Pm-B5

Front 1

Variations between business cycles most likely are attributable to which of the following factors?
a. Duration and intensity.
b. Opportunity costs.
c. The law of diminishing returns.
d. Comparative advantage.

Back 1

Choice "a" is correct. Variations in business cycle are attributed or described in terms of how long they last (duration) and the degree of peak or trough ( intensity). While a recession, for example, is defined as two consecutive quarters of negative economic growth, a depression is more qualitatively assessed after consideration of both severity (depth) and duration.

Front 2

Which of the following is most likely to cause an increase in the amount of frictional unemployment in an economy?
a. A reduction in the average age of the work force.
b. An invention that renders an industry obsolete.
c. An increase in the average age of the work force.
d. A downturn in aggregate business activity .

Back 2

Choice "a" is correct. Younger workers tend to move between jobs more frequently.

Front 3

When markets are perfectly competitive, consumers:
a. Must choose the brands they buy solely on the basis of informational advertising.
b. Must search for the lowest price for the products they buy.
c. Have goods and services produced at the lowest cost in the long run.
d. Do not receive any consumer surplus unless producers choose to overproduce.

Back 3

Choice "c" is correct. Since price is barely sufficient to give a firm a normal profit and stay in business, the consumer obtains the product at as low a price as is economically feasible. In addition, every firm is forced to produce at the most efficient output rate.

Front 4

Note

Back 4

Demand for electricity would only decrease if there were an enormous increase in price (people might then use other forms of energy - such as solar). Only goods that are absolute necessities (a theoretical example is water) have perfectly inelastic demand curves. That is, no matter what price is charged, people will still buy the product because they need it to stay alive.

Front 5

The impact of a government price support program would most likely result in which of the following?
a. Lead to shortages.
b. Not influence the rationing function of prices.
c. Lead to surpluses.
d. Improve the rationing function of prices.

Back 5

Choice "c" is correct. A government price support program acts as a subsidy that will encourage suppliers to increase supply beyond an equilibrium point (the point where supply and demand curves intersect) . This excess of supply over demand will create
surpluses in the market.

Front 6

Note

Back 6

When Potential national income exceeds actual national income this is a great indicator that the economy is in a recessionary phase.

Front 7

Which of the following statements is true assuming that demand for a product is price inelastic?
a. An increase in price will result in an increase the quantity demanded that is more than the increase in price.
b. An increase in price will have no effect on total revenue.
c. An increase in price will result in a decrease in total revenue.
d. An increase in price will result in an increase in total revenue.

Back 7

Choice "d" is correct. If demand is price inelastic, an increase in price will result in an increase in total revenue ( positive relationship).

Front 8

Under an oligopoly structure, strategic plans focus on:
a. Profitability from production levels that maximize profits.
b. Maintaining the market share and being responsive to market conditions related to sales price.
c. Maintaining the market share and planning for enhanced product differentiation.
d. Maintaining the market share, ensuring product differentiation, and adapting to changes in price and/or production volume.

Back 8

Choice "d" is correct. Under oligopoly , strategic plans focus on maintaining market share and call for the proper amount of advertising (to ensure product differentiation) and ways
to properly adapt to price changes or required changes in production volume.

Front 9

Note

Back 9

Shortages of raw materials are generally indicative that the economy is growing, not shrinking, and is placing greater demand on limited raw material resources than available capacity.

Front 10

Note

Back 10

An increase in the money supply is expansionary monetary policy (not fiscal policy).

Front 11

Note

Back 11

The peak of a business cycle marks the highest point of economic activity. At that point, firms are likely to face capacity constraints and labor shortages, which will put upward pressure on the overall price level.

Front 12

When applying value chain analysis, a firm asks its accounting department to perform an analysis of the sources of profits and costs of activities that exist within the firm. The firm is performing which form of value chain analysis?
a. None of the above.
b. Internal costs analysis.
c. Internal differentiation analysis.
d. Vertical linkage analysis.

