Business Concepts Exam Questions Answered Correctly Latest Version 2025
Define "Business" - Answers Any activity that provides goods or services for the purpose of making a
profit.
Who are the 3 main business participants? - Answers 1) Owners
2) Customers
3) Employees
There are 5 functional areas of business. What are they? - Answers 1) Management
2) Operations
3) Marketing
4) Accounting
5) Finance
MOMAF!!!!
Define "Management" - Answers Planning, organizing, staffing, directing, and controlling a company's
resources so it can achieve its goals.
Define "Operations" - Answers convert(s) resources...into goods or services...to ensure...products
are...high quality.
Define "Marketing" - Answers everything that a company does to identify customers' needs and design
products to meet those needs.
Define "Accounting" - Answers measure(s), summarize(s), and communicate(s) financial and managerial
information...and advise other managers on financial matters.
What are the 2 fields of accounting and what do they do? - Answers 1) Financial Accountants
- Prepare financial statements
- Assess financial strength
2) Managerial Accountants
- Prepare internal reports.
Define "Finance" - Answers Planning for, obtaining, and managing a company's funds."
,There are three shells in the business environment. What are they? - Answers Outer shell - Economy,
Government, Consumer Trends, and Corporate Citizenship.
Inner shell - Management, Operations, Marketing, Accounting, and Finance...MOMAF
Core - Owners, Employees, Customers
Define "Economics" - Answers Study of how scarce resources are used to produce outputs...to be
distributed among people.
Resource Inputs and Outputs are a crucial part of a business. What are the Business inputs? - Answers
Land, Labour, Capital, Entrepreneurship
What are the resource outputs of business? - Answers Goods and Services
What are the 3 Economists Questions? - Answers 1) What Goods & Services Should Be Produced...?
2) How Goods & Services Produced?
3) Who...Receive(s) The Goods & Services Produced?
On the spectrum of economic systems, imagine an arrow pointing both ways. On the left arrow, you
have Communism. On the right...Capitalism. And in the middle, you have socialism. Differentiate
between communism and capitalism. - Answers Communism:
- Planned Systems
- High degree of government control
- High level of social services
Capitalism
- Free Market Systems
- Low degree of government control
- Low level of social services
Define "Privatization" - Answers converting previously government-owned businesses to private
ownership
Who was Adam Smith? - Answers A man who was responsible for:
,- Wealth of Nations (1776)
- "Invisible Hand"
- Laissez-faire
Explain how perfect competition would exist - Answers Buy having numerous sellers that are selling a
standardized product (a fast food cheeseburger) and then having this product bought by many
consumers.
What is the term called when supply meets demand on a graph? - Answers Equilibrium point
Explain "Monopolistic" Competition - Answers When you have many sellers selling a differentiated
product to specific consumer groups. ie: One group wants one type of the product, and another group
wants another.
How does an "Oligopoly" work? - Answers When you have two sellers that are selling a simillar product.
The product is then sought out by different consumer groups. Different consumer groups will go with
the different sellers.
Explain a Monopoly - Answers When one seller has a product that is desired by all consumer groups. It's
not just a fun board game (which you should play btw...its been awhile)
What are the 3 main economic goals and measures around the world? - Answers 1) Growth - Gross
Domestic Product
2) High Employment - Unemployment Rate
3) Price Stability - Consumer Price Index
Define a "Gross Domestic Product" - Answers market value of all goods and services produced
by...economy in a given year...includes only...goods and services produced domestically.
Imagine a graph with a zig zag curve. A "V" graph if you will. Kinda like a sound wave. There are four
main aspects in the "Business" Cycle. What are they, and where would they place on this graph? -
Answers Prosperity - At the peak of the graph.
Depression - A the very bottom (in the negatives) of the graph
Recovery - When the graph starts to go back up, towards prosperity
Recession - When the graph goes down...ruh roh!! Depressed!
If the bottom of the graph is years over time, whats the other part? - Answers GDP
Explain the 3 aspects of price stability - Answers 1) Inflation
2) Deflation
, 3) Consumer Price Index (CPI)
Explain "Economic Indicators" - Answers statistic(s) that provide valuable information about the
economy.
Explain "Lagging" Economic Indicators - Answers Statistics that report the status of the economy a few
months in the past
Explain "Leading" Economic Indicators - Answers predict the status of the economy three to twelve
months in the future
What are the 5 aspects of determining a leading economic indicator? - Answers 1) Unemployment
Claims
2) Average Weekly Manufacturing Hours
3) Building Permits
4) U.S. Leading Index
5) Consumer Confidence Index
There are two policies when it comes to government & economic management. What are they? -
Answers Monetary Policies and Fiscal Policies.
Explain a Monetary policy - Answers 1 - Control = Federal Reserve
2 - Contractionary
3 - Expansionary
Explain a Fiscal policy - Answers 1 - Control = government
2 - Taxation
3 - Spending
4 - National Debt
What are the two Areas of Economics and how do they work? (Hint: WC3) - Answers Macroeconomics -
Study of the economy as a whole
Microeconomics - Study of the economic choices of individual consumers & businesses
Why do Nations Trade? - Answers Because no national economy can produce all the goods (it) need(s).
