ADMI 201 Study Guide - Midterm Guide: Planned Economy, Economic System, Market Economy

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14 Jan 2017

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Business: an organization that seeks to earn profits by providing goods and services. Profit: what remains after a business"s expenses have been subtracted from its revenues. Not-for-profit organizations: use the funds they receive to provide services to the public. Economic system: the way in which a nation allocates its resources among its citizens. Factors of production: the resources used to produce goods and services; labour, capital, entrepreneurs, and natural resources. Labour: the mental and physical training and talents of people. Capital: the funds needed to operate an enterprise. Entrepreneurs are people who accept the opportunities and risks involved in creating and operating businesses. Natural resources include all physical resources such as land, water, trees etc. Information resources: information such as market forecasts, economic data, and specialized knowledge of employees that is useful to a business and that helps it achieve its goals.

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The opportunity cost of going to college is almost never discussed, yet it is quite high, so high that it is seriously impacting the broader American economy. For non-economists, âopportunity costâ is one of the most important concepts in economics. Because of scarcity we only have limited resources, and when we use those resources to do something like go to college, we cannot use them for other things that we also believe are desirable.

By far the most important resource we use in producing goods and services is labor or âhuman capital.â Based on what we pay owners of resources, we can say that roughly two-thirds of all production of goods and services is attributable to direct human effort â work. When kids go to college, they forego entering the labor force in a major, full-time manner. When six or seven percent of the entire American population is in college, that means a significant reduction in work effort occurs because otherwise highly productive persons in the physical prime of their lives are only lightly utilized in making things or providing services.

Today, only slightly over 59 of every 100 Americans of working age actually work, down from almost 66 in 2000. If we had the employment-population ratio of 15 years ago, we would have at least 16 million more working Americans today â an increase of over 10 percent. Our output would be probably the better part of a trillion dollars higher. The push for âcollege for allâ is one reason we have less work effort today (to be sure, the modern welfare state has also lowered work incentives a lot for other reasons).

The college for all crowd says higher education augments oneâs human capital, and we forego output today from working to bolster output tomorrow from more productive workers. And, no doubt, that is sometimes true. We have many productive engineers and accountants who gained important skills in college, for example. But is that necessarily true of all college graduates, particularly when Arum and Roksa tell us that graduating college seniors typically have only marginally better critical reasoning skills that freshman? And when over 40 percent of those entering four year colleges fail to graduate in six years? What if millions of those who do graduate take jobs similar to those without that college education? What if the debt incurred to pay for the college leads many to delay marrying, delay buying houses? There is evidence that to some extent the push for college has led to all of these unintended consequences.

The Federal Reserve Bank of New York has published great work showing that there is a very severe underemployment problem amongst college graduates, and other equally good research demonstrating what many of us have been saying for years: the student financial aid programs such as subsidized student loans, have pushed up the cost of college. Now a sister Federal Reserve Bank, namely Philadelphia, is jumping into the act.

The Philly Fed in a new study shows that high student loan debt is preventing young potential entrepreneurs from starting new businesses â they cannot afford the necessary debt. Opportunity cost again: if I borrow a lot to go to college, I cannot afford to borrow to start a business.

Enrollment in all forms of higher education today are up roughly 50 percent or seven million from what they were in 1990. What if enrollments had only risen proportionate to population growth â we would have three or four million fewer enrolled in college today. Would our nation be better or worse off? No one knows for sure, but the continued rise in the proportion of Americans with a college education has been accompanied by a sharp reduction in the rate of economic growth. I bet we would have fewer underemployed recent graduates. I bet we would have less than 17 percent delinquency rates on college loans, and far less than a trillion dollars in loan debt. I bet we would have a higher rate of labor force involvement and entrepreneurial activity among the young. And I bet we would be spending tens of billions less on higher education, and at least a little bit more on capital goods investment, highway construction, et cetera. In short, I suspect we would have been better off as a nation.

Richard Vedder directs the Center for College Affordability and Productivity, teaches at Ohio University, and is an Adjunct Scholar at the American Enterprise Institute.

Question :

This is a short article discussing the concept of opportunity cost and college. Provide your views on this topic.Do you agree/disagree with the article? Why? What are your thoughts on the current employment landscape of college graduates? Provide any insight on this topic on a specific industry, your own experience, or the experiences of people that you know who have already graduated.

magentalion418

1. The high economic growth from the Industrial Revolution was characterized by

a. new opportunities to settle empty areas, particularly North America.

b. rapid technological and scientific innovation.

c. the expansion of national governments in Europe and North America.

d. a rapid increase in the accumulation of human and physical capital.

e. none of the above.