Back 12

Choice "b" is correct. Internal costs analysis includes analyzing the internal value creating ability of a firm, so the sources of profit and costs of the internal activities of the firm must be analyzed.

Front 13

Note

Back 13

The best description of a value chain is that value starts with the suppliers who provide the raw materials for a production process, continues with the firm and its strategic plan, continues with the value created by the customers, and then ends with the disposal and recycling of the materials.

Front 14

Note

Back 14

Variations in business cycle are attributed or described in terms of how long they last (duration) and the degree of peak or trough (intensity). While a recession, for example, is defined as two consecutive quarters of negative economic growth, a depression is more qualitatively assessed after consideration of both severity (depth) and duration.

Front 15

Note

Back 15

Assessing the ability of the suppliers to supply resources is part of the "plan" process.

Front 16

Note

Back 16

An increase in the money supply is expansionary monetary policy (not fiscal policy).

Front 17

Note

Back 17

Strategic planning is the creation of an overall strategic plan for an organization to achieve its overall "business objectives." The strategic plan will establish the general direction of the organization.

Front 18

Note

Back 18

Elasticity = %Change in Q/ %Change in P

Front 19

Note

Back 19

When potential national income (potential Gross Domestic Product, also referred to as the Long Run Aggregate Supply) is greater than the achieved national income, the short run aggregate supply curve is shifting to the left indicating a contraction or recession.

Front 20

Note

Back 20

If demand is price elastic, an increase in price will result in a decline in total revenue (negative relationship).

Front 21

Note

Back 21

A city ordinance that freezes rent prices may cause the quantity demanded of rental space exceeds the quantity supplied.

Front 22

Note

Back 22

The factor that Michael Porter has indicated impact the global competitive environment called "Related and Supporting industries" deals with whether there are suppliers of material inputs that exist within a nation or whether there are rival firms who are competitive in the international environment, both of which would increase the nation's competitive advantage.

Front 23

The impact of a government price support program would most likely result in which of the following?
a. Lead to surpluses.
b. Lead to shortages.
c. Improve the rationing function of prices.
d. Not influence the rationing function of prices.

Back 23

Choice "a" is correct. A government price support program acts as a subsidy that will encourage suppliers to increase supply
beyond an equilibrium point (the point where supply and demand curves intersect). This excess of supply over demand will
create surpluses in the market.

Front 24

Note

Back 24

Following are situations that would cause competition to be an even stronger force impacting the profitability of a firm:
• The market is not growing fast.
• There are several equal-sized firms in the market.
• Customers do not have strong brand preferences.
• The costs of exiting the market exceed the costs of continuing to operate.
• Some firms profit from making certain moves to increase market share.
• The various firms in the market use different types of strategic plans.

Front 25

Note

Back 25

The consumer price index measures the costs of a market basket of specific goods commonly purchased by consumers. It measures consumer buying power and is not distorted by items generally bought by industry.

Front 26

Note

Back 26

One of the consequences of greater government regulation of certain products is the resulting higher cost to the consumer when the government imposes health and safety regulations on certain products it is likely that expenses will increase and that the added costs will be passed on to consumers in terms of higher prices. The total output for the product may decrease.

Front 27

Note

Back 27

Strategic planning is the creation of an overall strategic plan for an organization to achieve its overall "business objectives." The strategic plan will establish the general direction of the organization.

Front 28

Note

Back 28

If demand is perfectly inelastic (or not price sensitive), there will be no change in quantity demanded for a change in price. This means that consumers of the product will demand a constant quantity, regardless of the price. If the quantity supplied is reduced (presumably below an equilibrium point where supply equals demand), there will be excess demand for the product and sales price will go up. The increase in sales price will have no impact on demand (because demand is assumed to be perfectly price inelastic).

Front 29

Note

Back 29

The factor of related and supporting industries deals with whether there are suppliers of material inputs that exist within a nation or whether there are rival firms who are competitive in the international environment, both of which would increase the nation's competitive advantage.

