member type: Tutor
education level: Expert
1) 3M, Hewlett-Packard, Lego, and other companies use the ________ to manage the innovation process.
A. skunk works
B. new product "team"
C. stage-gate system
D. joint- venture system
E. venture team
2) A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.
A. vertical system
B. product management system
C. marketing research system
D. marketing information system
E. marketing intelligence system
3) A(n) ________ is any good, service, or idea that is perceived by someone as new.
A. creative product
D. new idea
4) A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors' published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence.
A. customer feedback systems
B. external networks
C. sales force surrogates
E. advisory panels
5) ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
A. A marketing database
B. A marketing intelligence system
C. A marketing information system
D. A marketing research system
E. A promotional campaign
6) Most established companies focus on ________ when it comes to innovation.
A. competitive innovation
B. everyday innovation
C. incremental innovation
D. continuous innovation
E. demand innovation
7) ________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
A. Competitors market share rate
B. Report rating
C. Perceived usefulness
D. Failure avoidance rate
E. Customer perceived value
8) ________ is the result of a concentrated effort by designers, engineers, and purchasing agents to reduce the product's overall costs.
A. Experience curve
B. Target costing
C. Learning curve
D. Least cost producer
9) In ________ marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers.
10) Marketers usually identify niches by ________.
A. producing products that can be used in a variety of ways
B. allowing consumers to gravitate toward product brands
C. dividing a segment into subsegments
D. conducting VALS tests
E. examining the demographics section of The Handbook of Marketing
11) Which of the following is generally considered to be the last step in the marketing research process?
A. Draft the report
B. Make the decision.
C. Analyze the information.
D. Control the environment.
E. Present the findings.
12) ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
A. Marketing management
C. MIS (marketing information system)
D. Marketing research
E. Marketing intelligence
13) With respect to the sampling plan, three decisions must be made. The decisions are: the sampling unit—who is to be surveyed? Sample size—how many people should be surveyed? And ________.
A. sample supervisor—who will lead the sampling effort?
B. sampling procedure—how should the respondents be chosen?
C. surveyor skill—who will do the surveying?
D. sample security—how to protect the sample data?
E. sample cost—how much does sampling cost?
14) The marketing communications mix consists of six major modes of communications. Which of the following is NOT one of these modes?
C. Direct marketing
D. Sales promotions
E. Personal selling
15) Marketing communications can contribute to brand equity by establishing the brand in memory and to________ (in)a brand image.
B. create demand
C. create interest
16) ________ communicates a company's intended value positioning of its product or brand to the market.
A. Physical evidence
17) To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who "get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family." Which of the following techniques for reaching Generation Y are the Foo Fighters using?
A. Online buzz
B. Computer games
C. Unconventional sports
D. Cool events
E. Student ambassadors
18) New-to-the- world products are ________.
A. existing products that are targeted to new markets or market segments
B. new products that provide improved performance or greater perceived value and replace existing products
C. new products that allow a company to enter an established market for the first time
D. new products that supplement established product lines (package sizes, flavors, and so on)
E. new products that create an entirely new market
19) Following the ________ approach to target market selection encompasses a strong knowledge of the segment's needs, a strong market presence, and operating economies through specializing in production, distribution, and promotion.
A. full market coverage
B. market specialization
C. selective specialization
D. product specialization
E. single-segment concentration
20) Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products.
D. over the Internet
21) Some intermediaries use the following: strategic planning, advanced information systems, sophisticated marketing tools, measure performance on a return-on-investment basis, segment their markets, improve their target marketing and positioning, and ________.
A. contend with dwindling customer bases
B. aggressively pursue take over strategies
C. dominant the manufacturers they do business with
D. aggressively "squeeze" manufacturer margins
E. aggressively pursue market expansion and diversification strategies
22) "Power prices" use price as a key strategic tool. These "power prices" have discovered the highly ________ effect of price on the bottom line.
23) A company can add new products through acquisition or development. The acquisition route can take three forms. The company can buy other companies, it can acquire patents from other companies, or it can buy a ________ or _________ from another company.
C. franchise/acquire rights
D. license/receive permission
24) John Kotter's view argues that management focuses on coping with complexity, whereas leadership focuses on coping with _____.
25) Leadership is best defined as _____.
A. the ability to influence a group in goal achievement
B. implementing the vision and strategy provided by management
C. coordinating and staffing the organization and handling day-to-day problems
D. keeping order and consistency in the midst of change
E. not a relevant variable in modern organizations
26) Which of the following is NOT included in the definition of conflict?
B. something that is cared about
C. negative effects
D. disruption of tasks
27) Negotiation can be defined as a process in which two or more parties exchange goods or services and attempt to agree upon _____.
A. the exchange rate for those goods and services
B. a model of the negotiation process for resolving differences
C. effective arbitrators for disputes
D. acceptable bargaining strategies for obtaining the goods and services
E. the monetary value of the exchanged items
28) _____ bargaining is negotiation that seeks to divide a "fixed pie."
29) Which of the following statements about leadership is true?
A. leaders are managers.
B. managers are leaders.
C. leaders are hierarchically superior to followers.
D. Formal rights enable managers to lead effectively.
E. Nonsanctioned leadership is as important as or more important than formal influence.
30) Danielle wants to become a surgeon, not only because achieving this goal will give her self-respect and autonomy, but also because she wants a job with high status and recognition from others. Which of Maslow's needs is Danielle trying to fill?
31) _____ can be used to increase the perception that employees are treated fairly.
A. Selective evaluation
B. Multiple raters
C. Documenting with a journal
D. Due process
E. Focusing on subjective evaluations
32) Examples of off-the-job training include all of the following except _____.
A. classroom lectures
B. public seminars
C. Internet courses
E. apprenticeship programs
33) Training employees how to be better listeners falls under which of the following training categories?
A. ethical skills
B. interpersonal skills
C. problem-solving skills
D. cultural skills
E. technical skills
34) Which type of skill training has become increasingly important in organizations?
C. problem solving
35) According to a recent survey, about ___ percent of employees working in the 1,000 largest U.S. corporations receive ethics training.
36) Organizational structure has six key elements. Which of the following is not one of these elements?
C. work specialization
D. location of authority
37) Which of the following is not a primary force for change in organizations?
B. social trends
C. decreasing skill sets
D. the nature of the workforce
E. economic shocks
38) The "realistic" personality from Holland's typology of personality and congruent occupations would be well suited for which of the following jobs?
39) What term is used for the tendency of an individual to attribute his own successes to internal factors while putting the blame for failures on external factors?
A. fundamental attribution error
B. selective perception
E. self-serving bias
40) A task that is subdivided into many separate jobs is considered to have _____.
A. a high degree of departmentalization
B. a low degree of structure
C. a high degree of work specialization
D. a high degree of matrix structuring
E. a low degree of decentralization
41) Under exponential smoothing, if we want our forecast to be responsive to recent demand, the value of alpha should be:
42) Which of the following would NOT be classified as a time-series technique?
A. simple moving average
B. regression model
C. box Jenkins technique
D. trend projections
E. exponential smoothing
43) According to David Maister, the most complex projects requiring innovation and creativity are called _________.
