Final Practice Exam

An illustrative county reports that 16.0 percent of its wage and salary workers belonged to a union in one year and 12.0 percent in a later year. Which statement describes the change correctly?

Select one.

• A fall of 4.0 percent
• A fall of 4.0 percentage points
• A fall of 25 percentage points
• A rise of 4.0 percentage points

A federal agency, the Securities and Exchange Commission, oversees the nation's securities markets. Which law set up that agency?

Select one.

• The Securities Exchange Act, passed the year after the Securities Act of 1933
• The Securities Act of 1933, passed the year before the Securities Exchange Act
• The Federal Reserve Act, signed in 1913 to create the central bank
• The Sarbanes-Oxley Act, passed in 2002 to tighten corporate reporting rules

An illustrative manager believes that employees dislike work and must be closely watched. In McGregor's framework, what is that belief an example of?

Select one.

• Theory X, a set of assumptions a manager may hold about people
• A Theory X worker, a type of employee who must be watched at all times
• Free-rein leadership, which lets a group decide within broad limits
• The bodily needs at the base of Maslow's hierarchy of needs

An illustrative car wash pays its attendants 13 dollars an hour, and federal law alone would allow it to pay less. Which statement best separates the legal question from the ethical one?

Select one.

• Because a lower wage would be legal, paying it would also be the ethical choice
• Because 13 dollars exceeds the federal floor, the law obliges the car wash to keep paying it
• The law sets a minimum the wage must meet; whether the wage is fair is a separate question
• Legality and ethics are one question, so the federal minimum settles both of them

An illustrative sole proprietorship and an illustrative corporation both want to bring in new owner money. Why can only the corporation do it by selling stock?

Select one.

• A sole proprietorship is not allowed to borrow any money from a bank
• A corporation's stockholders are lenders whose money must be paid back
• A corporation can issue shares of ownership, while a sole proprietorship has one owner
• A corporation never has to pay interest on any money that it raises

An illustrative flower shop's opening-day balance sheet shows cash of 5,000 dollars, inventory of 4,000 dollars, fixtures and a cooler of 27,000 dollars, and a bank loan of 12,000 dollars. What is the owner's equity, by the accounting equation?

Select one.

• 5,000 dollars, the cash the shop has on hand
• 24,000 dollars, the owner's claim on the assets
• 36,000 dollars, the total of everything the shop owns
• 12,000 dollars, the same amount as the bank loan

An illustrative hotel manager lets a front-desk clerk plan the lobby's seasonal decorations and mentor newly hired clerks. Which job-design tool is the manager using?

Select one.

• Job enlargement, because the clerk now has more tasks of the same kind
• Job rotation, because the clerk now moves between different jobs
• Flexible scheduling, because the clerk now chooses the working hours
• Job enrichment, because it adds responsibility and control over the work

An illustrative bakery has a promotion budget of 7,200 dollars for the year. Each loaf of bread sells for 6 dollars and has a variable cost of 2 dollars. How many loaves must the bakery sell for their per-unit margin to cover the promotion budget?

Select one.

• 1,200 loaves
• 1,800 loaves
• 3,600 loaves
• 28,800 loaves

In one worker-day, illustrative Ridge Town makes 12 bolts of cloth or 3 tons of grain. What is Ridge Town's opportunity cost of one ton of grain, measured in cloth?

Select one.

• 0.25 bolts of cloth
• 4 bolts of cloth
• 3 bolts of cloth
• 12 bolts of cloth

An illustrative flower shop earned net income of 14,000 dollars for the year, yet its cash rose only from 6,000 dollars to 9,000 dollars. Which explanation fits the shop's statement of cash flows?

Select one.

• The income statement overstated revenue, so the true net income was only 3,000 dollars
• The 3,000 dollars of depreciation was paid out in cash, which pulled the cash balance down
• The balance sheet counts cash as of one date, so the rise in cash cannot be compared with profit
• The owner withdrew 11,000 dollars and repaid 3,000 dollars of the loan, using cash without lowering net income

An illustrative dental clinic turns staff time, equipment, and supplies into teeth cleanings, and an illustrative furniture workshop turns lumber, tools, and labor into tables. Which statement best describes operations management in both?

Select one.

• It applies only to the workshop, because operations management is about physical goods
• It applies only to the clinic, because a service has no inputs to plan
• It is advertising the cleanings and the tables to win new customers
• It is planning, running, and improving the process that turns inputs into outputs

As a factor of production, capital refers to the tools, machines, and buildings a business uses to make its goods or services.

True or false.

• True
• False

An illustrative pottery studio sells mugs through its own website and also ships cases of mugs to a downtown gift shop, which resells them to visitors. How should the route through the gift shop be classified?

Select one.

