Business Administration
Test Bank
Course Introduction
Business Administration is a multidisciplinary field that focuses on the organization, planning, and analysis of business activities required to efficiently run a company or enterprise. This course introduces students to fundamental concepts such as management, marketing, finance, human resources, and operations. It emphasizes the development of strategic thinking, leadership skills, problem-solving abilities, and effective communication, preparing learners to make informed decisions in a dynamic business environment. Through case studies and real-world applications, students gain an understanding of how businesses operate, grow, and adapt to changing markets.
Recommended Textbook
Managerial Economics 5th Edition by Luke
M. Froeb
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21 Chapters
1734 Verified Questions
1734 Flashcards
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Page 2
Chapter 1: The One Lessor of Business
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54 Verified Questions
54 Flashcards
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Sample Questions
Q1) The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is referred to as:
A)market surplus.
B)market shortage.
C)consumer surplus.
D)producer surplus.
Answer: D
Q2) If you are willing to sell your car business for $500,000 and someone offers you $420,000 for it,this transaction will generate:
A)There is no surplus created
B)$80,000 worth of seller surplus and unknown amount of buyer surplus
C)$40,000 worth of buyer surplus and $40,000 of seller surplus
D)$80,000 worth of buyer surplus and unknown amount of seller surplus
Answer: A
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3
Chapter 2: Benefits, Costs, and Decisions
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67 Flashcards
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Sample Questions
Q1) Variable costs are
A)costs that vary with output
B)not important in decision making
C)costs that do not vary with output
D)equal to total costs
Answer: A
Q2) Firm X is producing 1000 units,selling them at $15 each.Variable costs are $3 per unit and the firm is making an accounting profit of $3000.What is the firm's fixed costs?
A)$9,000
B)$10,000
C)$11,000
D)$12,000
Answer: A
Q3) If a firm is earning negative accounting profits,it implies
A)That the firm's economic profits are necessarily zero
B)That the firm's economic profits are necessarily positive
C)That the firm's economic profits are necessarily negative
D)Accounting profits alone cannot determine economic profits
Answer: D
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Chapter 3: Extent How Much Decisions
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76 Flashcards
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Sample Questions
Q1) If the firm hires 8 workers,the total fixed costs is
A)$6,200
B)$1,000
C)$600
D)$1,200
Answer: B
Q2) Average cost of production is
A)Total variable cost divided by total units produced
B)Total fixed cost divided by total units produced
C)Total cost divided by total units produced
D)Equal to marginal cost
Answer: C
Q3) At the current level of production,if the firm's MR>MC,then the firm should
A)produce more
B)the company is maximizing profit at this output
C)producing less
D)None of the above
Answer: A
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5
Chapter 4: Investment Decisions: Look Ahead and Reason
Back
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85 Flashcards
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Sample Questions
Q1) The break-even quantity is
A)Fixed Costs/Price
B)Fixed Costs/Marginal Cost
C)Fixed Costs/(Price - Marginal Costs)
D)Contribution Margin/Fixed Costs
Q2) A firm sells 1000 units per week.It charges $15 per unit,the average variable costs are $10,and the average costs are $25.At what price does the firm consider shutting-down in the long run?
A)$25
B)$0
C)$15
D)$10
Q3) A firm sells 1000 units per week.It charges $70 per unit,the average variable costs are $25,and the average costs are $65.At what price would the firm consider shutting down in the long run?
A)$10
B)$25
C)$65
D)$70
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Chapter 5: Simple Pricing
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87 Flashcards
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Sample Questions
Q1) A product can be classified as an inferior good if an increase in the income causes
A)A decrease in the quantity demanded
B)A decrease in demand
C)An increase in demand
D)An increase in the quantity demanded.
Q2) If the government could raise taxes on one good,which product should the government increase tax rates in order to raise tax revenue?