A. "procedures" projects
B. "grinding" projects
C. "brain surgery" projects
D. "gray hair" projects
44) Goldratt's rule of production scheduling include all but:
A. Do not balance the capacity - balance the flow
B. Utilization and activation of a resource is not the same thing
C. Priorities can be set only by examining the system's constraints
D. An hour saved at a non-bottleneck is a mirage
E. A process batch should be fixed both along its route and in time
45) If the system contains a bottleneck, the _______ is the best place for control. If there is no bottleneck, the __________ is the best place for control.
A. capacity-constrained resource, bottleneck
B. capacity-constrained resource, drum
C. none of these answers
D. bottleneck, capacity constrained resource
46) "Hard" capital rationing refers to the rationing __________.
A. imposed by external factors
B. imposed internally by the shareholders
C. always imposed by debt holders
D. always imposed by competitors
47) __________ says to look for opportunities to invest in positive-NPV projects in foreign markets or to develop derivatives or design arrangements that enable firms to cope better with the risks they face in their foreign operations.
A. The Principle of Risk-Return Trade-off
B. The Principle of Diversification
C. The Principle of Valuable Ideas
D. The Principle of Capital Market Efficiency
48) __________ says to recognize the value of hidden options in a situation, such as the foreign exchange options in some derivative instruments.
A. The Options Principle
B. The Principle of Comparative Advantage
C. The Time Value of Money Principle
D. The Principle of Two-Sided Transactions
49) Under capital rationing, given the choice among several equally attractive investments, the best tool to use is the __________.
A. Internal Rate of Return method
B. Payback method
C. Net Present Value method
D. Profitability Index method
50) An all-equity-financed firm would __________.
A. not pay any income taxes because interest would exactly offset its taxable income.
B. pay corporate income taxes because it would have interest expense.
C. pay corporate income taxes if its taxable income is positive
D. not pay corporate income taxes because it would have no interest expense.
51) __________ says to seek out investments that offer the greatest expected risk-adjusted real return.
A. The Principle of Incremental Benefits
B. The Signaling Principle
C. The Principle of Valuable Ideas
D. The Principle of Self-Interested Behavior
52) A checking account is __________.
A. a place to "collect" money between inflows and outflows
B. an account that acts like a reservoir
C. useful because you can add money in any amount
D. all of these
53) Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is _________.
C. being sold by insiders
D. caught up in a bear market
54) Which of the following statements is true?
A. The Principle of Capital Market Efficiency says to consider the possible ways to minimize the value lost to capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction costs.
B. The Behavioral Principle suggests to look for opportunities to create value by issuing securities that are in short supply, perhaps resulting from changes in tax law.
C. The Signaling Principle says to consider any possible change in capital structure carefully, because financing transactions and capital structure changes convey information to outsiders and can be misunderstood.
D. all of these
55) Which of the following statements is true?
A. The Principle of Incremental Benefits says to consider the possible ways to minimize the value lost to capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction costs.
B. The Principle of Valuable Ideas suggests to look for opportunities to create value by issuing securities that are in short supply, perhaps resulting from changes in tax law.
C. The Time Value of Money Principle advises to include any time-value-of-money tax benefits from capital structure choices.
D. all of these
56) __________ says to recognize the value of options contained in derivatives.
A. The Principle of Valuable Ideas
B. The Capital Market Efficiency Principle
C. The Principle of Comparative Advantage
D. The Options Principle
57) __________ says to use derivatives to pay others to take risks.
A. The Principle of Two-Sided Transactions
B. The Signaling Principle
C. The Principle of Self-Interested Behavior
D. The Principle of the Time Value of Money
58) The conversion price (for a convertible security) is usually adjusted __________.
A. for a new debt offering.
B. for stock splits.
C. for cash dividends.
D. all of these
59) The investment decision best addresses which of the following questions?
A. Should we buy new equipment?
B. Should debt be short-term?
C. Should we increase our advertising budget?
D. Should we borrow in a foreign currency?
60) Dimensions of risk include __________.
A. uncertainty about the future outcome
B. the impossibility of the same return
C. uncertainty about yesterday's outcome
D. the certainty of a negative outcome
61) According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate for __________.
A. lack of diversification
B. less risk
C. greater risk
62) You do a study and find out that, on average, stock prices for firms decrease 3% for every 5% decrease in inside ownership. You are watching the nightly business report and find out that Magic Tape's stock has announced that insiders have sold 10% of their holdings. You are concerned because you own 1,000 shares of Magic Tape and it had closed the day before unchanged at $30 per share. If markets are at least semi-strong form efficient, what would you expect?
A. You would expect Magic Tape to close at $28 the day of the announcement.
B. You would lose $1,800.
C. You would lose $2.00 per share
D. You would lose $4,000.
63) Which of the following is not an advantage of going public?
A. Going public enables a firm to raise additional capital.
B. Going public generally brings a lower price in the public market than in the venture capital or private placement markets.
C. Going public achieves liquidity and diversification for current shareholders
D. Going public gives existing shareholders a chance to sell portions of their shares as part of the IPO giving them a cash return on their investment and allows them to diversify their investment portfolios.
64) Which of the following is not an advantage of going public?
A. Going public makes the common stock negotiable and creates a visible market value.
B. Going public increase the firm's equity financing flexibility.
C. Going public makes it easier for a firm to acquire other firms in exchange for shares of its stock.
D. Going public makes securities worth more because of their decreased liquidity.
65) Undertaker Corporation has a joint process that produces three products: P, G, and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows:
Product Sales Value at Split-off Processing Costs after Split-off Sales Value at Completion
P $62,000 $5,000 $88,000
G 12,500 6,500 19,000
A 9,400 5,000 12,000
Product G _____.
A. should be processed further to increase profits by $6,500.
B. should be processed further to increase profits by $19,000.
C. an be processed further or sold at split off; there is no difference in profit.
D. should be sold at split off since processing further would only reduce profits by $6,500.
66) Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
A. Income would decrease by $4,000.
B. Income would increase by $70,000.
C. Income would increase by $20,000
D. Income would increase by $4,000.
67) Transfer-pricing systems exist to _____.
A. encourage managers to purchase goods and services internally
B. maximize worldwide taxes, duties, and tariffs
C. evaluate segment performance
D. all of these answers are correct
68) Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion?
A. Theory of constraints.
B. Activity-based costing.
C. Total-quality management
D. Just-in-time inventory.
69) The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is
A. subtracted from the "Make" costs.
B. Added to the "Make" costs.
C. added to the "Buy" costs.
D. none of these
70) Which of the following does not appear as a separate section on the cash budget?
A. Cash receipts
B. Capital expenditures
D. Cash disbursements
71) Important factors considered by sales forecasters include all of the following except _____.
A. past patterns of sales
B. the desired level of sales
C. marketing research studies
D. competitors' activities
72) Effectiveness is indicated by _____.