2. Periods of economic growth and prosperity can often be explained by

a. political paradigm shifts.

b. technological innovation

c. movement of capital

d. both a and b

e. both b and c

3. Prior to the onset of economic reform in the late 1980s, the Soviet Union and

most Eastern European countries allocated resources primarily by means of

a. markets.

b. national economic plans.

c. neither a nor b.

d. both a and b.

4. A major theme in the 1980s in the governments of England and the U.S.was

a. the appropriate role of government in the economy.

b. the pressure for expanding trade with former socialist block countries.

c. repressing inflation.

d. increasing employment opportunities.

e. none of the above.

5. One example of the expansion of internationalism in the 1990s was the development of a trade agreement between Canada, Mexico, and the United States. This agreement is known as

a. the GATT (General Agreement on Tariffs and Trade).

b. the IMF (International Monetary Fund).

c. the NAFTA (North American Free Trade Agreement).

d. the CMEA (Council for Mutual Economic Assistance).

6. The contemporary Chinese economy is of interest because

a. it combines central planning with a multiparty democratic political system.

b. it combines the market with a multiparty democratic political system.

c. it combines the market with a single-party political system.

d. none of the above.

7. In the analysis of the planned socialist economic systems, the concept of economic reform is usually referred to as

a. the replacement of the plan by the market after the collapse of the planning system.

b. the attempt to improve the operation of the planned economy without a significant shift toward market arrangements.

c. the frequent attempt, in the planned socialist economic systems, to introduce the industrial policy.

d. none of the above.

8. The modern approach to defining economic systems

a. is based on the isms of capitalism and socialism.

b. emphasizes resource allocation arrangements over incentive systems.

c. defines economic systems according to a number of characteristics.

d. recognizes that defining economic systems is impossible.

e. none of the above.

9. Which of the following is not a major attribute of an economic system (Based on the textbook)?

a. Organization of decision-making arrangements.

b. Mechanisms for providing information and coordination.

c. Economic policies.

d. The system's physical and human capital.

e. Both c and d are correct.

10. A planned economy is one in which

a. subunits are coordinated by directives formulated by a superior agency.

b. subunits are not induced by appropriate incentives to carry out plan directives.

c. market allocation is combined with planned allocation.

d. a ministerial system prevails.

e. none of the above.

11. Property ownership rights include

a. disposition and utilization.

b. disposition, utilization, and the right to use the products and services generated.

c. disposition, utilization, and team production.

d. disposition, utilization, and economic incentives.

e. none of the above.

12. Consumer sovereignty means that

a. central planning is absent.

b. consumers elect public officials.

c. consumers make the basic decisions on what is to be produced.

d. consumers are not affected by advertising.

e. none of the above.

13. Which of the following is not a characteristic of market socialism?

a. Centralized decision-making.

b. Market allocation.

c. State or collective ownership.

d. Combination of moral and economic incentives.

e. All are characteristic of market socialism.

14. Two factors generally believed to be important in the analysis of levels of decision-making are

a. incentives and ownership.

b. authority and information.

c. level of economic development and ideological focus.

d. all of the above.

e. none of the above

15. Moral incentives generally refer to

a. direct money payments made to participants.

b. supplements to direct money payments, such as bonuses.

c. rewards that do not give the recipient greater command over goods and services but rather serve to reward desirable behavior.

d. all of the above.

e. none of the above

16. Principals and agents are different people. An agent is a party

a. who has controlling authority in an organization.

b. who acts on behalf of a principal.

c. with equity rights in the organization.

d. a and b are correct.

e. none of the above.

17. According to the text, opportunistic behavior occurs when a lower-level unit of an organization can use its information advantage against the interests of its superiors. This form of behavior, it is argued, can take two forms:

a. indicative planning and directive planning.

b. planners' preferences and consumer sovereignty.

c. moral hazard and adverse selection.

d. a and b are correct.

e. none of the above.

18. According to the text, there are two extremes of organizational structure. These extremes are termed

a. planned or market

b. corporate or individual proprietorship.

c. association based or hierarchy based.

d. a and c are correct.

e. none of the above.

19. It is often assumed that individuals who participate in the organized activity do so within the constraints of bounded rationality. The concept of bounded rationality

means that

a. individuals may not in fact pursue self-interest.

b. individuals face a variety of limitations, for example, in the ability to process information.

c. agents will never pursue goals or objectives set by principals.

d. b and c are correct

e. none of the above.

