_______________ means that decision-making authority is delegated to lower-level

managers and employees.

Select one:
a. Specification of authority
b. Standardized authority
c. Decentralized authority
d. Uniformity of authority
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The correct answer is: Decentralized authority
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Which of the following government policies would be least likely to encourage
entrepreneurship?
Select one:
a. Passage of laws that eliminate corruption in government and business.
b. Establishment of strict regulations specifying exactly how products should be made to ensure
safety and affordability.
c. Passage of laws that enable businesspeople to write enforceable contracts.
d. Establishment of a currency that is tradable in world markets.
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The correct answer is: Establishment of strict regulations specifying exactly how products
should be made to ensure safety and affordability.
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Which of the following is an advantage of the corporate form of business when compared to
sole proprietorships and partnerships?
Select one:
a. Simplified paperwork
b. Ease of formation
c. Limited liability of owners
d. Lower taxes
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The correct answer is: Limited liability of owners
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To many businesspeople, one of the major attractions of a sole proprietorship is:
Select one:
a. an unlimited lifespan.
b. the protection of limited liability.
c. the ability to obtain additional financial resources.
d. the chance to be their own boss.
Feedback
The correct answer is: the chance to be their own boss.
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___________ is the management function of creating a vision for the organization and
guiding, training, coaching, and motivating employees to help achieve the goals and
objectives of the organization.
Select one:
a. Controlling
b. Leading
c. Organizing
d. Officiating
Feedback
The correct answer is: Leading
 Question 6
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Entrepreneurs weigh the differences between the benefits of starting a business and those
things that they are likely to forego because they choose to work for themselves. Such
things they are likely to pass up on are:
Select one:
a. tickets to sporting events that trading partners may provide.
b. local government benefits such as enterprise zone tax credits.
c. the freedom to make their own decisions.
d. employer paid benefits such as paid vacation and health insurance.
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The correct answer is: employer paid benefits such as paid vacation and health insurance.
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Dividing tasks into smaller jobs is called:
Select one:
a. job specialization.
b. job enrichment.
c. division of authority.
d. departmentalization.
Feedback
The correct answer is: job specialization.
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 Question text
Tess and Tijuana have considered starting their own business but are concerned about the
possibility of losing their personal assets if the business fails. One way for Tess and Tijuana

to avoid this risk would be to organize their firm as a :

Select one:
a. corporation.
b. limited partnership.
c. sole proprietorship.
d. general partnership.
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The correct answer is: corporation.
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How is it that people working in their own self-interest produce goods, services, and wealth
for others?
Select one:
a. In order to earn money and produce goods that improve lives, self-directed gain would
provide jobs, and subsequently wages for others.
b. Entrepreneurs tend to include themselves in a group of people who need charitable support.
c. By taking advantage of a vast supply of labor, people working in their own self-interest could
hire others at very low wages.
d. The government pays entrepreneurs in the U.S. to produce goods, services, and wealth for
others.
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The correct answer is: In order to earn money and produce goods that improve lives, self-
directed gain would provide jobs, and subsequently wages for others.
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 Question text
The price of iPhones™ is falling. In a free-market economic system where everything else is
equal, the most likely explanation is:
Select one:
a. the product has competition at the equilibrium price.
b. sellers cannot keep up with market demand.
c. the government determined that the product was not worth the price tag that the producer
was asking.
d. suppliers are not producing enough product.
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The correct answer is: the product has competition at the equilibrium price.
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Which of the following statements would best summarize Max Weber's views on the role of
workers in an organization?
Select one:
a. Workers will be promoted within the organization depending upon "who they know," rather
than "what they know."
b. Although top managers must ultimately make the decisions, workers are an important
creative resource for a firm, and top management should listen to their ideas.
c. Workers should simply follow well-defined procedures.
d. Workers should be empowered to do whatever it takes to satisfy the needs of customers.
Feedback
The correct answer is: Workers should simply follow well-defined procedures.
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In a company in which an effective vision has been provided:
Select one:
a. goals and objectives are no longer needed.
b. there is no need for tactical planning.
c. the economic and competitive environments tend to be much more predictable.
d. employees are likely to have a sense of purpose and a common set of values.
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The correct answer is: employees are likely to have a sense of purpose and a common set
of values.
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Which of the following activities would be a part of the leading function of management?
Select one:
a. Training and coaching workers to help them understand their job and perform it effectively
b. Recruiting qualified workers to join the organization and assigning them to their proper
position
c. Examining a financial report to see whether the firm's profits are improving and taking
corrective action if they are not
d. Devising a new strategic plan to enter a new foreign market currently dominated by a
competing firm
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The correct answer is: Training and coaching workers to help them understand their job and
perform it effectively
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Which of the following statements about S corporations is most accurate?
