BUS475/BUS 475 Week 2 Knowledge check

1. Compared with other approaches to business, the marketing concept is distinct in that it
A. focuses on sales
B. produces new products and services
C. creates a broad assortment of products
D. focuses on satisfying customers' needs
2. A company provides its advertising agency with a statement about a new product to use in designing an advertising campaign, and this statement includes a description of the target market, the product type, the primary benefits of using the product, and how this product is different from, and better than, competitive products. What type of statement is this?
A. Qualifying
B. Positioning
C. Determining
D. Clustering
3. The sales analysis of a product revealed that profits were highest when it was initially introduced into the market with a high selling price. However, the price was gradually reduced as it started facing competition as substitutes entered the market. This is an example of a(n)
A. introductory price dealing
B. temporary price cut policy
C. skimming price policy
D. penetration price policy
4. Blending the firm’s promotion efforts to convey a complete and consistent message is the goal of
A. sales management communications
B. sales promotion communications
C. integrated promotional marketing
D. integrated marketing communications
5. According to the concept of social responsibility, a firm has a duty to
A. communicate regularly with the public
B. place profit above all other considerations
C. place customer satisfaction above all other considerations
D. conduct business in a way that is good for society as a whole, both now and for the
Future
6. The principal participants in the financial markets are
A. businesses, banks, and government
B. borrowers, savers, and financial institutions
C. mutual funds, hedge funds, and investment bankers
D. dealers, brokers, and regulators
7. You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years? Note. Due to rounding and method of calculation, your answer might vary slightly. Choose the closest answer.
A. $25,000
B. $31,060
C. $38,720
D. $34,310
8. Bull Gator Industries is considering a new assembly line costing $6,000,000. The assembly line will be fully depreciated by the simplified straight line method over its 5-year depreciable life. Operating costs of the new machine are expected to be $1,100,000 per year. The existing assembly line has 5 years remaining before it will be fully depreciated and has a book value of $3,000,000. If sold today the company would receive $2,400,000 for the existing machine. Annual operating costs on the existing machine are $2,100,000 per year. Bull Gator is in the 46 percent marginal tax bracket and has a required rate of return of 12 percent. Calculate the net present value of replacing the existing machine. Note. Due to rounding and method of calculation, your answer might vary slightly. Choose the closest answer.
A. $816,000
B. $382,320
C. $2,941,680
D. $-382,320

9. A strong stock market and reasonably good earnings have caused the price of the firm's common stock to increase by 25%.
A. This will have no effect on the firm's cost of capital.
B. All things equal, this will increase the firm’s cost of capital.
C. All things equal, this will lower the firm's cost of capital.
D. This will only affect the cost of capital if the firm uses CAPM to compute the cost of equity.
10. Buying and selling in more than one market to make a riskless profit is called
A. profit maximization
B. arbitrage
C. international trading
D. This cannot be determined from the above information.
11. The United States imposes substantial taxes on cigarettes but not on loose tobacco. When the tax on cigarettes went into effect, the demand for home cigarette rolling machines most likely
A. decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall
B. decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall
C. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise
D. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall

12. Keynes believed that an increase in savings would
A. raise aggregate demand by reducing investment
B. raise aggregate demand by increasing consumption
C. reduce aggregate demand by reducing investment
D. reduce aggregate demand by reducing consumption
13. Which of the following monetary policies reduces aggregate demand and output?
A. A cut in the federal funds rate
B. An open market purchase of government securities
C. An increase in the discount rate
D. A cut in the required reserve ratio
14. Deficits may be desirable in the short run if they
A. help to stabilize the economy when the economy falls below potential output
B. increase savings necessary for future investment and growth
C. increase savings necessary for future consumption and demand
D. help to stabilize the economy when the economy is above potential output
15. If for a country, the quantity of its currency demanded exceeds the quantity supplied, then there is a
A. balance of payments surplus
B. balance of payments deficit
C. balance of payments equilibrium
D. trade balance
16. Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that
A. the law of demand is invalid
B. despite the increase in price, quantity demanded rose due to some other factor changing
C. this situation has nothing to do with the law of demand
D. the demand for a college education is positively sloped
17. Economic efficiency is achieved at a particular output level if
A. marginal cost is as low as possible
B. average fixed cost is as low as possible
C. average total cost is as low as possible
D. average variable cost is as low as possible
18. A perfectly competitive firm will be profitable if price at the profit-maximizing quantity is above
A. MC
B. AVC
C. ATC
D. AFC

19. How are goods manufactured in other countries creating jobs in the United States?
A. People whose jobs were outsourced are now discouraged workers.
B. U.S. firms are specializing in managing the trade of these goods.
C. Foreign countries are importing U.S. natural resources
D. People who have lost jobs have more time to shop and therefore increase demand for good