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BUS 475 Week 2 Knowledge Check

Instructions

Complete the Week 2 Knowledge Check.

Week 2 Knowledge Check

The material presented below is not meant to be a comprehensive list of all you need to know in the content area. Rather it is a starting point for building your knowledge and skills. Additional study materials are recommended in each area below to help you master the material.

1.

Compared with other approaches to business, the marketing concept is distinct in that it

focuses on sales

produces new products and services

creates a broad assortment of products

focuses on satisfying customers’ needs

Concept: ADVERTISING STATEMENTS

Materials on the concept

• Focusing Marketing Strategy with Segmentation and Positioning

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?

Qualifying

Positioning

Determining

Clustering

Concept: NEW PRODUCT PRICING

Materials on the concept

• Product Management and New-Product Development

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)

introductory price dealing

temporary price cut policy

skimming price policy

penetration price policy

Concept: INTEGRATED MARKETING COMMUNICATIONS

Materials on the concept

• Promotion—Introduction to Integrated Marketing Communications

4.

Blending the firm’s promotion efforts to convey a complete and consistent message is the goal of

sales management communications

sales promotion communications

integrated promotional marketing

integrated marketing communications

Concept: SOCIAL RESPONSIBILITY

Materials on the concept

• Organizational Structure
• Ethical Marketing in a Consumer–Oriented World: Appraisal and Challenges

5.

According to the concept of social responsibility, a firm has a duty to

communicate regularly with the public

place profit above all other considerations

place customer satisfaction above all other considerations

conduct business in a way that is good for society as a whole, both now and for the future

Concept: FINANCIAL MARKET PARTICIPANTS

Materials on the concept

• Firms and the Financial Market

6.

The principal participants in the financial markets are

businesses, banks, and government

borrowers, savers, and financial institutions

mutual funds, hedge funds, and investment bankers

dealers, brokers, and regulators

Concept: FUTURE VALUE

Materials on the concept

• Time Value of Money: The Basics

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.

$25,000

$31,060

$38,720

$34,310

Concept: NET PRESENT VALUE

Materials on the concept

• Analyzing Project Cash Flows

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.

$816,000

$382,320

$2,941,680

$-382,320

Concept: COST OF CAPITAL

Materials on the concept

• The Cost of Capital

9.

A strong stock market and reasonably good earnings have caused the price of the firm’s common stock to increase by 25%.

This will have no effect on the firm’s cost of capital.

All things equal, this will increase the firm’s cost of capital.

All things equal, this will lower the firm’s cost of capital.

This will only affect the cost of capital if the firm uses CAPM to compute the cost of equity.

Concept: FOREIGN EXCHANGE RISK

Materials on the concept

• International Business Finance

10.

Buying and selling in more than one market to make a riskless profit is called

profit maximization

arbitrage

international trading

This cannot be determined from the above information.

Concept: SUPPLY AND DEMAND

Materials on the concept

• Using Supply and Demand

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

decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall

decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall

increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise

increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall

Concept: AS AND AD MODEL

Materials on the concept

• The Short-Run Keynesian Policy Model: Demand-Side Policies

12.

Keynes believed that an increase in savings would

raise aggregate demand by reducing investment

raise aggregate demand by increasing consumption

reduce aggregate demand by reducing investment

reduce aggregate demand by reducing consumption

Concept: MONETARY POLICY

Materials on the concept

• Monetary Policy

13.

Which of the following monetary policies reduces aggregate demand and output?

A cut in the federal funds rate

An open market purchase of government securities

An increase in the discount rate

A cut in the required reserve ratio

Concept: DEFICIT

Materials on the concept

• Deficits and Debt

14.

Deficits may be desirable in the short run if they

help to stabilize the economy when the economy falls below potential output

increase savings necessary for future investment and growth

increase savings necessary for future consumption and demand

help to stabilize the economy when the economy is above potential output

Concept: BALANCE OF PAYMENTS

Materials on the concept

• International Financial Policy

15.

If for a country, the quantity of its currency demanded exceeds the quantity supplied, then there is a

balance of payments surplus

balance of payments deficit

balance of payments equilibrium

trade balance

Concept: SHIFTS IN DEMAND

Materials on the concept

• Economics and Economic Reasoning

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

the law of demand is invalid

despite the increase in price, quantity demanded rose due to some other factor changing

this situation has nothing to do with the law of demand

the demand for a college education is positively sloped

Concept: ECONOMIC AND TECHNICAL EFFICIENCY

Materials on the concept

• Oligopoly and Antitrust Policy

17.

Economic efficiency is achieved at a particular output level if

marginal cost is as low as possible

average fixed cost is as low as possible

average total cost is as low as possible

average variable cost is as low as possible

Concept: PROFIT MAXIMIZATION

Materials on the concept

• Perfect Competition

18.

A perfectly competitive firm will be profitable if price at the profit-maximizing quantity is above

MC

AVC

ATC

AFC

Concept: COMPARATIVE ADVANTAGE

Materials on the concept

• Comparative Advantage, Exchange Rates, and Globalization

19.

How are goods manufactured in other countries creating jobs in the United States?

People whose jobs were outsourced are now discouraged workers.

U.S. firms are specializing in managing the trade of these goods.

Foreign countries are importing U.S. natural resources

People who have lost jobs have more time to shop and therefore increase demand for goods.