20. Modern comparative economists would object to the definition of economic systems only in terms of property ownership arrangements, because

a. they recognize that ownership arrangements are not important.

b. there is some private ownership of property in every economic system.

c. ownership arrangements are only one aspect of the economic system.

d. resource allocation procedures are much more important than property ownership.

e. all of the above.

amaranthhedgehog298

QUESTION 1

_____ refer to the forces of change whose direction and sometimes timing can be predicted.

		Uncertainties
		Trends
		Occurrences
		Scenarios
		Forecasts

2 points

QUESTION 2

Management institutes, certification agencies, and headhunting firms are examples of specialized intermediaries for:

		financial markets.
		markets for managerial talent.
		markets for products.
		auction markets.
		labor market.

2 points

QUESTION 3

_____ involves analyzing markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market.

		Search retargeting
		Unique selling proposition
		Rebranding
		First-mover advantage
		Market due diligence

2 points

QUESTION 4

Consumer safari refers to the initiatives taken by Unilever executives to spend a day with consumers in their homes to:

		understand how they use products.
		convince them to use more Unilever products.
		train them to make multiple use of their products.
		estimate how many products they use.
		help them set up cottage industries for their products.

2 points

QUESTION 5

_____ refer to the forces of change whose direction and pace is largely unknown.

		Uncertainties
		Trends
		Occurrences
		Scenarios
		Forecasts

2 points

QUESTION 6

_____ are straight-line, one-factor projections from present to future.

		Estimates
		Opportunities
		Scenarios
		Forecasts
		Plans

2 points

QUESTION 7

The United States is separated from Nigeria by 5,840 miles and the Atlantic Ocean. According to the CAGE framework this is a case of:

		emotional distance.
		economic distance.
		cultural distance.
		geographic distance.
		administrative distance.

2 points

QUESTION 8

The GDP of France is 2.113 trillion USD whereas Sierra Leone's GDP is approximately 4.812 billion USD. According to the CAGE framework, this is a case of:

		emotional distance.
		economic distance.
		cultural distance.
		geographic distance.
		administrative distance.

2 points

QUESTION 9

_____ occurs when a function is taken out of one's country of residence to be performed in another country, generally at a lower cost.

		Open sourcing
		Offshoring
		Exporting
		Importing
		Licensing

2 points

QUESTION 10

Which of the following is true of acquisitions?

		The acquiring company will be eligible for any financial help from the company whose shares it is trying to acquire.
		It affords the firm maximum control and has the most potential to provide above-average returns.
		The acquiring company enters into an agreement with the target business to pursue a set of agreed-upon goals while remaining independent organizations.
		The acquiring firm avoids the expense of establishing operations in the new country.
		The acquiring company gains control of another firm by purchasing its stock.

2 points

QUESTION 11

Which of the following statements holds true for the ISO 9001:2008 certification?

		Organizations which supply raw materials are barred from applying for the ISO 9001:2008 certification.
		Companies which meet the criteria of a minimum financial turnover can apply for the ISO 9001:2008 certification.
		The ISO 9001:2008 certification is a mark that a company's products and services have met quality standards.
		Companies that had achieved ISO 9001:2000 certification were exempt from being recertified to meet ISO 9001:2008 standards.
		ISO 9001:2008 certification specifically focuses on the environment.

2 points

QUESTION 12

_____ refers to buying goods and services from foreign sources and bringing them back into the home country.

		Open sourcing
		Offshoring
		Exporting
		Importing
		Farmshoring

2 points

QUESTION 13

The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.

		letter of credit
		bill of lading
		customs invoice
		export declaration
		license

2 points

QUESTION 14

_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.

		Letter of credit
		Bill of lading
		Customs invoice
		Insurance certificate
		Bill of exchange

2 points

QUESTION 15

Which of the following can also function as collateral against loans?

		Certificate of origin
		Export declaration
		License
		Customs invoice
		Bill of lading

2 points

QUESTION 16

_____ refers to the financing granted against collateral, which can be the imported/exported goods.

		Angel funding
		Purchase Order Financing
		Secured financing
		Overdraft
		Cash advance

2 points

QUESTION 17

Which of the following is a contractual mode of entry into a foreign market?

		Greenfield ventures
		Licensing
		Joint ventures
		Acquisition
		Merger

2 points

QUESTION 18

_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.