Front 30

Note

Back 30

The characteristics of monopolistic competition include:
1-Numerous firms with differentiated products
2-Ease of entry - few barriers .
3-Firms exact some influence over price and market.
4-Non-price competition is frequent and critical.

Front 31

Note

Back 31

Economic fluctuations (or business cycles) are best described as Fluctuations of equal duration and equal severity in the level of economic activity over time.

Front 32

Note

Back 32

Technological advances would likely result in structural unemployment. Structural unemployment is characterized by available jobs that do not match the skill sets of the workforce. Technological advances could create jobs that simultaneously make the skills of the workforce obsolete.

Front 33

Note

Back 33

The following are situations that would cause competition to be an even stronger force impacting the profitability of a firm:
• The market is not growing fast.
• There are several equal-sized firms in the market.
• Customers do not have strong brand preferences.
• The costs of exiting the market exceed the costs of continuing to operate.
• Some firms profit from making certain moves to increase market share.
• The various firms in the market use different types of strategic plans.

Front 34

Note

Back 34

One of the consequences of greater government regulation of certain products is the resulting higher cost to the consumer when the government imposes health and safety regulations on certain products it is likely that expenses will increase and that the added costs will be passed on to consumers in terms of higher prices. The total output for the product may decrease.

Front 35

Note

Back 35

The process of planning consists of developing a way to properly balance aggregate demand and aggregate supply within the goals and objectives of the firm and plan for the necessary infrastructure. Assessing the ability of the suppliers to supply resources is part of the "plan" process.

Front 36

Note

Back 36

The best description of a value chain is that value starts with the suppliers who provide the raw materials for a production process, continues with the firm and its strategic plan, continues with the value created by the customers, and then ends with the disposal and recycling of the materials.

Front 37

Note

Back 37

If demand is unit elastic, a change in price will have no effect on total revenue.

Front 38

Note

Back 38

Frictional unemployment is the unemployment that arises from workers routinely changing jobs or from workers being temporarily laid off. It results from the time needed to match qualified job seekers with available jobs.

Front 39

Note

Back 39

Only goods that are absolute necessities (a theoretical example is water) have perfectly inelastic demand curves. That is, no matter what price is charged, people will still buy the product because they need it to stay alive.

Front 40

Note

Back 40

Assessing the ability of the suppliers to supply resources is part of the "plan" process.

Front 41

Note

Back 41

Following are situations that would cause competition to be an even stronger force impacting the profitability of a firm:
• The market is not growing fast.
• There are several equal-sized firms in the market.
• Customers do not have strong brand preferences.
• The costs of exiting the market exceed the costs of continuing to operate.
• Some firms profit from making certain moves to increase market share.
• The various firms in the market use different types of strategic plans.

Front 42

Note

Back 42

One of the consequences of greater government regulation of certain products is the resulting higher cost to the consumer when the government imposes health and safety regulations on certain products it is likely that expenses will increase and that the added costs will be passed on to consumers in terms of higher prices. The total output for the product
may decrease.

Front 43

Note

Back 43

If demand is perfectly inelastic (or not price sensitive), there will be no change in quantity demanded for a change in price. This means that consumers of the product will demand a constant quantity, regardless of the price. If the quantity supplied is reduced (presumably below an equilibrium point where supply equals demand), there will be excess demand for the product and sales price will go up. The increase in sales price will have no impact on demand (because demand is assumed to be perfectly price inelastic).

Front 44

Note

Back 44

The factor of related and supporting industries deals with whether there are suppliers of material inputs that exist within a nation or whether there are rival firms who are competitive in the international environment, both of which would increase the nation's competitive advantage.

Front 45

Note

Back 45

Technological advances would likely result in structural unemployment. Structural unemployment is characterized by available jobs that do not match the skill sets of the workforce. Technological advances could create jobs that simultaneously make the skills of the workforce obsolete.

