Q:
Some business services have intrinsic value that can be embodied in some tangible form; they can be produced in one country and exported to another. An example is
A) language schools.
B) in-flight services on an airplane.
C) operating an automatic teller machine.
D) data processing services.
E) physicians' services.
Q:
Any firm with a positive growth rate in sales will require some amount of external funding, assuming all existing ratios are to be maintained.
a. True
b. False
Q:
When the consumer spends less than 3% of his income on a good, demand will beA) elastic.B) unit-elastic. C) inelastic.D) elastic, unit-elastic or inelastic depending upon supply.
Q:
For most consumer services firms, the mode of entry into a foreign market is licensing, franchising, strategic alliances, or direct. This is usually done because
A) services are highly differentiated.
B) services produced cannot be added to inventory.
C) the creation and consumption of services cannot be separated.
D) the inputs used vary to a great extent.
E) services usually do not have any intrinsic value that can be converted into a tangible form.
Q:
The term "spontaneously generated funds" generally refers to increases in the cash account that result from growth in sales, assuming the firm is operating with a positive profit margin.
a. True
b. False
Q:
Using a graph, show the effects of a negative externality. Where is the socially optimum point of output? How can it be achieved?
Q:
Firms that sell industrial goods in international markets should focus on after-sales services because these services
A) are almost always more profitable than the actual sale of the goods themselves.
B) require high levels of investment in training and development.
C) ensure that the firm's goods are not liable to lawsuits.
D) cost the firm almost nothing.
E) cannot be outsourced to other companies and must be provided by the firm itself.
Q:
An increase in the firm's inventory balance normally will require additional financing unless the increase is matched by an equally large decrease in some other asset account.
a. True
b. False
Q:
The official poverty level is based onA) total net worth.B) pretax income, and includes cash subsidies but does not include in -kind subsidies such as food stamps.C) after-tax income, and includes both cash and in -kind government subsidies.D) wages and salaries, plus any unreported amounts of income from the underground economy.
Q:
________ is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology.
A) Promotional pricing
B) Product innovation
C) Capacity utilization efficiency
D) Customer training
E) Warranty
Q:
As a firm's sales grow, its current asset accounts tend to increase. For instance, as sales increase, the firm's purchases increase and its level of accounts payable will increase. Thus, spontaneously generated funds will arise from transaction accounts that increase as sales increase.
a. True
b. False
Q:
The ISO 9000 certification allows a company to
A) hedge its risk from currency fluctuations.
B) bypass all international trade barriers.
C) diversify into other product lines.
D) differentiate it from its competitors.
E) provide after-sales services.
Q:
A monopsonist wants to purchase more labor. Which of the following statements is true?A) The wage rate that the monopsonist has to pay future workers is lower than it pays current workers since there is no other place to work.B) The wage rate that the monopsonist has to pay future workers will be the same rate it pays current workers.C) The wage rate that the monopsonist has to pay future workers is higher than what it will continue to pay current workers.D) The monopsonist will have to raise the wage rate for current and additional employees.