A)Cigarettes
B)Alcohol
C)Sodas
D)None of the above
Q3) The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing
A)2%
B)3%
C)4%
D)5%
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Chapter 6: Economies of Scale and Scope
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Sample Questions
Q1) Ray's Radios believed the synergies between radio production and battery production could be realized if he expanded.However,due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing.At this point,Ray's Radios should
A)Increase production of the batteries
B)Divest itself from the production of the batteries
C)Shut down the production of the batteries
D)None of the above
Q2) If marginal costs rises above average costs,average costs must
A)Be increasing
B)Be decreasing
C)Stay constant
D)None of the above
Q3) A food company trying to increase its profits by expanding in to the soft drinks business is an example of
A)Economies of scale
B)Economies of Scope
C)Diseconomies of Scale
D)Diseconomies of Scope
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Page 8
Chapter 7: Understanding Markets and Industry Changes
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82 Flashcards
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Sample Questions
Q1) In the market for used cars we have 10 sellers,willing to sell at the prices of $1000,$2000,$3000,$4000,$5000,$6000,$7000,$8000,$9000,$10000.What could the market price be in order to induce five sellers to offer their cars for sale?
A)$4001
B)$5001
C)$6001
D)$7001
Q2) How does an increase in the price of laptop memory chips affect the market of laptops?
A)The demand curve for laptops shifts to the right
B)The demand curve for laptops shifts to the left
C)The supply curve for laptops shifts to the right
D)The supply curve for laptops shifts to the left
Q3) Financial Innovation
More and more of the back office tasks for commodity traders and market makers can be easily automated which lowers the costs of making transactions.What is the effect of these technical changes on the bid-ask spreads between commodity buyers and sellers at commodity exchanges?
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9
Chapter 8: Market Structure and Long Run Equilibrium
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Sample Questions
Q1) In the long-run,a perfectly competitive firm will achieve
A)An average rate of return
B)Above average profits
C)Losses
D)Economic Profits
Q2) A sudden fall in the market demand in a competitive industry leads to
A)A short run market equilibrium price lower than the original equilibrium
B)A market equilibrium price lower than the short run price
C)New firms entering the market
D)All of the above
Q3) Monopolies can earn positive profits
A)In the long run only
B)Until they disappear due to new entry
C)In the short run only
D)None of the above
Q4) A sudden rise in the market demand in a competitive industry leads to
A)A short run market equilibrium price lower than the original equilibrium
B)A market equilibrium higher than the short run price
C)Entry of new firms into the market
D)All of the above
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Chapter 9: Strategy: the Quest to Keep Profit From Eroding
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71 Flashcards
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Sample Questions
Q1) Supplier power tends to be low when
A)The supplier provides critical inputs
B)The supplier provides homogenous inputs
C)Both A&B
D)None of the above
Q2) Which of the following could potentially capture the value created in a market
A)Suppliers
B)Industry rivals
C)Buyers
D)All of the above
Q3) For a resource to be able to generate temporary competitive advantage over rivals,it must be
A)Valuable
B)Rare
C)Valuable and rare
D)Not valuable but rare
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11
Chapter 10: Foreign Exchange, Trade, and Bubbles
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83 Flashcards
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Sample Questions
Q1) Which of the following is(are)the characteristics of a bubble
A)Bubbles emerge when investors disagree about the particular economic importance of an event
B)Bubbles involve very large increases in trading volume
C)Bubbles may continue even when many expect a bubble and doesn't pop until a sufficient number of skeptical investors act simultaneously
D)All of the above
Q2) Holding other things constant,a decrease in the inflation rate in the US compared to the Canadian economy may cause the demand for the US dollar to _____________ and the supply to __________.