A. sales-activity variances
B. all of these answers are correct
C. static-budget variances
D. flexible-budget variances
73) Beginning cash balance plus total receipts
A. equals ending cash balance.
B. is the excess of available cash over disbursements.
C. must equal total disbursements.
D. equals total available cash.
74) A cost which remains constant per unit at various levels of activity is a
A. variable cost.
B. manufacturing cost.
C. fixed cost.
D. mixed cost.
75) A variable cost is a cost that
A. varies per unit at every level of activity.
B. may or may not be incurred, depending on management's discretion.
C. occurs at various times during the year.
D. varies in total in proportion to changes in the level of activity.
76) A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are
77) For an activity base to be useful in cost behavior analysis,
A. the activity should always be stated in dollars.
B. the activity level should be constant over a period of time.
C. there should be a correlation between changes in the level of activity and changes in costs.
D. the activity should always be stated in terms of units.
78) Identify which statement about "currently attainable standards" is NOT true.
A. They allow for normal spoilage and nonproductive time.
B. Employees usually view these goals as reasonable.
C. Because they allow for waste, they usually result in favorable variances.
D. They represent projections of what will probably be attained.
79) Joint costs are incurred _____.
A. before the production process is started
B. after the process-further decision
C. before individual products are separately identified
D. after the split-off point but before the process-further decision
80) The last step in activity-based costing is to
A. assign manufacturing overhead costs for each activity cost pool to products.
B. identify the cost driver that has a strong correlation to the activity cost pool.
C. compute the activity-based overhead rate per cost driver.
D. identify and classify the major activities involved in the manufacture of specific products.
81) In a process cost system,
A. a Work in Process account is maintained for each product.
B. one Work in Process account is maintained for all the processes, similar to a job order cost system.
C. a materials requisition must identify the job on which the materials will be used.
D. a Work in Process account is maintained for each process.
82) The proprietorship form of business organization
A. must have at least two owners in most states.
B. is classified as a separate legal entity.
C. generally receives favorable tax treatment relative to a corporation.
D. combines the records of the business with the personal records of the owner.
83) Identify which one of the following statements is false.
A. Owners' equity solely represents the profits made by an organization in the current period.
B. Assets are economic resources that are expected to benefit future cash inflows or reduce future cash outflows.
C. Liabilities are economic obligations or claims against the assets of an organization by outsiders.
D. Assets must always equal the sum of liabilities and owners' equity.
84) A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate?
A. ability to raise capital for expansion
B. desire to limit the owner's personal liability
C. the prestige of operating as a corporation
D. the ease in transferring shares of the corporation's stock
85) _____ are sections of the balance sheet.
A. Revenues, assets, and liabilities
B. Assets, liabilities, and expenses
C. Expenses, revenues, and owners' equity
D. Assets, liabilities, and owners' equity
86) Although the U.S. has had a longstanding agreement with ___________, after the passage of NAFTA, _________ became the United States' second largest trading partner.
A. Canada, Venezuela
B. Canada, Mexico
C. Mexico, Canada
D. Mexico, Venezuela
E. Great Britain, Paraguay
87) Diversity training programs are generally intended to provide a vehicle for _____.
A. focusing on individual differences
B. increasing awareness and examining stereotypes
C. eliminating group learning
D. socializing otherwise unmanageable employees
E. balancing work/life conflicts
88) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?
89) Which of the following is not one of the Caux Round Table Principles for International Business?
A. Support for Multilateral Trade.
B. Avoidance of Illicit Operations.
C. Promotion of Multiculturalism.
D. Responsibility of Business Beyond Shareholders Toward Stakeholders.
E. Respect for the Environment.
90) One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States.
A. About $2; about 15
B. Less than $1; about 15
C. Less than $1; about 25
D. Less than $1; about 40
E. $2; about 25
91) Which of the following is correct about litigating commercial disputes?
A. Commercial disputes, because of their specialized nature, are first heard at the appellate court level.
B. Nearly all states have specialized trial courts that hear commercial disputes.
C. A few states have established specialized trial courts for commercial disputes.
D. In all states, commercial disputes must be heard in a limited-jurisdiction court.
E. Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
92) Which article of the United States Constitution deals with the judicial power of the federal government?
A. Article II.
B. Article I.
C. Article III.
D. Article V.
E. Article IV.
93) When an economist says that the demand for a product has increased, this means that:
A. quantity demanded is greater at each possible price.
B. firms make less of the product available for sale.
C. consumers respond to a lower price by buying more.
D. the demand curve becomes steeper.
94) When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects:
A. diminishing marginal utility.
B. the income effect.
C. the rationing function of markets.
D. the substitution effect.
95) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
A. digital, e-commerce
B. e-commerce, digital
C. digital, physical
D. physical, digital
E. physical, financial
96) Which of the following is NOT a function of functional area information systems?
A. supports the managerial tasks of planning, organizing, and controlling operations
B. provides information mainly in the form of reports
C. provides information to managers in the functional areas
D. provides data from business events to the corporate database
E. provides analysis capabilities to middle level managers and staff
97) The Global, Web-Based Platform enables individuals to do which of the following?
A. access information, services, and entertainment
B. exchange knowledge
C. connect, compute, communicate, collaborate, and compete everywhere and all the time
D. produce and sell goods and services
E. all of these answers are correct
98) Companies normally budget marketing research at ________ percent of company sales.
A. 2 to 3
C. 1 to 2
E. 10 to 12
99) The assignment of numbers or symbols to a property of objects according to value or magnitude is called _____.
100) A ________ has been defined as being a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.
A. marketing intelligence system
B. marketing decision support system
C. marketing information system
D. marketing research system
E. database management system
1) Northwest Airlines applied mathematical models to determine which customers in its database were currently responsible for most of its profitability and which customers were not currently profitable but had similar characteristics to the most profitable customers. Northwest Airlines utilized _____ to identify these customers.
A. Computer programming
B. Data warehousing
C. Customer relationships management
D. Data mining
2) Minute Maid sees research as the fundamental first step in any business decision, and it created proprietary methods for conducting research. At what level of the hierarchy of business decision makers does Minute Maid operate?
A. Top tier
B. Middle tier
C. Base tier
D. Foundation tier
3) Which of the following questions is considered first when discussing a management dilemma?
A. How can management eliminate negative symptoms?
B. What does the manager need to know to choose the best alternative from the available sources of action?
C. What is the recommended course of action?
D. What symptoms cause management concern?
4) The goal of ethics in research is to _____.
A. To ensure that no one is harmed
B. To protect researchers from legal liability
C. identify what behavior is appropriate
D. ensure research sponsors fulfill their legal obligations
5) _____ occurs when the participants are told only part of the truth or when the truth is fully compromised.
C. informed consent
6) The process of stating the basic dilemma and then developing other questions by progressively breaking down the original question into more specific ones is called the _____.
A. Research question
B. Management-research-question hierarchy
C. Management dilemma
D. Management question
7) The fundamental weakness in the research process is _____.
A. incorrectly defining the research question
B. identifying a flawed sampling frame
C. misdefining the target population
D. failing to identify all relevant secondary information
8) Which type of management question asks what do we want to achieve?
A. Choice of purpose
B. Evaluation of solutions
9) In the Southeast, the potato chip market share held by the Lays brand is 46%. This is an example of _____.
A. a research question
B. a descriptive hypothesis
C. a relational hypothesis
D. an explanatory hypothesis
10) An increase in hours of television viewing leads to increases in the sales of snack foods. This is an example of a _____.
