BAM101 Midterm Exam

1. Individual ownership of property is a key element in:

- Capitalism
2. The purchaser of a franchise is called the:
- Franchisee
3. When a single firm accounts for 100 percent of industry sales, it is an example of:
- A pure monopoly
4. A _ merger brings together companies in unrelated businesses to reduce risk.
- Conglomerate
5. Spanish customers view toothpaste as a cosmetic while consumers in the Netherlands
view it as a necessary part of daily hygiene and use three times as much their Spanish
counterparts. This example of _ shows how important it is for marketers to understand.
- Cultural differences
6. In a _, the factors of production are owned collectively rather than individually, and no
incentives to work harder or to produce quality products are provided.
- Communist Economic System
7. The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of
healthcare inventory software, is an example of a(an) _ merger.
- Vertical
8. Which of the following is a disadvantage for the fast-food franchise?
- Royalty fees
9. The main incentive in capitalism is:
- Profit
10. Walmart ran a series of ads in trade journals with the following headline: “We’re looking
for quality products that are guaranteed not to last”. What Wal-Mart was in fact doing
was asking suppliers to develop more environmentally friendly products and to use
material that could be recycled. This concern about the environment is one way that
Walmart practices:
- Social Responsibility
11. _ is the amount of money remaining from a firm’s sales revenue after it deducts
production costs, interest costs, and taxes.
- Profit
12. An argument in favor of protective tariffs is the “infant-industry argument”, which states
that:
- Infant industries should be protected by tariffs from established foreign competition.
13. Nation sometimes form free-trade associations and establish areas where there are few,
if any, export and import duties or other regulations that would act as barriers to trade
among partners. These are called:
- Free trade zones
14. What type of organization generates the most total sales?
- Corporation

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 15. When grand metropolitan, a British company, purchased U.S. – based Pillsbury Co. in
order to expand its product line and the market for its existing consumer products, it
was an example of a(an):
- Direct foreign investment
16. The World Bank’s emphasis has recently shifted from helping to build the infrastructure
of developing countries to:
- Offering loans to help to relieve their debt burden
17. The headquarters, seller, and supplier of the service or method of operation of a
franchise is called the:
- Franchisor
18. Which of the following statements about a general partnership is true?
- Partners in a general partnership co-own the company’s assets
19. One of the keys to ethical business behavior is:
- How the company’s top management conducts themselves
20. Corporate philanthropy:
- Can be either a cash or noncash donation
21. _ is the practice of limiting investments to securities in companies that behave in
accordance with the investor’s beliefs about ethical and social responsibility
- Social investing
22. Seeds of Change manufactures and markets certified organic entrees. Its mission reads,
“At Seeds of Change, we’re committed to making delicious foods that are healthy for you
as well as the planet”. In support of this mission, the company donates money to
support environmental protection activities. In other words, Seeds of Change engages in:
- Strategic giving
23. The least costly and least risky method for selling a product on a global market is:
- Exporting
24. A term that means that business damages and/or debts can also be attached to the
personal assets of the owner is _ liability
- Unlimited
25. Which of the following is an example of an ethical business activity?
- The employee reported to his supervisors that a co-worker had misappropriated
company funds.
26. China imposes a 45 percent tac on the market value of all chickens that are imported
from the US to China. Another name for this type of tax is a(an):
- Tariff
27. A homebuilder who disposes of asbestos shingles by burying them on his own property
may please the home owner because it is a less expensive means of disposal but will be
punished by various legal agencies if any become aware of his crime. At which stage of
the social responsibility pyramid is the builder most likely operating?
- Economic
28. The _ created the world’s largest free-trade zone.
- North America Free Trade Agreement
29. When the price of gasoline rises by 40 percent, but your salary remains the same, it is an
example of a decline in your:

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 - Purchasing power
30. Jules Sylvester had always loved reptiles. When he was asked by a movie producer if he
could locate some anaconda snakes for a movie, a business was born. Sylvester is the
proud owner and operator of Reptile Rentals. The California-based business, which he
started with no financial help from anyone, is often called on to provide "creepy, crawly"
moments in the movies. Jules Sylvester is an example of a:
- Sole Proprietorship
31. Active ownership of a foreign company, with direct investors having either a controlling
or large minority interest in the firm, is called:
- Direct foreign investment
32. Which of the following is an example of disadvantage associated with partnership?
- Unlimited liability
33. Which of the following statements about oligopolies is true?
- In an oligopoly, three or four firms usually dominate the marketplace.
34. The Home Depot supplies all the materials and the labour expertise for Habitat Homes in
various regions of the country where the retail giant has a store. Its top management
believes that this type of philanthropy better reflects the company's commitment to the
community than simple donations to the Canadian Cancer Society and similar national
charities. The Home Depot is using the practice of:
- Strategic giving
35. Code ethics:
- May be influential in determining a person’s decision making behavior
36. Singapore has granted a(an) _ on the importation of beer and stout made in the
Philippines. This means that beer and stout made in the Philippines can sell for less in
Singapore than beer and stout made by New Zealand or the United States
- Preferential tariff
37. The _ is an agreement that dramatically lowered trade barriers worldwide and created
the new World Trade Organization (WTO)
- Uruguay round
38. Many weight-loss programs advertise that they can help individuals lose a great deal of
weight without any changes in the individual's lifestyle. Typically when the person who
has lost the weight leaves the program, he or she regains all the lost weight. This yo-
yoing is almost as bad for the body as the excess weight. These weight-loss programs are
engaged in _____ behavior.
- Legal but irresponsible
39. The situation in which the average of all prices of products is rising is called:
- Inflation
40. As soon as any nations has experienced two consecutive quarterly declines of its gross
domestic product, that nation will be in a:
- Recession
41. Another factor influencing business ethics is _ or what is fair according to prevailing
standards of society.
- Justice

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 42. Why do many people fear trade and globalization?
- Many fear trade and globalization will lead to massive job losses.
43. The _ is the value of currency in terms of another.
- Exchange rate

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