Chapter 1 - Exploring the World of Business and Economics s1

Chapter 1 - Exploring the World of Business and Economics

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Matching Questions

1. _____Materials, machinery, and workers 9. _____A person who takes the risk and are assembled in one place. invests in a business. 2. _____The government spends more than it 10. _____Value of all goods and services receives. produced within a country during a one- 3. _____System of exchange. year period. 4. _____The process of distinguishing a. capitalism Colgate from Crest toothpaste. b. economics 5. _____The average level of output per c. federal deficit worker per hour. d. productivity 6. _____A study of how wealth is created e. product differentiation and distributed. f. business 7. _____An organized effort to produce and g. factory system sell goods and services for a profit. h. entrepreneur 8. _____A system where individuals own and operate the majority of businesses. i. gross domestic product j. barter True False Questions

11. T F The majority of small business 16. T F If a firm’s sales revenues firms are successful at the end of ten exceed its expenses, the firm has years. earned a profit. 12. T F For a business to be organized, it 17. T F Fiscal policy determines the must combine four types of level of interest rates. resources: workers, natural 18. T F The ultimate objective of business resources, capital, and ownership. firms should be to satisfy the needs 13. T F The equilibrium price means of their customers. that the supply and demand for a 19. T F Adam Smith is the father of product are in balance. communism and advocated a 14. T F Under communism, individual classless society. consumers determine what will be 20. T F A business cycle consists of produced. four states: peak, recession, trough, 15. T F Hewlett-Packard Corporation and and recovery. Dell Computer use product differentiation in the marketplace.

21. 22. Multiple-Choice Questions

23. _____Demand is a e. business cycle. a. relationship between prices and 28. _____The ability to work well with many the quantities purchased by types of people in the workplace is buyers. referred to as b. relationship between prices and a. workplace differentiation. the quantities offered by b. cultural diversity. producers. c. economic stability. c. quantity of goods available for d. career unity. purchase. e. employee magnification. d. is measured by comparing the 29. _____Best Buy and Walmart are both gross domestic product with examples of supply. a. production intermediaries. e. by-product of communism. b. manufacturing businesses. 24. _____The process of separating work into distinct tasks is called c. service businesses. d. marketing intermediaries. a. bartering. e. small businesses. b. networking. 30. _____The study of the national economy c. specialization. and the global economy is referred to as d. a factory system. a. factors of the economy. e. a domestic system. b. microeconomics. 25. _____What term implies that there shall be no government interference in the c. macroeconomics. economy? d. laissez-faire capitalism. a. Market economy e. a command economy. b. Free-market economy 31. _____How well off an individual or a society is, mainly in terms of want c. Command economy satisfaction through goods and services is d. Laissez-faire referred to as e. Socialism a. microeconomics. 26. _____When the level of prices in an b. national satisfaction index. economy rise, it’s called c. economic standard. a. prosperity. d. standard of living. b. recession. e. global comparison measure. c. depression. 32. _____A monthly index that measures d. recovery. changes in prices that consumers pay for e. inflation. goods is referred to as the 27. _____The total of all federal deficits is a. prosperity index. called b. producer’s price index. a. depression. c. prosperity price predictor. b. fiscal policy. d. inflation rate index. c. gross domestic product. e. consumer price index. d. national debt. 33. 34.