• A direct channel, because every mug is still made and glazed in the studio's own kiln
• A wholesale price, because the gift shop orders many mugs at one time
• An indirect channel, since the gift shop sits between the studio and the buyer
• A promotion decision, because visitors see the mugs on a display shelf

In an illustrative farm-stand peach schedule, at 4, 5, 6, 7, 8, and 9 dollars a basket, buyers want 650, 550, 450, 350, 250, and 150 baskets, and sellers offer 50, 150, 250, 350, 450, and 550 baskets. What happens at a price of 5 dollars a basket?

Select one.

• A surplus of 400 baskets
• A shortage of 550 baskets
• A shortage of 700 baskets
• A shortage of 400 baskets

State laws decide which ownership forms, such as the LLC and the corporation, a business may choose. When an illustrative bakery scans its outside environment with PESTEL, which force do those laws belong to?

Select one.

• Economic, because the form changes how much money the owner could end up losing
• Legal, because they are laws that shape how a business may be organized
• Social, because family members and friends may join the business
• Technological, because the forms can be filed on a state website

An illustrative hair salon has an empty chair for a whole afternoon, while a bottle of shampoo the salon sells stays on its shelf until someone buys it. Why is the empty chair's time lost in a way the shampoo is not?

Select one.

• Because a haircut is a service, produced and used at once, so it cannot be stored
• Because the shampoo is a service that can be shelved, while a haircut is a good
• Because a haircut costs the salon more to provide than a bottle of shampoo costs it
• Because the salon did not advertise the empty time to its customers

An illustrative repair shop's year-end balance sheet shows cash of 9,000 dollars, inventory of 6,000 dollars, accounts payable of 4,000 dollars, and 2,000 dollars of its bank loan due within the coming year. What is the shop's current ratio?

Select one.

• 0.4
• 2.5
• 3.75
• 1.5

An illustrative trade-association newsletter lists the three core federal antitrust laws, the rules that police monopoly, in the order they were passed. Which law comes first on that list?

Select one.

• The Clayton Act
• The Federal Trade Commission Act
• The Securities Exchange Act
• The Sherman Act

An illustrative software company organized as a corporation has issued both stock and bonds. This year its board votes to reinvest all profit in product development instead of paying a dividend. Which statement is true?

Select one.

• Stockholders must still receive a dividend, because they own the company
• Bondholders lose this year's interest payment, because no dividend is being paid
• Stockholders receive no dividend, but bondholders are still owed their interest
• The board has broken a legal promise to stockholders by skipping the dividend

An illustrative call center pays its agents 19 dollars an hour in a quiet, comfortable office, but agents never choose how to handle a case, never lead a project, and are never thanked for good work. Using Herzberg's two factors, which diagnosis and fix fit the case?

Select one.

• A hygiene gap, so the fix is a raise in pay
• A motivator gap, so the fix is job enrichment
• A safety-need gap, so the fix is a new office
• No gap, because a well-paid worker is always engaged

An illustrative sandwich counter's process map has two steps: taking the order and payment takes 2 minutes per sandwich at the register, and making the sandwich takes 3 minutes per sandwich at the one prep station. What is the counter's capacity?

Select one.

• 12 sandwiches an hour, found by adding the two step times
• 30 sandwiches an hour, set by the 2-minute register step
• 20 sandwiches an hour, set by the 3-minute prep step
• 50 sandwiches an hour, found by adding the two hourly rates

An illustrative pet groomer's assistant works 30 hours a week for 48 weeks a year. If the owner raises the assistant's pay by 2 dollars an hour, how much more will the assistant cost the business each year?

Select one.

• 60 dollars
• 96 dollars
• 2,880 dollars
• 1,440 dollars

An illustrative summer camp needs four more counselors. It posts the openings on a regional job board and asks its returning counselors to tell friends who might apply. Which step of the hiring process is the camp carrying out?

Select one.

• Selection, because the camp is already choosing which applicants to hire
• Training, because the camp is teaching new counselors the skills of the job
• Recruitment, because the camp is building a pool of qualified applicants
• Performance evaluation, because the camp is rating counselors against standards

In one worker-day, illustrative North Valley makes 8 bolts of cloth or 2 tons of grain, and illustrative South Valley makes 5 bolts of cloth or 4 tons of grain. Which statement about absolute advantage is accurate?

Select one.

• North Valley has the absolute advantage in both goods
• South Valley has the absolute advantage in both goods
• Each valley has the absolute advantage in one good
• Neither valley has an absolute advantage in either good

In an illustrative farm-stand peach schedule, at 4, 5, 6, 7, 8, and 9 dollars a basket, buyers want 650, 550, 450, 350, 250, and 150 baskets, and sellers offer 50, 150, 250, 350, 450, and 550 baskets. Which statement describes the market at a price of 9 dollars a basket?

Select one.

• A shortage of 400 baskets, and the price tends to rise
• A surplus of 400 baskets, and the price tends to fall
• A surplus of 400 baskets, and the price tends to rise
• A surplus of 550 baskets, and the price tends to fall

Reading Carroll's pyramid of corporate social responsibility from the top layer down to the base, which order do its layers follow?

Select one.