A)Increase;decrease
B)Increase,increase
C)Decrease;Increase
D)Decrease;Decrease
Q3) If Chinese consumers want to buy US goods,they will
A)Buy Yuan and sell US Dollars
B)Sell Yuan and buy US Dollars
C)Neither buy nor sell Yuan
D)Neither buy nor sell dollars
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Page 12
Chapter 11: More Realistic and Complex Pricing
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72 Flashcards
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Sample Questions
Q1) Which of the following are ways of promoting a firm's product
A)Advertising
B)Discount coupons
C)End-of-aisle displays
D)All of the above
Q2) A Swiss watch company advertises its history of superior craftsmanship.The company thinks that this would
A)Make the demand for the product less elastic
B)Make the customers less sensitive to the price
C)Assist them with differentiating their product
D)All of the above
Q3) If an ice-cream manufacturer acquires a frozen yogurt producer,you would likely see
A)Lower prices for both the ice cream and the frozen yogurt
B)Higher prices for both the ice cream and the frozen yogurt
C)Higher prices for ice cream,but lower prices for frozen yogurt
D)Higher prices for frozen yogurt but lower prices for ice cream
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Chapter 12: Direct Price Discrimination
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Sample Questions
Q1) For direct price discrimination to work,
A)The firm need not be able to identify members of the low-value group
B)The firm must charge a single price to all its customers
C)The firm need not worry about any arbitrage since all its customers are charged the same price
D)None of the above
Q2) For direct price discrimination to work effectively
A)The low-valued customers should not be able to engage in arbitrage
B)You need to charge the same price to the different groups
C)Both groups should have the same elasticity of demand
D)None of the above
Q3) It is illegal for a business to price discriminate when selling goods to other businesses unless Both A & B are true
A)Price discounts are cost-justified
B)Discounts are offered to meet competitors' price
C)Either A or B is true
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14
Chapter 13: Strategic Games
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91 Flashcards
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Sample Questions
Q1) What is the Nash equilibrium of this game?
A)Both of them clean the apartment
B)John cleans,Joe doesn't
C)Joe cleans,John doesn't
D)Neither of them clean the apartment
Q2) If the apartment owner decides to fine both the roommates if the apartment is dirty,such that now if neither of them clean they each get a 5 utility loss,what would the new equilibrium be now?
A)John cleans,Joe doesn't
B)Joe cleans,John doesn't
C)Neither of them clean the apartment
D)Both A&B
Q3) In a sequential game,given Mattie's best response function,what would Irene's best response be?
A)Not enter the market
B)Enter the market
C)Fight
D)Run away
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Chapter 14: Bargaining
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82 Flashcards
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Sample Questions
Q1) Could either party do better?
A)Yes,both parties can do better without hurting each other if they cooperated
B)Yes,one party can do better,but only at the expense of the other
C)No,neither party can do better
D)No,each party has its best possible outcome
Q2) Sam is responsible for ordering office supplies for the firm gets a bonus if the firm stays well-stocked at all times.The bonus implies he is more likely to
A)Pay lower prices for the supplies
B)Pay higher prices for the supplies
C)Have more stock outs
D)Resign from the position
Q3) If the firm hires security guards to enforce a lockout,what are they implying?
A)They would always accommodate
B)They would always bargain hard
C)They would not accommodate
D)Both B&C
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16
Chapter 15: Making Decisions With Uncertainty
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Sample Questions
Q1) We worry that false negatives occur too often relative to false positives due to A)Most hypotheses being false
B)It being appropriate to set a high standard for acceptance of a hypothesis
C)Managers having an incentive to make a false negative conclusion because they are harder for superiors to observe
D)They are not too common
Q2) You experiment by offering free warranties for your product in market A but not in market B.Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430.The Difference-in-difference estimate of the effect of the free warranty is:
A)80 units
B)100 units
C)120 units
D)140 units
Q3) Two important considerations during the difference-in-difference approach are
A)Representativeness,Reflectiveness
B)Injections,Leakages
C)Representativeness,Leakages
D)Reflectiveness,Injections
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Chapter 16: Auctions
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100 Verified Questions
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Sample
Questions
Q1) Anna's Antiques expects to get two bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If Anna holds an auction between the two bidders,and both the bidders have low values,she would earn ___ from the auction.
A)Just above $100
B)$100
C)Just above $70
D)$70
Q2) If the bidders at a first-price auction have true values of $8,$7,$6,and $5,the item will sell for
A)$8
B)$7
C)just over $8
D)just under $7
Q3) Bid-rigging is more likely when
A)auctions are for larger amounts
B)auctions are infrequent
C)auctions are for smaller amounts
D)the auctioneer is paid on commission rather than a fixed fee
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Page 18
Chapter 17: The Problem of Adverse Selection
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Sample Questions
Q1) For a screen to be successful,
A)High risk individuals must not be able to pose as low risk individuals
B)It must not be profitable for high risk individuals to pose as low risk individuals
C)High risk individuals should be able to pose as low risk individuals
D)None of the above
Q2) If the company can correctly anticipate the adverse selection,what premiums would it charge?