A. research question
B. descriptive hypothesis
C. correlational hypothesis
D. causal hypothesis
11) To be categorized as a customer, an individual must have a history of shopping at the establishment at least twice before the start of the study with expenditures of more than $10. This is an example of _____.
A. Hypothetical construct
B. Conceptual scheme
C. Operational definition
D. Dictionary definition
E. Mediating variable
12) James is entering data on client gender. Because the values entered reflect male or female, this variable is _____.
13) Which variable in an experiment is the variable expected to be affected by the manipulation?
A. Dependent variable
B. Extraneous variable
C. Moderating variable
D. Independent variable
14) Qualitative research seeks to _____ theory while quantitative research _____ it.
A. examine, interprets
B. build, tests,
C. test, understands
D. apply, builds
E. justify, applies
15) Which of the following is true of quantitative research?
A. It uses a nonprobability sampling method
B. Results are generalizable
C. Data analysis is ongoing during the project
D. Sample sizes are generally small
E. It uses multiple data collection methods
16) The use of a control group in experimentation _____.
A. provides for the manipulation of the independent variable
B. serves as a comparison to assess the manipulation
C. minimizes the cost of experimentation
D. allows for discovery of the average effect of the independent variable in different situations
17) What is the first step in conducting an experiment?
A. Specify the level(s) of the treatment
B. Choose the experimental design
C. Control the experimental environment
D. Select relevant variables
18) Data originating from studies that are conducted by others and created for a purpose different from the purpose of the study for which the data are being reviewed are called _____ data
19) The goal of a formal study is to _____.
A. Discover future research tasks
B. Expand understanding of a topic
C. Test hypotheses
D. Provide insight
E. Develop hypotheses
20) A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.
21) What type of data is produced by simple category scales?
22) _____ is the extent to which a measurement tool actually measures what we wish to measure.
23) The list of elements in a population from which the sample is drawn is known as the _____.
A. sampling frame
B. population extent
D. sampling base
24) The process of ensuring the accuracy of data and their conversion from raw form into classified forms appropriate for analysis is called _____.
B. data entry
C. data preparation
D. data measurement
25) _____ involves assigning numbers or other symbols to answers so that the responses can be grouped into a limited number of categories
B. Data entry
26) The standard error of the estimate is a type of measure of _____.
A. central tendency
D. standard deviation
27) _____ are summary descriptors of variables of interest in the population
A. Sample statistics
B. Population parameters
C. Systematic estimates
D. Standard errors
28) The measure of deviation from the mean such that cases stretch toward one tail or the other is called _____.
29) Which of the research questions/hypotheses below is best answered using cross-tabulations?
A. What percentage of men and women prefer Brand A over Brand B?
B. What percentage of residents shop at the local grocery store?
C. Is brand loyalty related to brand image?
D. What happens to sales when prices drop?
30) If a difference is not caused only by random sampling fluctuations, it is said to have _____.
B. statistical significance
C. substantive significance
D. reasonable doubt
1) What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?
A. ± 1.96
B. ± 2.33
C. ± 2.58
D. ± 1.65
2) In classical hypothesis testing, the test statistic is to the critical value what the __________.
A. 'p-value' is to alpha
B. critical value is to alpha
C. test statistic is to the 'p-value'
D. level of significance is to the test statistic
3) For a hypothesis test of a single population mean at 95% confidence level, a calculated Z score of 1.7 supports the conclusion that
A. the population mean is greater than the hypothesized value
B. the null hypothesis cannot be rejected
C. the sample is biased
D. the population mean is less than expected
4) If the paired differences are normal in a test of mean differences, then the distribution used for testing is the
A. normal distribution
C. student distribution
D. F distribution
5) One hundred women were polled and 60 reported successfully communicating an automobile problem to an auto repairman. A sample of 150 men had 95 reporting the same success. The value of the test statistic for a test of the equality of proportions is
6) Weekly sales of iPods® at 20 Best Buy® stores are compared before and after installing a new eye-catching display. To determine if the display is effective in increasing sales, what type of statistical test would you perform?
A. Comparison of means using independent samples using a t-test
B. Comparison of proportions using independent samples using a z-test
C. Comparison of means using a paired z-test
D. Comparison of means using a paired t-test
7) When is it appropriate to use the paired difference t-test?
A. Four samples are compared at once.
B. Any two samples are compared.
C. Two independent samples are compared.
D. Two dependent samples are compared.
8) A survey of hotels found that the average hotel room rate in New Orleans is $88.42 and the average room rate in Phoenix is $80.61. The survey sampled 50 hotels in each city. The standard deviations were $5.62 and $4.83, respectively. At alpha=.05, it can be concluded that there is a significant different in the rates?
9) If the paired differences are normal in a test of mean differences, the distribution used for testing is the
A. normal distribution
C. student t distribution
D. F distribution
10) The accountant for Thomas's Furniture Store is concerned regarding the outstanding receivable owed the company. There has been a cash flow problem and it is believed that the slow collection of accounts receivable is partially the blame. The accountant believes that 40% of the present accounts are more than 4 months behind in making payments. To be able to make a decision regarding this belief, a random sample of 100 accounts was taken. It was found that 37 accounts were more than 4 months late. Did the sample data confirm the accountant's belief? Use the .05 significant level for the statistical test.
A. There is not enough evidence to confirm or deny the belief.
B. The accountant's belief is not confirmed.
C. The accountant's belief is confirmed.
D. The accountant needed to take a larger sample.
11) New college business graduates are finding it difficult to get a job. A business journal has reported that only one in five graduates is able to find a job within 6 months of their graduation. A report by University of Phoenix indicated that out of a survey of 300 recent business graduates, 75 had jobs. You are a business major at University of Phoenix and have a concern about getting a job. Based on this data, will a graduate of University of Phoenix have a better chance of getting a job in the first 6 months after graduation? Use the .05 significant level for the test.
A. No, there is not a significant difference.
B. It cannot be predicted based on this data.
C. Yes, there is a significant difference.
D. The business journal information is incorrect.
12) Analysis of variance (ANOVA) is used to
A. compare nominal data
B. compute t- test
C. compare population proportion
D. simultaneously compare several population means
13) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be
A. a paired t- test
B. two different t tests
C. an ANOVA test
D. a two sample test
14) Sound engineers studied factors that might affect the output, in decibels, of a rock concert's speaker system. The desired level of significance was a = .05. The results of their ANOVA tests are shown:
Source of Variation SS df MS F P-value
Amplifier 99.02344 99.02344 0.005718
Position 93.98698 31.32899 3.215807 0.051003
Interaction 10.15365 3 3.384549 0.347412 0.791505
Error 155.875 16 9.742188
Total 359.0391 23
The interaction between the Position and Amplifier treatments was
A. very significant
B. slightly significant
D. highly correlated
15) Totto, an automobile manufacturer, has designed a radically new engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, below regular, premium, and super premium. The test car made three trial runs on the test track using each of the grades and the miles per gallon were recorded. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?
16) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?