Select one:
a. Only large corporations with operations in more than one state can qualify to be classified as
S corporations.
b. The major attraction of S corporations is that they avoid the problem of double taxation.
c. Any corporation willing to pay the necessary fees and fill out the required paperwork can
become an S Corporation.
d. S Corporations are similar to C corporations, except that the majority of owners are foreign
investors.
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The correct answer is: The major attraction of S corporations is that they avoid the problem
of double taxation.
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Which of the following is an advantage of a line organization in a large business?
Select one:
a. Responsibility and authority are clearly defined.
b. Each worker has several supervisors.
c. It is very flexible.
d. It does not require specialists to advise people along the line.
Feedback
The correct answer is: Responsibility and authority are clearly defined.
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Jamie and Maria invested all their savings in a small pizzeria they opened outside the
University of Western Kentucky. They operated the business as a general partnership. After
11 months, the business went broke and Jamie and Maria were left with outstanding bills of
$37,500, which was more than their initial investment in the company. Jamie and Maria can:
Select one:
a. avoid any liability for these debts since a partnership is considered to be a business entity
that is separate and distinct from the partners who own it.
b. lose their personal assets as the result of their company's financial problems.
c. lose only the total value of the assets actually used to operate the business.
d. lose only the funds they originally invested in their company.
 Feedback
The correct answer is: lose their personal assets as the result of their company's financial
problems.
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Kathleen's company produces computer monitors and other peripheral devices for
computers. About six months ago, Kathleen began to keep track of number of hours
worked, and the resulting output at her particular work site. Comparing the results, she
found that the number of workers (and the hours they worked) remained relatively steady
over the past six months; however, the work site's output increased significantly. This
indicates that:
Select one:
a. the work site sold-off some of its excess inventory.
b. productivity at the work site has increased.
c. the company's prices have increased faster than the wages paid to workers.
d. the company should hire more workers.
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The correct answer is: productivity at the work site has increased.
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Fayol believed that decision-making authority should remain in the hands of top
management:
Select one:
a. in small organizations, but should be delegated to middle and first-line managers in large
organizations.
b. in all types and sizes of organizations.
c. only in organizations subjected to significant government regulation.
d. in large organizations, but could be delegated to middle and first-line managers in small
organizations.
 Feedback
The correct answer is: in small organizations, but should be delegated to middle and first-
line managers in large organizations.
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After working for eleven years as a production line worker, Hollis recently was made a
foreman. In his new position, Hollis will rely on:
Select one:
a. technical skills and conceptual skills, but he won't really need any human relations skills.
b. accounting and financial skills.
c. conceptual skills more than human relations skills.
d. technical skills and human relations skills more than conceptual skills.
Feedback
The correct answer is: technical skills and human relations skills more than conceptual
skills.
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__________ is the study of how a society employs its limited resources to produce goods
and services and how it distributes them among competing groups and individuals.
Select one:
a. Capitalism
b. Economics
c. Marketing
d. Socialism
Feedback
The correct answer is: Economics
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Jane's income has remained stable over the past few years while the prices of things she
buys have gone up. Nevertheless, Jane feels better off because the environment is cleaner,
the crime rate has declined, she has more leisure time, and the quality of medical care has
improved. If Jane's experience is typical, we can conclude that the standard of living has:
Select one:
a. increased, and so has the quality of life.
b. increased, but the quality of life has decreased.
c. declined, but the quality of life has increased.
d. declined, and so has the quality of life.
Feedback
The correct answer is: declined, but the quality of life has increased.
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The management at Patriot Mills works hard to ensure that no one in its organization has
more than one boss and all workers are treated with fairness and respect. Additionally, the
firm divides the work into areas of specialization so that everyone knows to whom they
should report. The management of Patriot Mills reflects the ideas and principles of:
Select one:
a. Henri Fayol.
b. John M. Keynes.
c. Peter Drucker.
d. Karl Marx.
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The correct answer is: Henri Fayol.
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 Question text
Health care, insurance, recreation and other intangible products are provided by the:
Select one:
a. service industry.
b. industrial sector.
c. global sector.
d. manufacturing industry.
Feedback
The correct answer is: service industry.
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Which of the following statements about partnerships is most accurate?
Select one:
a. Partnerships are taxed at the lowest corporate tax rate.
b. A partnership is a corporation with fewer than 100 owners.
c. A major drawback of a partnership is that it is difficult to terminate.
d. A major advantage of a partnership is that it offers all owners limited liability.