Front 46

Note

Back 46

The following are situations that would cause competition to be an even stronger force impacting the profitability of a firm:
• The market is not growing fast.
• There are several equal-sized firms in the market.
• Customers do not have strong brand preferences.
• The costs of exiting the market exceed the costs of continuing to operate.
• Some firms profit from making certain moves to increase market share.
• The various firms in the market use different types of strategic plans.

Front 47

Note

Back 47

One of the consequences of greater government regulation of certain products is the resulting higher cost to the consumer when the government imposes health and safety regulations on certain products it is likely that expenses will increase and that the added costs will be passed on to consumers in terms of higher prices. The total output for the product may decrease.

Front 48

Note

Back 48

The process of planning consists of developing a way to properly balance aggregate demand and aggregate supply within the goals and objectives of the firm and plan for the necessary infrastructure. Assessing the ability of the suppliers to supply resources is part of the "plan" process.

Front 49

Note

Back 49

The best description of a value chain is that value starts with the suppliers who provide the raw materials for a production process, continues with the firm and its strategic plan, continues with the value created by the customers, and then ends with the disposal and recycling of the materials.

Front 50

Note

Back 50

Objectives related to strategy are typically operations and reporting and compliance objectives. Information technology objectives may be a subset of one of these objectives, but is typically not a separate category.

Front 51

Note

Back 51

The treasury is the one who prints money

Front 52

Note

Back 52

Simply because the manufacturing costs of a firm are less than those of close rivals, this does not necessarily mean that the firm has a competitive market advantage. Only if TOTAL costs to a firm are less than those of close rivals will a firm have a competitive market advantage.

Front 53

Note

Back 53

Crude oil is an input to the production of gasoline. When the price of an input increases, supply shifts left, causing equilibrium price to rise and equilibrium quantity to fall.

Front 54

Note

Back 54

Depreciation represents a method of reasonable and rational allocation of the historical cost of fixed assets to benefitting accounting periods. Depreciation is a method of allocation, not valuation. Inflation will cause the consumption of non-monetary assets accounted for as depreciation to be undervalued since the total value used as the basis for depreciation is the asset's historical cost, not an inflation adjusted amount.

Front 55

Note

Back 55

Selecting vendors is a source decision, not a plan decision. The SCOR model includes a series of processes or steps defined as plan, source, make, and deliver. The process of planning consists of developing a way to properly balance aggregate demand and aggregate supply within the goals and objectives of the firm and plan for the necessary infrastructure. Selecting vendors is a "source" step that implements that plan

Front 56

Note

Back 56

The percentage change in account balances is most logically constructed as the current balance minus the prior balance divided by the prior balance.

Front 57

Note

Back 57

Precious metals are a non-monetary asset whose value increases with inflation. Therefore, precious metals would likely serve as a better hedge against inflation than common stock or fixed income securities.

Front 58

Note

Back 58

The Treasury is the authority that is supposed to print the money and not the FED

Front 59

Note

Back 59

Any business firm that has the ability to control the price of the product it sells faces a downward-sloping demand curve for the firm.

Front 60

Note

Back 60

A rise in the value of country's currency causes the national output of the country to fall

Front 61

Note

Back 61

When the supply of and demand for a good both increase, equilibrium quantity increases. However, the impact on price is indeterminate. If derrand and supply increase by the same amount, price will remain unchanged. However, if demand increases by more than supply, price will increase. Conversely, if supply increases by more than demand, price will decrease.

Front 62

Note

Back 62

"Assumptions and market conditions for Monopolistic competition market structure are
1. Numerous firms with differentiated products
2. Few barriers to entry
3. The ability of firms to exert some influence over the price and market
4. Significant non-price competition in the market (e.g., competition to increase brand awareness and loyalty)."

Front 63

Note

Back 63

Perfectly inelastic supply curves are also vertical representing that supply is insensitive to changes in price; i.e., the quantity supplied will not change as price changes.

Front 64

Note

Back 64

A natural monopoly exists when economic and technical conditions permit only one efficient supplier.