A. Too many degrees of freedom
B. A difference between at least one pair of population means
C. No difference between the population means
D. The variances are the same
17) Nonparametric statistics are used when
A. you have qualitative data, with your variables being measured at the nominal or interval level
B. you have qualitative data, with your variables being measured at the ordinal or ratio level
C. you have qualitative data, with your variables being measured at the nominal or ordinal level
D. you have qualitative data, with your variables being measured at the ordinal or interval level
18) The nonparametric test most commonly used for testing the statistical independence between two variables is
A. the Kruskal- Wallis test
B. the Chi- Square test
C. the Mann Whitney test
D. the Sign test
19) What nonparametric test is used when the assumptions for the parametric ANOVA cannot be met? Its purpose is to test whether three or more populations are equal. The data must be at least ordinal scaled.
A. Students' t
B. Kruskal- Wallis
20) Rachael Smith is the personnel manager at Johnson and Johnston, an accounting firm. She is concerned about absenteeism, which seems to be an increasing problem, especially after days off work. She decided to sample the records to determine if absenteeism was distributed evenly throughout the 6-day work week. The null hypothesis to be tested was: Absenteeism is distributed evenly throughout the week. The sample results were:
Day of Week Number Absent
What is the critical value of chi-square with a significant level of = 0.05?
21) A public opinion poll surveyed a simple random sample of voters. Respondents were classified by gender and by voting preference—Republican, Democrat, or Independent. The results follow.
Voting Preferences Republican Democrat Independent Row total
Male 200 150 50 400
Female 250 300 50 600
Column total 450 450 100 1000
If you conduct a chi-square test of independence, what is the expected frequency count of male Independents?
22) What parametric test is equivalent to the nonparametric Spearman's rank test?
A. T-test of correlation coefficient
B. T-test of two sample means
C. T-test of one sample mean.
D. T-test of two sample proportions
23) What is the variable used to predict another variable called?
A. Independent variable
B. Dependent variable
C. Moderating variable
D. Intervening variable
24) Michelle used a sample of 50 U.S. cities to estimate the relationship between crime, or annual property crimes per 100,000 persons, and income, or median income per capita. Her estimated regression equation was crime = 428 - .01 income. Assuming her model is statistically significant, if income decreases by $1,000, we would predict that crime will
A. decrease by 1
B. increase by 10
C. decrease by 10
D. increase by 100
25) In the least squares equation, Y' = 12 + 25X the value of 25 indicates
A. the y- intercept
B. for each unit increase in 'x', y' increases by 25
C. for each unit increase in 'y', 'x' increases by 25
D. the residual of 'x' factor
26) A test is conducted in eight cities to see if giving away free transit system maps will increase bus ridership. In a regression analysis, the dependent variable is the increase in bus ridership in thousands of persons from the start of the test until its conclusion. The independent variables are X1 = the number in thousands of free maps distributed and X2 = a binary equal to 1, if the city has free downtown parking and 0 otherwise. The estimated regression equation is Y = 1.32+.0345X1-1.45X2. If the Y value for city 3 is 7.3, X1 = 140, and X2 = 0 the residual for city 3 in thousands is:
27) The following linear trend equation was developed for the annual sales of the Tractor Manufacturing Company. Y' = 355 + 50t in thousands of dollars. How much are sales increasing by?
A. $50,000 per year
B. $5,00 per month
C. $500,000 per year
D. $6,000 per year
28) The time series component that reflects variability over short, repetitive time periods that last less than one year is called
A. long-term trend
B. cyclical variation
C. seasonal variation
D. irregular variation
29) A research company has been hired by a realty company to do an analysis of heating cost of homes in the region. The realty company wanted to be able to predict the heating cost of a typical single-family home. The realty company was constantly being asked questions regarding heating costs by potential home buyers. It was believed that these variables would impact heating costs (Y'): mean daily outdoor temperature (X1), the number of inches of insulation (X2), and the age in years of the furnace (X3). The multiple regression analysis produced the following regression equation: Y' = 427.2 – 4.58X1 – 14.83X2 + 6.10X3. Which statement is correct based on this analysis?
A. The age of the furnace has an indirect relationship with heating costs.
B. There is an inverse relationship between outdoor temperature and heating costs.
C. There is no real clear relationship between these variables.
D. There exists a direct relationship between inches of insulation and heating costs.
30) If we fit a linear trend to data that are growing exponentially,
A. the fitted trend will be too high at the end
B. the forecasts, if extrapolated, will be too low
C. the forecasts, if extrapolated, will be too high
D. the fitted trend will be too low in the middle
1) Which of the following measures of central location is affected most by extreme values?
D. Geometric mean
2) Which level of measurement is required for the median?
3) Which level of measurement is required for the mode?
4) In a set of observations, which measure of central tendency reports the value that occurs most often?
D. Geometric mean
5) The weighted mean is a special case of what?
D. Geometric mean
6) A sample of 5 companies were examined for changes in their relative market share. The results showed the following increases and decreases: –5, 10, 10, 5, –10.
7) The difference between the sample mean and the population mean is called the
A. margin of error
B. population standard deviation
C. standard error of the mean
D. sampling error
8) A local trade union consists of plumbers and electricians. Classified according to rank:
Apprentice Journeyman Master Total
Plumbers 25 20 30 75
Electricians 15 40 20 75
40 60 50
A member of the union is selected at random. Given that the person selected is an electrician, what is the probability that the person is a master?
9) Suppose a population consisted of 20 items. How many different samples of n = 3 are possible?
10) The mean and the variance are equal in
A. the normal distribution
B. the binomial distribution
C. the Poisson distribution
D. the hypergeometric distribution
11) In the 1936 Presidential Election Franklin D. Roosevelt defeated Alfred E. Landon in a landslide vote. A Landon victory had been predicted by the Literary Digest, a magazine that ran the oldest, largest, and most widely publicized of the polls at the time. The Digest's final prediction was based on 10 million sample ballots mailed to prospective voters, and 2.3 million were returned. The sample of voters was drawn from lists of automobile and telephone owners. Despite the massive size of this sample, it failed to predict a Roosevelt victory, being off the mark by 19 percentage points. The Digest was wrong because
A. the sample size, although large, was not large enough
B. the right research questions were not asked
C. respondents intentionally lied about their preferred candidate
D. the sample used was not representative of the actual population at the time
12) In a study on the effect of reinforcement on learning from a company online training program, two experimental treatments are planned: reinforcement given after every learning module, or reinforcement given after every two learning modules. Reinforcement is accomplished with the addition of more examples. Which one of the following control groups would serve best in this study?
A. A group that does not read any of the learning modules.
B. A group that reads the modules using hardcopy only.
C. A group that reads the learning modules, but does not receive reinforcement.
D. A group that reads the learning modules with random reinforcement.
13) The central limit theorem is important to market researchers because it states that as sample sizes increase, the distribution of the sample ________ collected from consumers on any topic of interest being researched approaches the normal distribution.
C. standard deviations
14) To find confidence intervals for the mean of a normal distribution, the t distribution is usually used in practical applications instead of the standard normal distribution because
A. the mean of the population is not known
B. the t distribution is more effective
C. the variance of the population is usually not known
D. the sample size is not known
15) We wish to develop a confidence interval for the population mean. The population follows the normal distribution, the standard deviation of the population is 3, and we have a sample of 10 observations. We decide to use the 90% level of confidence. The appropriate value of to represent the level of confidence is
16) Which of the following is a correct statement about a probability?