Feedback
The correct answer is: A major drawback of a partnership is that it is difficult to terminate.
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Which of the following is a clear performance standard?
Select one:
a. Decrease the number of products rejected due to manufacturing defects by 10% over the
next 6 months.
b. Bring about a significant improvement in the morale of all workers.
c. Completely eliminate all customer complaints.
d. Make secretaries more efficient.
Feedback
The correct answer is: Decrease the number of products rejected due to manufacturing
defects by 10% over the next 6 months.
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Preferred Pet Care, Inc., a mobile veterinary care company, is planning for the future. As a
business student who has studied social trends, which of the following statements do you
think reflects the need for Preferred Pet Care's service in the future?
Select one:
a. People will always prefer to take their pets to the veterinary clinic.
b. People who would require this service would be higher income individuals. Retired people
would not be a market for this firm because they do not have money to care for pets.
c. The aging population will be a sizeable market for this firm.
d. Mobile pet care will not be needed because the majority of people are working which means
that nobody is home.
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The correct answer is: The aging population will be a sizeable market for this firm.
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Fourteen years ago, Sergio noticed that a lot of people who bought personal computers did
not know much about how to use them and frequently suffered system crashes and other
aggravations. He decided he could earn a nice profit by starting a consulting business to
help other people overcome their computer woes. Although the business struggled at first, it
has experienced a good deal of success for the past five years. Sergio has many satisfied
customers, and the business has grown to the point where he now employs several
workers. Sergio's experience is an example of:
Select one:
a. the principle of comparative advantage.
b. the invisible hand concept.
c. socialism at work.
d. the multiplier principle.
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The correct answer is: the invisible hand concept.
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The __________ is the most common form of business ownership.
Select one:
a. joint venture
b. partnership
c. corporation
d. sole proprietorship
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The correct answer is: sole proprietorship
Question 29
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As a middle manager for her firm, Tori just finished comparing the results of a promotional
campaign with the outcome expectations. The next step in the control process is:
Select one:
a. set up contingency plans.
b. monitor and record actual performance.
c. communicate results and deviations with management and employees involved.
d. establish discipline committees to decide on dismissals.
Feedback
The correct answer is: communicate results and deviations with management and
employees involved.
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A free market is one in which decisions about what to produce and in what quantities are
made by:
Select one:
a. the Congress
b. the community
c. the Fed
d. the market
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The correct answer is: the market
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The four basic types of unemployment are frictional, structural, seasonal, and:
Select one:
a. procedural.
b. industrial.
c. cyclical.
d. traditional.
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The correct answer is: cyclical.
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__________ is the management function that involves determining whether an organization
is progressing toward its goals, rewarding employees for doing a good job, and taking
corrective action when they are not.
Select one:
a. Controlling
b. Officiating
c. Organizing
d. Leading
Feedback
The correct answer is: Controlling
Question 33
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Young people today are often called __________ because they have never known life
without the Internet.
Select one:
a. digital natives
b. social networkers
c. electronic eggheads
d. the high-tech heroes
Feedback
The correct answer is: digital natives
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A nation progresses socially when it has good schools, clean air and water, and more.
Which of the following statements addresses conditions for social progress?
Select one:
a. The foundation for social progress is a handful of wealthy entrepreneurs willing to spread the
wealth.
b. A city, state, or nation's social progress needs the right business environment.
c. Social progress can only improve when there is a strong labor pool to draw from.
d. Social progress will evolve when capital is apportioned to everyone in equal amounts.
 Feedback
The correct answer is: A city, state, or nation's social progress needs the right business
environment.
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Independence Electronics prides itself as a world-class producer of components used in CD
and DVD players. The outstanding performance of the production department indicates that
this activity is one of the firm's:
Select one:
a. core competencies.
b. fiscal responsibilities.
c. benchmark assets.
d. target competitive advantages.
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The correct answer is: core competencies.
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Maria recently purchased 100 shares of stock in Idle Time Gaming, Inc. Maria is a  
______________ of this company.
Select one:
a. partner
b. creditor
c. manager
d. owner
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The correct answer is: owner
Question 37
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Communism is an economic system in which:
Select one:
a. the government and private citizens own equal shares of the economic resources.
b. the government makes almost all of the major economic decisions.
c. individual consumers make all economic decisions.
d. almost all of the productive resources are owned by private businesses.
Feedback
The correct answer is: the government makes almost all of the major economic decisions.
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The foundation of the U.S. economic system is based on:
Select one:
a. equality.
b. the ideas of Thomas Malthus.
c. the saying, "from each according to ability, to each according to need."
d. capitalism.
Feedback
The correct answer is: capitalism.