Explain "Absolute Advantage" (2 pts) - Answers 1. Only source of particular product
Define "Business" - Answers Any activity that provides goods or services for the purpose of making a
profit.
Who are the 3 main business participants? - Answers 1) Owners
2) Customers
3) Employees
There are 5 functional areas of business. What are they? - Answers 1) Management
2) Operations
3) Marketing
4) Accounting
5) Finance
MOMAF!!!!
Define "Management" - Answers Planning, organizing, staffing, directing, and controlling a company's
resources so it can achieve its goals.
Define "Operations" - Answers convert(s) resources...into goods or services...to ensure...products
are...high quality.
Define "Marketing" - Answers everything that a company does to identify customers' needs and design
products to meet those needs.
Define "Accounting" - Answers measure(s), summarize(s), and communicate(s) financial and managerial
information...and advise other managers on financial matters.
What are the 2 fields of accounting and what do they do? - Answers 1) Financial Accountants
- Prepare financial statements
- Assess financial strength
2) Managerial Accountants
- Prepare internal reports.
Define "Finance" - Answers Planning for, obtaining, and managing a company's funds."
,There are three shells in the business environment. What are they? - Answers Outer shell - Economy,
Government, Consumer Trends, and Corporate Citizenship.
Inner shell - Management, Operations, Marketing, Accounting, and Finance...MOMAF
Core - Owners, Employees, Customers
Define "Economics" - Answers Study of how scarce resources are used to produce outputs...to be
distributed among people.
Resource Inputs and Outputs are a crucial part of a business. What are the Business inputs? - Answers
Land, Labour, Capital, Entrepreneurship
What are the resource outputs of business? - Answers Goods and Services
What are the 3 Economists Questions? - Answers 1) What Goods & Services Should Be Produced...?
2) How Goods & Services Produced?
3) Who...Receive(s) The Goods & Services Produced?
On the spectrum of economic systems, imagine an arrow pointing both ways. On the left arrow, you
have Communism. On the right...Capitalism. And in the middle, you have socialism. Differentiate
between communism and capitalism. - Answers Communism:
- Planned Systems
- High degree of government control
- High level of social services
Capitalism
- Free Market Systems
- Low degree of government control
- Low level of social services
Define "Privatization" - Answers converting previously government-owned businesses to private
ownership
Who was Adam Smith? - Answers A man who was responsible for:
,- Wealth of Nations (1776)
- "Invisible Hand"
- Laissez-faire
Explain how perfect competition would exist - Answers Buy having numerous sellers that are selling a
standardized product (a fast food cheeseburger) and then having this product bought by many
consumers.
What is the term called when supply meets demand on a graph? - Answers Equilibrium point
Explain "Monopolistic" Competition - Answers When you have many sellers selling a differentiated
product to specific consumer groups. ie: One group wants one type of the product, and another group
wants another.
How does an "Oligopoly" work? - Answers When you have two sellers that are selling a simillar product.
The product is then sought out by different consumer groups. Different consumer groups will go with
the different sellers.
Explain a Monopoly - Answers When one seller has a product that is desired by all consumer groups. It's
not just a fun board game (which you should play btw...its been awhile)
What are the 3 main economic goals and measures around the world? - Answers 1) Growth - Gross
Domestic Product
2) High Employment - Unemployment Rate
3) Price Stability - Consumer Price Index
Define a "Gross Domestic Product" - Answers market value of all goods and services produced
by...economy in a given year...includes only...goods and services produced domestically.
Imagine a graph with a zig zag curve. A "V" graph if you will. Kinda like a sound wave. There are four
main aspects in the "Business" Cycle. What are they, and where would they place on this graph? -
Answers Prosperity - At the peak of the graph.
Depression - A the very bottom (in the negatives) of the graph
Recovery - When the graph starts to go back up, towards prosperity
Recession - When the graph goes down...ruh roh!! Depressed!
If the bottom of the graph is years over time, whats the other part? - Answers GDP
Explain the 3 aspects of price stability - Answers 1) Inflation
2) Deflation
, 3) Consumer Price Index (CPI)
Explain "Economic Indicators" - Answers statistic(s) that provide valuable information about the
economy.
Explain "Lagging" Economic Indicators - Answers Statistics that report the status of the economy a few
months in the past
Explain "Leading" Economic Indicators - Answers predict the status of the economy three to twelve
months in the future
What are the 5 aspects of determining a leading economic indicator? - Answers 1) Unemployment
Claims
2) Average Weekly Manufacturing Hours
3) Building Permits
4) U.S. Leading Index
5) Consumer Confidence Index
There are two policies when it comes to government & economic management. What are they? -
Answers Monetary Policies and Fiscal Policies.
Explain a Monetary policy - Answers 1 - Control = Federal Reserve
2 - Contractionary
3 - Expansionary
Explain a Fiscal policy - Answers 1 - Control = government
2 - Taxation
3 - Spending
4 - National Debt
What are the two Areas of Economics and how do they work? (Hint: WC3) - Answers Macroeconomics -
Study of the economy as a whole
Microeconomics - Study of the economic choices of individual consumers & businesses
Why do Nations Trade? - Answers Because no national economy can produce all the goods (it) need(s).
Explain "Absolute Advantage" (2 pts) - Answers 1. Only source of particular product