A. It may range from 0 to 1.
B. It may assume negative values.
C. It may be greater than 1.
D. It cannot be reported to more than 1 decimal place.
17) The special rule of addition is used to combine
A. independent events
B. mutually exclusive events
C. events that total more than one
D. events based on subjective probabilities
18) We use the general rule of multiplication to combine
A. events that are not independent
B. mutually exclusive events
C. events that total more than 1.00
D. events based on subjective probabilities
19) A discrete variable
A. is an example of a qualitative variable
B. can assume only whole number values
C. can assume only certain clearly separated values
D. cannot be negative
20) A nominal scale variable
A. usually involves ranking.
B. cannot assume negative values
C. has meaningful zero point
D. is usually based on counting
21) The ratio scale of measurement
A. usually the result of counting something
B. has meaningful zero point
C. may assume negative values
D. cannot have more than two categories
22) In the world of market research, the use of a questionnaire often plays a vital role in gaining useful business intelligence because
A. it is a structured technique to collect secondary data
B. it represents a way to ask anything you want from respondents and receive valid information
C. it does not need to be tested
D. it can be used in conjunction with other techniques such as field interviews and focus groups to maximize data input
23) A Type I error is
A. the correct decision
B. a value determined from the test statistic
C. rejecting the null hypothesis when it is true
D. accepting the null hypothesis when it is false
24) In a two-sample test of means for independent samples, we use the z distribution when
A. the population standard deviations are equal
B. both populations have at least 4,000 observations
C. both population standard deviations are known
D. nB and n(1-B) are both greater than 5
25) Which of the following is a requirement for a two-sample test of proportions?
A. The population standard deviations are equal.
B. Both populations are positively skewed.
C. Both samples are at least 30.
D. nB and n(1-B) are both greater than 5.
26) Bob is interested in opening a candy store in his town. He believes that his customers will spend an average of $75 or more in annual purchases (the alternative hypothesis). Bob hires a consultant to test this belief. The consultant tested this conjecture on a sample of 100 customers and found the p-value for the test statistic satisfied p > .25, then
A. you would not reject the null hypothesis
B. you would reject the null hypothesis for alpha= .01
C. you would reject the null hypothesis for alpha= .05
D. you would reject the null hypothesis for alpha= .10
27) A carefully designed business experiment has just been concluded. Unfortunately, use of alpha = .05 indicated no significant differences among four treatments. What useful information can you supply future investigators when you report on this experiment?
A. The means are different but their variances are the same.
B. The estimated variance (and its df) can be useful to future investigators.
C. Pair-wise tests can be conducted to show significant differences.
D. Significant differences can be reported by changing the type I error rate from .05 to .10, .20, or whatever is needed to declare significance.
28) A correlation matrix
A. shows all simple coefficients of correlation between variables
B. shows only correlations that are zero
C. shoes the correlations that are positive
D. shows only the correlations that are statistically significant
29) The multiple standard error of estimate is
A. the measure of variability to the prediction
B. negative when one of the net regression coefficients is zero
C. found by calculating SSR/SS total
D. the measure of accuracy of the prediction
30) A dummy variable or indicator variable
A. may assume only a value of 0 or 1
B. is another term for the dependent variable
C. is a quantitative variable
D. is a variable at a ratio or interval level of measurement
1) The largest source of household income in the U.S. is obtained from
A. stock dividends
B. wages and salaries
C. interest earnings
D. rental income
2) The market where business sell goods and services to households and the government is called the
A. goods market
B. factor market
C. capital market
D. money market
3) Real gross domestic product is best defined as
A. the market value of intermediate goods and services produced in an economy, including exports
B. all goods and services produced in an economy, stated in the prices of a given year and multiplied by quantity
C. the market value of all final goods and services produced in an economy, stated in the prices of a given year
D. the market value of goods and services produced in an economy, stated in current-year prices
4) Underemployment includes people
A. who work "off-the-books" to avoid tax liabilities
B. who are working part time, or not using all their skills at a full-time job
C. who are tired of looking for a job, so they quit looking, but still want one
D. whose skills are not in demand anymore
5) The Bureau of Economic Analysis is responsible for which of the following?
A. Setting interest rates
B. Managing the money supply
C. Calculating U.S. gross domestic product]
D. Paying unemployment benefits
6) The Federal Reserve provides which of the following data?
A. Federal funds rate
B. Stock price of GE
C. Bond yields of corporations
D. Debt to GDP of Ireland
7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have
A. shifted the AD curve to the left
B. shifted the AD curve to the right
C. made the AD curve flatter
D. made the AD curve steeper
8) If the depreciation of a country's currency increases its aggregate expenditures by 20, the AD curve will
A. shift right by more than 20
B. shift right by less than 20
C. shift right by exactly 20
D. not shift at all
9) Aggregate demand management policies are designed most directly to
A. minimize unemployment
B. minimize inflation
C. control the aggregate level of spending in the economy
D. prevent budget deficits or surpluses
10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?
A. An increase in government spending
B. An increase in taxes
C. A reduction in government spending
D. No change in taxes or government spending
11) According to Keynes, market economies
A. never experience significant declines in aggregate demand
B. quickly recover after they experience a significant decline in aggregate demand
C. may recover slowly after they experience a significant decline in aggregate demand
D. are constantly experiencing significant declines in aggregate demand
12) The laissez-faire policy prescription to eliminate unemployment was to
A. eliminate labor unions and government policies that hold real wages too high
B. strengthen unions and government regulations protecting unions and workers
C. increase real wages so that people are encouraged to work
D. have government guarantee jobs for everyone
13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it
A. increases both nominal and real income
B. increases real income but not nominal income
C. increases nominal income but not real income
D. doesn't increase real or nominal income
14) The Federal funds rate
A. is always slightly higher than the discount rate
B. can never be close to zero
C. may sometimes have to be targeted at zero
D. is an intermediate target
15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1% to 1.25%?
A. Open-market operations
B. The discount rate
C. A change in reserve requirements
D. Margin requirements
16) If the Federal Reserve increases the required reserves, financial institutions will likely lend out
A. more than before, increasing the money supply
B. less than before, decreasing the money supply
C. more than before, decreasing the money supply
D. less than before, increasing the money supply
17) Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should
A. reduce the discount rate by 3 percentage points
B. reduce the discount rate by 10 percentage points
C. raise the discount rate by 3 percentage points
D. raise the discount rate by 10 percentage points
18) If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely
A. increase both the money multiplier and the money supply
B. increase the money multiplier but decrease the money supply
C. decrease the money multiplier but increase the money supply
D. decrease both the money multiplier and the money supply
19) A country can have a trade deficit as long as it can
A. purchase foreign assets
B. make loans to other countries
C. borrow from or sell assets to foreigners
D. produce more than it consumes.
20) A weaker dollar
A. raises inflation and contracts the economy.
B. reduces inflation and contracts the economy
C. raises inflation and expands the economy
D. reduces inflation and expands the economy
21) In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because
A. the country eventually will consume more and produce less
B. the country eventually will sell all its financial assets to foreigners
C. the domestic currency will appreciate
D. the country eventually has to produce more than it consumes in order to pay foreigners their profits
22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to
A. decrease the exchange rate and increase the trade deficit
B. increase the exchange rate and increase the trade deficit
C. decrease the exchange rate and decrease the trade deficit
D. increase the exchange rate and decrease the trade deficit
23) The balance of trade measures the
A. difference between the value of imports and exports
B. share of U.S. imports coming from various regions of the world
C. share of U.S. exports going to various regions of the world
D. exchange rate needed to make imports equal exports
24) When a country runs a trade deficit, it does so by:
A. borrowing from foreign countries or selling assets to them.
B. borrowing from foreign countries or buying assets from them.
C. lending to foreign countries or selling assets to them.
D. lending to foreign countries or buying assets from them.
25) Expansionary fiscal policy tends to
A. raise U.S. income, increase U.S. imports, and increase the trade deficit
B. raise U.S. income, increase U.S. imports, and lower the trade deficit
C. lower U.S. income, reduce U.S. imports, and increase the trade deficit
D. lower U.S. income, reduce U.S. imports, and lower the trade deficit
26) In considering the net effect of expansionary fiscal policy on the trade deficit, the
A. income effect offsets the price effect
B. price effect offsets the income effect
C. income and price effects work in the same direction, so the trade deficit is decreased
D. income and price effects work in the same direction, so the trade deficit is increased
27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the
A. dollar will lose value in terms of yen
B. dollar will gain value in terms of yen
C. dollar's value will not change in terms of yen
D. change in the dollar's value cannot be determined
28) Expansionary monetary policy tends to
A. lower the U.S. interest rate and increase the U.S. exchange rate
B. lower the U.S. interest rate and decrease the U.S. exchange rate
C. increase the U.S. interest rate and decrease the U.S. exchange rate
D. increase the U.S. interest rate and increase the U.S. exchange rate
29) The U.S. has limits on Chinese textile imports. Such limits are an example of
A. a tariff
B. a quota
C. a regulatory trade restriction
D. an embargo
30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of
C. voluntary restrictions
D. regulatory trade restrictions
1) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in
A. microeconomic research
B. macroeconomic research
C. theoretical research, because there is no data on these variables
D. empirical research, because there is no economic theory related to these variables
2) A basic difference between microeconomics and macroeconomics is that microeconomics
A. focuses on the choices of individual consumers, while macroeconomics considers the behavior of large businesses
B. focuses on financial reporting by individuals, while macroeconomics focuses on financial reporting by large firms
C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy's overall performance
D. focuses on national markets, while macroeconomics concentrates on international markets
3) The distinction between supply and the quantity supplied is best made by saying that
A. the quantity supplied is represented graphically by a curve and supply as a point on that curve associated with a particular price
B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price
C. the quantity supplied is in direct relation with prices, whereas supply is in inverse relation
D. the quantity supplied is in inverse relation with prices, whereas supply is in direct relation
4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?
A. The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.
B. The rise in demand shifted the demand for oil to the right. As price rose, the supply of oil also rose.
C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.
D. The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.
5) Price elasticity of demand is the:
A. change in the quantity of a good demanded divided by the change in the price of that good
B. change in the price of a good divided by the change in the quantity of that good demanded
C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded
D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good
6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
7) When labor is the variable input, the average product equals the
A. marginal product divided by the number of workers
B. marginal product multiplied by the number of workers
C. number of workers divided by the quantity of output
D. quantity of output divided by the number of workers
8) The increase in output obtained by hiring an additional worker is known as
A. the average product
B. the marginal product
C. the total product
D. value added
9) Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.
C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.
D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.
10) Other things being equal, when average productivity falls,
A. average fixed cost must rise
B. marginal cost must rise
C. average total cost must rise
D. average variable cost must rise
11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will
A. work the same number of hours as they will on slower days
B. work fewer hours than they will on slower days
C. work more hours than they will on slower days
D. not work any hours
12) A firm's demand for labor is derived from the
A. opportunity costs associated with labor and leisure
B. desires and needs of the entrepreneur
C. cost of labor inputs
D. demand for its output
13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day
A. is $0 because Owen does not have to purchase another van
B. is $5
C. is $75
D. cannot be calculated without knowing Owen's total fixed costs
14) Expected economic profit per unit is equal to
A. expected price
B. expected average total cost
C. the difference between expected average price and expected average total cost
D. the difference between expected total revenue and expected total cost
15) If a firm in a perfectly competitive market experiences a technological breakthrough,
A. other firms would find out about it eventually
B. other firms would find out about it immediately
C. other firms would not find out about it
D. some firms would find out about it, but others would not
16) A significant difference between monopoly and perfect competition is that
A. free entry and exit is possible in a monopolized industry, but impossible in a competitive industry
B. competitive firms control market supply, but monopolies do not
C. the monopolist's demand curve is the industry demand curve, while the competitive firm's demand curve is perfectly elastic
D. profits are driven to zero in a monopolized industry, but may be positive in a competitive industry.
17) A monopoly firm is different from a competitive firm in that
A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product
B. a monopolist's demand curve is perfectly inelastic while a competitive firm's demand curve is perfectly elastic
C. a monopolist can influence market price while a competitive firm cannot
D. a competitive firm has a U-shaped average cost curve while a monopolist does not
18) The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a
A. horizontal demand curve and price equals marginal cost in equilibrium
B. horizontal demand curve and price exceeds marginal cost in equilibrium
C. downward-sloping demand curve and price equals marginal cost in equilibrium
D. downward-sloping demand curve and price exceeds marginal cost in equilibrium
19) As long as marginal cost is below marginal revenue, a perfectly competitive firm should
A. increase production
B. hold production constant
C. decrease production
D. reconsider past production decisions
20) Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as the marginal
A. benefit of advertising is positive
B. cost of advertising is positive
C. benefit of advertising exceeds the marginal cost of advertising
D. cost of advertising exceeds the marginal benefit of advertising
21) In the Flint Hills area of Kansas, proposals to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce fossil fuel usage, while local chapters of the Nature Conservancy say they will befoul the landscape. The Sierra Club argues that wind turbines
A. are a source of negative externalities
B. reduce negative externalities elsewhere in the economy
C. create a free-rider problem
D. are a way of solving a free-rider problem
22) When negative externalities are present, market failure often occurs because
A the marginal external cost resulting from the activity is not reflected in the market price
B. the marginal external cost resulting from the activity is reflected in the market price
C. the existence of imports from foreign countries takes jobs and income away from U.S. citizen
D. consumers will consume the good at a level where their individual marginal benefits exceed the marginal costs borne by the firm producing the good
23) A merger between a textile mill and a clothing manufacturing company would be considered a
A. horizontal merger
B. vertical merger
C. conglomerate merger
D. diagonal merger
24) A merger between a baby food company and a life insurance company would be considered a
A. horizontal merger
B. vertical merger
C. conglomerate merger
D. diagonal merger
25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs?
A. It hurts the poor and benefits the rich.
B. It leads to less fuel being used than the amount that maximizes consumer surplus.
C. It encourages the consumption of too much fuel at the expense of other goods.
D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.
26) Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person's income to provide the same level of coverage as before. What can be said about deadweight loss in each case?
A. Taxing income results in deadweight loss, while purchasing health care on one's own does not result in deadweight loss.
B. Taxing income results in less deadweight loss, because government knows better what health care coverage is good for society.