A)$2500
B)$2600
C)$1000
D)$1100
Q3) If the insurance company can successfully screen both Nadia and Samantha into appropriate contracts,it would earn
A)Between a zero and $200 loss
B)Between zero and $200
C)$3500 loss
D)$3500 gain
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19
Chapter 18: The Problem of Moral Hazard
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Sample Questions
Q1) Because employer-provided health insurance was too expensive,a major employer decided to self-insure and simply pay for medical bills itself rather than a premium to an insurance company.As a result
A)they are more likely to institute a wellness program for employees
B)they are less likely to institute a wellness program for emp
C)they are indifferent with regards wellness programs
D)they will regret this decision
Q2) An auto-insurance company introduces an anti-theft device that records how well the customer has secured his car.If the driver locks his car with the monitored lock every day,the rates go down.The company is trying to solve a __________problem
A)Adverse selection
B)Moral hazard
C)Forced bankruptcy
D)None of the above
Q3) An example of moral hazard is
A)workers working diligently even though the boss is not looking
B)health care insured dieting and exercising
C)drivers of safer cars turning their phones off before driving
D)borrowers investing their loan proceeds differently than the bank requires
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Page 20
Chapter 19: Getting Employees to Work in the Firms Best Interest
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108 Flashcards
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Sample Questions
Q1) An incentive compensation scheme includes
A)a performance evaluation system
B)a disciplinary action committee
C)a reward system linked to performance
D)Both A&C
Q2) An HVAC company is selling heating and cooling equipment.It has separate sales and marketing units.The marketing unit would want to
A)Price aggressively to ensure sales are made
B)Price less aggressively to ensure that profitable sales are made
C)Price at cost to maximize sales
D)None of the above
Q3) Data Driven Decision Making
Kroger Groceries provides store managers flexibility to determine prices for a number of popular items they carry because demand is affected primarily by local conditions that managers are more aware of.To make sure managers use this discretion wisely,managers are rewarded with bonuses based on quarterly sales.With improvements in data collection and analysis,the "quants" in corporate headquarters can run many small experiments.Doing so allows them to understand nuanced patterns in consumer demand that had been un-noticed previously.How does this affect manager compensation?
Page 21
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Chapter 20: Getting Divisions to Work in the Firms Best
Interest
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115 Flashcards
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Sample Questions
Q1) Managers of profit centers earn more when their divisions
A)increase their sales and increase their costs
B)decrease their sales and increase their costs
C)decrease the costs of the components for which they are responsible
D)increase the costs of the components for which they are responsible
Q2) Which of the following is FALSE?
A)Maximizing division profits can sometimes lead to reducing company-wide profits
B)Managers of profit centers are usually given a lot of discretion in their decision making
C)Profit centers usually require the highest degree of attention by corporate headquarters
D)A manager being rewarded on division revenues has the most incentive to make good decisions for his division
Q3) Which of the following is TRUE about firms organized along functional lines?
A)In functional organizations workers develop functional expertise
B)Workers find it difficult to share information within their division
C)They inhibit the exploitation of economies of scale
D)All of the above
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Page 22
Chapter 21: Managing Vertical Relationships
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Sample Questions
Q1) Acquiring a supplier because it becomes more profitable
A)will raise the asking price to offset any increase in cash flow over time
B)will increase your profits
C)will decrease your profits
D)will make you alter operations
Q2) Tee-shirt Integration
Tee-shirt Titan produces a variety of lines of "ironic" designs that it sells nationwide.It also sells plain tee-shirts in a variety of colors to smaller local silkscreen shops.It noticed that one of these,Shasta Shirtwerkz,has experienced substantial growth and profitability due to its even more clever designs.Should Tee-shirt Titan purchase Shasta Shirtwerkz as another line within their product offerings?
Q3) Which of the following can increase customer awareness?
A)Advertising
B)Promotional activities
C)Service
D)All of the above
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