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When we think of successful music entertainment groups of the past 60 years, the Beatles
almost always appear in the top 5! In the early days, the entertainment group's life cycle
could have ended as so many other rock groups do—here today, gone tomorrow. The four
musicians were definitely creative and passionate about their craft and genre of music. As
the informal leader of the group, John Lennon _____________ the others to make
 important compositional contributions. All four members had the opportunity to create
musical compositions and receive copyright credit for their contributions.
Select one:
a. enabled
b. commanded
c. transformed
d. empowered
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The correct answer is: empowered
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One reason limited liability companies have become so popular is that they:
Select one:
a. allow owners to sell their interests in the company without requiring approval from other
owners.
b. can be taxed either as a corporation or as a partnership, so owners can choose the tax
treatment that is most advantageous for their situation.
c. permit owners to avoid paying self-employment taxes on the company's profits.
d. have unlimited life.
Feedback
The correct answer is: can be taxed either as a corporation or as a partnership, so owners
can choose the tax treatment that is most advantageous for their situation.
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________ refers to the process of dividing organizational functions (sales, production,
accounting/bookkeeping) into separate units.
Select one:
a. Empowerment
b. A chain of command
c. Departmentalization
d. Coordination
Feedback
The correct answer is: Departmentalization
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Which of the following determines the degree of decentralization of a firm?
Select one:
a. The geographical area served by the firm's operations.
b. The chain of command used to follow the flow of authority from top of the hierarchy to the
lowest levels.
c. The degree of product standardization desired by the marketplace.
d. The degree to which lower-level management is empowered to make decisions.
Feedback
The correct answer is: The degree to which lower-level management is empowered to make
decisions.
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Which of the following activities is part of the organizing function of management?
Select one:
a. Developing a broad general strategy to help the organization meet its long-term growth
objectives
b. Giving front-line workers additional resources needed to provide faster and better service to
customers
c. Teaching a new employee how to use a piece of office equipment
d. Going over a spreadsheet to analyze some financial data
 Feedback
The correct answer is: Giving front-line workers additional resources needed to provide
faster and better service to customers
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Often in business the greater the risk, the __________.
Select one:
a. greater the potential reward
b. lower the value provided to society
c. greater the number of stakeholders
d. lower the expected revenues
Feedback
The correct answer is: greater the potential reward
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The green movement is:
Select one:
a. developing more green food products to feed the world's poor.
b. concerned with depletion of natural resources and leaving a large carbon footprint.
c. our concern with the fact that everywhere we look, things are remaining green for longer
periods of time.
d. a trend that started with the U.S. government.
Feedback
The correct answer is: concerned with depletion of natural resources and leaving a large
carbon footprint.
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Jorge Martinez is a well-educated entrepreneur who operated a small business in his home
country of Fiorentina. At the encouragement of his American relatives, Jorge recently
immigrated to the United States and applied for U.S. citizenship. "In Fiorentina, tax rates
were very high," Jorge complained. "The government used the taxes I paid to finance all
sorts of social programs to help the less fortunate. While this is a noble goal, it has really
undermined the profit incentive of individuals such as me. I really feel that these high taxes
have stifled economic growth." Jorge's comments illustrate the reason many socialist

countries are experiencing a :

Select one:
a. antitrust problem.
b. depression.
c. brain drain.
d. budget surplus.
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The correct answer is: brain drain.
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Marla Staples is concerned with identity theft. One of the ways that she can protect her
information from leaking out to the wrong hands is to:
Select one:
a. limit her travels to only the U.S. because identity theft is an international problem.
b. limit her purchases with vendors that she knows do not store her information in a database.
c. avoid all e-commerce transactions because this is the only type of buying transaction where
websites and others handle sensitive, personal information.
d. install antivirus software, firewalls, and anti-spyware software on her computer.
Feedback
The correct answer is: install antivirus software, firewalls, and anti-spyware software on her
computer.
Question 48
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___________ is the management function that involves setting goals, strategies, and tactics
for achieving the organization's goals and objectives.
Select one:
a. Controlling
b. Planning
c. Forecasting
d. Conceptualizing
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The correct answer is: Planning
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__________ is the amount a business earns after deducting what it spends for salaries and
other expenses.
Select one:
a. Revenue
b. Interest
c. Profit
d. Dividends
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The correct answer is: Profit
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When entering into a new partnership, a good strategy is to:
Select one:
a. avoid putting the agreement in writing since this would limit the flexibility of the partnership.
b. put the partnership agreement in writing.
c. agree to put the first year's profits back into the partnership.
d. plan to incorporate as soon as possible.
Feedback
The correct answer is: put the partnership agreement in writing.