C. There is no difference because the goods are purchased in the market in either case.
D. There is no difference because the total spending remains the same and the health care purchased remains the same.
27) The U.S. textile industry is relatively small because the US imports most of its clothing. A clear result of the importation of clothing is
A. there is less variety available than there would be without imports
B. the quality of clothing is lower than it would be without imports
C. the price of clothing is higher than it would be without imports
D. the price of clothing is lower than it would be without imports
28) Countries can expect to gain from international trade as long as they
A. keep production diversified
B. specialize according to their comparative advantage
C. produce only those goods for which they have a relatively high opportunity cost
D. use trade restrictions to reduce competition for domestic producers
29) Which of the following is an example of the law of one price?
A. Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar.
B. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.
C. Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the US to import all goods at one price.
D. Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency.
30) The fact that U.S. managers' salaries are substantially greater than those of comparable managers in Japan may be related to
A. an increase in the demand for CEOs
B. an increase in the supply of CEOs
C. the comparatively greater competitive markets in Japan
D. the greater number of public goods provided in the United States
1) An accrued expense can best be described as an amount
paid and currently matched with earnings.
not paid and not currently matched with earnings.
not paid and currently matched with earnings.
paid and not currently matched with earnings.
2) When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.
3) When an item of expense is paid and recorded in advance, it is normally called a(n)
4) A common set of accounting standards and procedures are called
objectives of financial reporting.
generally accepted accounting principles.
financial accounting standards.
statements of financial accounting concepts.
5) One objective of financial reporting is to provide
information that is useful in assessing cash flow prospects.
information about the liquidation values of the resources held by the enterprise.
information about the investors in the business entity.
information that will attract new investors.
6) The information provided by financial reporting pertains to
individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers.
business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers.
individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.
an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries.
7) The Financial Accounting Foundation
provides information to interested parties on financial reporting issues.
oversees the operations of the AICPA.
oversees the operations of the FASB.
works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues.
8) The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is
all members of the FASB possess extensive experience in financial reporting.
all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.
the FASB issues exposure drafts of proposed standards.
a majority of the members of the FASB are CPAs drawn from public practice.
9) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the
10) Limitations of the income statement include all of the following except
items that cannot be measured reliably are not reported.
income measurement involves judgment.
income numbers are affected by the accounting methods employed.
only actual amounts are reported in determining net income.
11) The income statement reveals
resources and equities of a firm at a point in time.
net earnings (net income) of a firm at a point in time.
net earnings (net income) of a firm for a period of time.
resources and equities of a firm for a period of time.
12) Which of the following would represent the least likely use of an income statement prepared for a business enterprise?
Use by customers to determine a company's ability to provide needed goods and services.
Use by government agencies to formulate tax and economic policy.
Use by investors interested in the financial position of the entity.
Use by labor unions to examine earnings closely as a basis for salary discussions.
13) The process of formally recording or incorporating an item in the financial statements of an entity is
14) Which of the following is not a reason why revenue is recognized at time of sale?
Realization has occurred.
Title legally passes from seller to buyer.
All of these are reasons to recognize revenue at time of sale.
The sale is the critical event.
15) Which of the following is not an accurate representation concerning revenue recognition?
Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers.
Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used.
Revenue from disposing of assets other than products is recognized at the date of sale.
Revenue from services rendered is recognized when cash is received or when services have been performed.
16) One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is
an extensive use of estimates.
the extensive use of separate classifications.
failure to reflect current value information.
failure to include items of financial value that cannot be recorded objectively.
17) The basis for classifying assets as current or noncurrent is conversion to cash within
the accounting cycle or one year, whichever is longer.
the operating cycle or one year, whichever is longer.
the accounting cycle or one year, whichever is shorter.
the operating cycle or one year, whichever is shorter.
18) The correct order to present current assets is
Cash, inventories, accounts receivable, prepaid items.
Cash, accounts receivable, inventories, prepaid items.
Cash, accounts receivable, prepaid items, inventories.
Cash, inventories, prepaid items, accounts receivable.
19) If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the
dollar amount of the transactions for each of the periods for which an income state-ment is presented.
nature of any future transactions planned between the parties and the terms involved.
nature of the relationship between the parties to the transactions.
amounts due from or to related parties as of the date of each balance sheet presented.
20) Events that occur after the December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be
used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008.
disclosed only in the Notes to the Financial Statements.
discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.
used to record an adjustment directly to the Retained Earnings account
21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.
Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.
All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.
Disclosure of any financial facts significant enough to influence the judgment of an informed reader.
22) The MD&A section of an enterprise's annual report is to cover the following three items:
liquidity, capital resources, and results of operations.
income statement, balance sheet, and statement of cash flows.
income statement, balance sheet, and statement of owners' equity.
changes in the stock price, mergers, and acquisitions.
23) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be
24) Which of the following best characterizes the difference between a financial forecast and a financial projection?
Forecasts include a complete set of financial statements, while projections include only summary financial data.
A forecast attempts to provide information on what is expected to happen, whereas a projection may provide information on what is not necessarily expected to happen.
A forecast is normally for a full year or more and a projection presents data for less than a year.
A forecast includes data which can be verified about future expectations, while the data in a projection is not susceptible to verification.
25) Theoretically, in computing the receivables turnover, the numerator should include
net credit sales.
26) Which of the following ratios measures long-term solvency?
Debt to total assets
27) The rate of return on common stock equity is calculated by dividing
net income by average common stockholders' equity.
net income by ending common stockholders' equity.
net income less preferred dividends by average common stockholders' equity.
net income less preferred dividends by ending common stockholders' equity.
28) The primary purpose of the statement of cash flows is to provide information
about the operating, investing, and financing activities of an entity during a period.
about the cash receipts and cash payments of an entity during a period.
that is useful in assessing cash flow prospects.
about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.
29) The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?
Statements of cash flows
Statements of retained earnings
30) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.
estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.
eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.
re-recording all income statement transactions that directly affect cash in a separate cash flow journal.
31) The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
deduction from net income.
addition to net income.
32) In determining net cash flow from operating activities, a decrease in accounts payable during a period
requires an increase adjustment to cost of goods sold under the direct method.
requires an addition adjustment to net income under the indirect method.
requires a decrease adjustment to cost of goods sold under the direct method.
means that income on an accrual basis is less than income on a cash basis.
33) In reporting extraordinary transactions on a statement of cash flows (indirect method), the
net of tax amount of an extraordinary gain should be deducted from net income.
net of tax amount of an extraordinary gain should be added to net income.
gross amount of an extraordinary gain should be added to net income.
gross amount of an extraordinary gain should be deducted from net income.
34) Which of the following transactions would require the use of the present value of an annuity due concept in order to calculate the present value of the asset obtained or liability owed at the date of incurrence?
A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.
A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.
A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.
A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.
35) Which of the following tables would show the smallest value for an interest rate of 5% for six periods?
Future value of an ordinary annuity of 1
Present value of 1
Present value of an ordinary annuity of 1
Future value of 1
36) Which table would show the largest factor for an interest rate of 8% for five periods?
Future value of an annuity due of 1
Present value of an ordinary annuity of 1
Present value of an annuity due of 1
Future value of an ordinary annuity of 1