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Fall 2011

Introduction to Business

Exam 1

Name_______________________________________ Date____________________________ Period____________

Section I. True/False (2 points each) Indicate whether each statement is true (T) or false (F) by circling either letter at the end of each statement. If the statement is false (F), correct the underlined portion in the space provided below each statement. 1. What is the problem and what are my options? is a question that would best help you evaluate a business decision after you put it into effect. ____________________________________________________________________________ ____________________________________________________________________________ 2. Businesses use market research to gain immediate access to market capital. ____________________________________________________________________________ ____________________________________________________________________________ 3. To avoid failure, a business can modify its products, services, and business practices to satisfy consumers. ____________________________________________________________________________ ____________________________________________________________________________ 4. Coal is a renewable capital resource because there is so much coal still in the ground. ____________________________________________________________________________ ____________________________________________________________________________ 5. Cashiers, dentists, architects, and teachers are all examples of labor resources. ____________________________________________________________________________ ____________________________________________________________________________ 6. If a price for a good or service is too high, demand decreases. ____________________________________________________________________________ ____________________________________________________________________________ 7. In a mixed economy, there is little choice for consumers. ____________________________________________________________________________ ____________________________________________________________________________ Page 1 of 7 T F T F T F T F T F T F T F

Fall 2011

Introduction to Business

Exam 1

8. The industrial revolution led to an industry based economy in the 1700s. ____________________________________________________________________________ ____________________________________________________________________________ 9. Deflation can occur when the government allows too much money to circulate in the economy. ____________________________________________________________________________ ____________________________________________________________________________ 10. Another term for a period of economic prosperity is peak. ____________________________________________________________________________ ____________________________________________________________________________

Section II. Multiple Choice (1 point each) Read each question carefully and select the BEST answer based on the information presented in class and the information in the textbook. Circle the letter of your answer AND write your letter choice in the space provided to the right of each question. 11. Which is true of resources? A. resources, in general, are unlimited B. insurance and tourism are examples of resources C. resources are things that you must have to survive D. resources, in general, are limited 11. ________

12. What is the motive of businesses? A. to compete with other businesses B. to make a profit C. to provide goods and services D. to offer competitive prices 13. What might a business do if its products dont meet consumers needs? A. modify its products to meet consumer needs B. consider bankruptcy C. start a new business D. try new selling techniques

12. ________

13. ________

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Fall 2011

Introduction to Business

Exam 1 14. ________

14. The Decision-Making Process (DMP) should be used A. when you buy orange choice at the store B. for every decision a business makes C. when you make a major household process D. when a decision will not affect your life

15. What are the factors of production? A. demand, supply, scarcity, and price B. natural, labor, capital, and entrepreneurial resources C. renewable and nonrenewable resources D. market, command, and mixed economies

15. ________

16. Which is an example of a capital resource? A. a machine used to make plastic toys B. a customer service representative C. money borrowed from the bank D. an accountant that works for a business 17. Which is most likely to profit from societys changing wants and needs? A. a business with capital resources B. a producer of goods C. an entrepreneur D. a business with substantial labor resources

16. ________

17. ________

18. If you live in a market economy, you will most likely A. be told what to purchase by market economists B. have few wants met C. be able to choose your occupation D. work for the same amount of wages as less skilled workers

18. ________

19. Which results when a government spends more than it makes during a year? A. a depression B. a budget deficit C. loss of revenue D. a budget surplus

19. ________

20. Which of the following would be true of a developing nation? A. there would be an excess of services provided B. the wages of low-skilled workers would be high C. its economy would be controlled by the United States D. the national debt would be a large amount of money

20. ________

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Fall 2011 Section III. Short Answer

Introduction to Business

Exam 1

Read each question carefully and follow the directions provided. For questions 21 25, fill in the blank with the most appropriate word(s) that make the sentence true. Place the word(s) in the space provided to the right of each statement. (1 point each) For questions 26 30, read and follow the directions carefully for each question. 21. The money left over after a business has paid the cost of providing its goods and services is ___________. 21. _________________

22. A lack of resources that go into the making of goods and services is __________. 23. All the economic resources necessary to produce a societys good and services are ___________.

22. _________________

23. _________________

24. The study of how individuals and groups of individuals strive to satisfy their needs and wants by making choices is _________.

24. _________________

25. The level of material comfort as measured by the goods and services that are available is ____________.

25. _________________

26. Label the diagram below with the five steps of The Decision-Making Process (DPM). (5 points)

Step 1 Step 2 Step 3 Step 4 Step 5

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Fall 2011

Introduction to Business

Exam 1

27. Give three examples of individual wants. Write your answers in the list below. (3 points) 1.

2.

3.

28. Give three examples of individual needs. Write your answers in the list below. (3 points) 1.

2.

3.

29. Give three examples of periods of economic recession/depression in the United States over the past 100 years. Write your answers in the list below. (3 points) 1.

2.

3.

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Fall 2011

Introduction to Business

Exam 1

30. Summarize in your own words the relationship between price, supply, and demand. Write your answer in the space provided below. Please use five sentences or less. (6 points)

Section IV. Essay (15 points) Read the following essay question carefully and write your answer in the space provided below. 31. Describe the three basic economic questions that each country must answer to make decisions about their resources, and then contrast how a market economy and a command economy answer the three economic questions. Write your answer in the space provided below. If you need more room, continue your answer on the back of this paper.

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Fall 2011

Introduction to Business

Exam 1

Name______________________________________ Date_________________________ Period______________

Section V. Performance Assessment (30 points) In the space provided below, write a diary entry about an entrepreneurial career you might be interested in pursuing. What capital resources would you need? What sort of economy would your career flourish in? Would you require entrepreneurial resources? Is there a lot of competition in this field? Where would you start your career/business? Write your answer in the space provided below. If you need more room, continue your answer on the back of this paper.

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