• Economic, legal, ethical, philanthropic
• Ethical, philanthropic, legal, economic
• Legal, ethical, economic, philanthropic
• Philanthropic, ethical, legal, economic

An illustrative saver keeps 150,000 dollars in a single-owner savings account at each of two different FDIC-insured banks. Which statement describes the saver's coverage in the FDIC's own terms?

Select one.

• Only 250,000 dollars is insured, since coverage is per depositor across every bank the saver uses
• All 300,000 dollars is insured, since coverage is counted per account, with each separate account adding its own limit
• Coverage also includes stocks and mutual funds bought at either bank, up to 250,000 dollars
• All 300,000 dollars is insured, since coverage is per depositor, per insured bank, for each ownership category

An illustrative bakery plans to sell 24,000 loaves of bread in its first year at 6 dollars each, and it sets its promotion budget at 5 percent of planned revenue. What is the promotion budget for the year?

Select one.

• 1,200 dollars
• 144,000 dollars
• 7,200 dollars
• 28,800 dollars

A new federal law raises spending on highway repairs after Congress passes it and the President signs it. Which type of policy is that, and who controls it?

Select one.

• Monetary policy, set by Congress and the President
• Fiscal policy, run by the Federal Reserve
• Monetary policy, run by the Federal Reserve
• Fiscal policy, set by Congress and the President

An illustrative smoothie stand sells smoothies at 8 dollars each. Each smoothie has a variable cost of 3 dollars, and the stand's fixed costs are 45,000 dollars a year. How many smoothies must it sell in a year to break even?

Select one.

• 5,625 smoothies a year, found as 45,000 divided by 8
• 15,000 smoothies a year, found as 45,000 divided by 3
• 72,000 smoothies a year, which is really the break-even revenue in dollars
• 9,000 smoothies a year, found as 45,000 divided by (8 minus 3)

An illustrative bakery writes "Double our wedding-cake orders by the end of next year" and labels that line its mission statement. Because the line names a specific result to reach by a set time, it is correctly labeled a mission statement.

True or false.

• True
• False

An illustrative dog-walking business starts with 7,000 dollars from the owner's savings and a 5,000-dollar bank loan. Which kinds of financing are those two sources?

Select one.

• Both are debt financing, because both have to be paid back
• The owner's savings are equity, and the bank loan is debt
• The owner's savings are debt, and the bank loan is equity
• Both are equity financing, because the owner controls both

The owner of an illustrative chain of bike shops, its top manager, must decide whether opening another shop fits the company's long-range plan and how it would affect the shops already open. Which managerial skill does that decision draw on most?

Select one.

• Conceptual skill, because it means seeing the whole company and how its parts connect
• Technical skill, because the owner knows how to repair every kind of bike
• Human skill, because the shop managers will need to hire and train the new shop's staff
• No skill in particular, because managers at every level use the same mix

At an illustrative print shop, the large-format printer and the paper-cutting machine count as which factor of production?

Select one.

• Labor
• Capital
• Natural resources
• Entrepreneurship

A government places a new tax on imported cocoa, which an illustrative chocolate shop buys from growers overseas. How does the shop's scan of its external environment classify this news?

Select one.

• A threat from a political force outside the shop
• A weakness inside the shop, because it raises the shop's costs
• A strength, because the shop can pass the cost on to customers
• An opportunity, because competing shops face the same tax

An illustrative chain of pizza restaurants buys the dairy that supplies its mozzarella. What type of merger is this?

Select one.

• Horizontal, because both firms are in the food business
• Conglomerate, because a dairy and a restaurant do different work
• Vertical, because the two firms sit at different stages of making pizza
• Horizontal, because the restaurant chain is much larger than the dairy

An illustrative garden center's staffing plan has one seasonal worker working 25 hours a week for 30 weeks a year at 18 dollars an hour. What are the worker's yearly wages?

Select one.

• 750 dollars
• 13,500 dollars
• 450 dollars
• 23,400 dollars

The owner of an illustrative family-run bakery tells a new hire that the only stakeholders are the people who own the bakery. Which response is accurate?

Select one.

• The owners are the only stakeholders, because they put their money into the bakery
• Only the customers count, because their purchases bring in all of the bakery's revenue
• Only the bakers count, because their work turns the flour into bread for sale
• Workers, customers, suppliers, lenders, neighbors, and government have a stake too

An illustrative food truck takes in sales from customers over a month and pays for ingredients, a parking permit, and propane. Which amount is the truck's profit for that month?

Select one.

• Everything that customers paid the truck during the whole month
• The ingredient, permit, and propane costs added together for the month
• The sales left over once the ingredient, permit, and propane costs come out
• The sales the truck made during the single busiest lunch shift of the month

An illustrative fire captain arriving at a burning warehouse issues quick commands to the crew and does not pause to ask for anyone's views. Which leadership style is that?

Select one.

• Participative leadership, since the whole crew takes part in the work
• Free-rein leadership, since trained firefighters know their jobs
• Autocratic leadership, since the leader makes the decisions alone
• No style at all, since an emergency leaves no time for leadership