		Japan Bank for International Cooperation
		Japan External Trade Organization
		Development Bank of Japan
		Master Trust Bank of Japan
		Japan Post Bank Company

2 points

QUESTION 19

Which of the following statements holds true for a nonentity joint venture?

		In a nonentity joint venture, the partner with the smaller capital investment loses control over the joint venture after a period of two months.
		In a nonentity joint venture, each of the partners contributes capital and resources in exchange for an equity stake and share in any resulting profits.
		In a nonentity joint venture, the control of the joint venture is in the hands of the party which makes the larger capital investment.
		In a nonentity joint venture, there is no contribution of capital to form a new entity.
		In a nonentity joint venture the benefit gained is in the form of collective profits rather than individual profits.

2 points

QUESTION 20

The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.

		export declaration
		license
		letter of credit
		bill of lading
		customs invoice

2 points

QUESTION 21

_____ refers to the constellation of business, corporate, and international strategy elements, which managers must consider when making decisions.

		Five Forces Analysis
		Cluster model
		Strategy diamond
		Porter's four corners model
		Strategic grouping

2 points

QUESTION 22

Strategy implementation is the process of:

		deciding which strategies to follow in order to diversify.
		performing all the activities necessary to do what has been planned.
		deciding the businesses in which an organization would compete.
		addressing the issue of the kind of strategies an organization would follow.
		devising plans to add value to the existing line of business.

2 points

QUESTION 23

The _____ function requires monitoring performance so that it meets the performance standards established by the organization.

		controlling
		leading
		planning
		organizing
		job design

2 points

QUESTION 24

_____ refers to the sequence of activities that include the various steps of the supply chain as well as additional activities, such as marketing, sales, and service.

		Value chain
		Differentiation
		Cost leadership
		Scope
		Homesourcing

2 points

QUESTION 25

Outsourcing involves:

		diversifying into a new business.
		the sale of products or services in one country that are sourced in another country.
		the company delegating an entire process to the outsource vendor.
		guiding the choice of markets that a firm competes in.
		performing a service by staff from within an organization and also by an external service provider.

2 points

QUESTION 26

The U.S. fast-food chain Sonic will only open new outlets in states that are adjacent to states where it already has stores. This is an example of:

		differentiation.
		increasing vertical scope.
		diversification.
		offshoring.
		increasing geographic scope.

2 points

QUESTION 27

_____, which are a part of the SWOT analysis, assess the external attractive factors that represent the reason for a business to exist and prosper.

		Strengths
		Weaknesses
		Threats
		Opportunities
		Strategies

2 points

QUESTION 28

_____ refers to the number of different topographical markets in which an organization participates.

		Geographic scope
		Value chain
		Differentiation
		Cost leadership
		Offshoring

2 points

QUESTION 29

The first step in the planning process is:

		establishing organizational objectives.
		formulating and ensuring the effective implementation of plans.
		the SWOT analysis.
		identifying multiple ways of achieving organizational objectives.
		monitoring the progress and evaluating the success of the plans.

2 points

QUESTION 30

In Holland, KFC makes a potato-and-onion croquette, while in France it sells pastries alongside chicken. KFC:

		has centralized its business processes to enable it to provide the services mentioned.
		assumes that consumer needs and desires vary by country.
		assumes that the world is flat.
		sells the same products in the same way in every country.
		is following the cost-leadership strategy.

2 points

QUESTION 31

An automobile giant headquartered in the United States sells high-end bikes across the world. It wants to enter an emerging market. Customers in the market cannot afford the types of accessories used in the bikes. Thus the regional branch of the organization makes an autonomous decision to remove the accessories and to offer a toned-down version of the bikes to compete in the emerging market. This decision is accepted by the headquarters on the principle that the man on the ground is the best judge of local conditions. The above serves as an example of a(n):

		decentralized organizational structure.
		reverse engineering.
		centralized organizational structure.
		reverse innovation.
		open sourcing.

2 points

QUESTION 32

Nike products are manufactured in factories in countries such as China, Vietnam, Indonesia, and Mexico. Wholesalers, retailers, agents, and brokers are intermediaries who help in bringing the products to the consumer. These intermediaries bring the products from the factories to the consumers. They serve as an example of:

		product branding.
		market positioning.
		market segmentation.
		channel of distribution.
		social marketing.

2 points

QUESTION 33

Which of the following statements holds true for a global brand?

		It refers to the brand name of a product that has worldwide recognition.
		It refers to the marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category.
		It refers to products that make the world less flat because of lack of recognition across countries.
		It refers to the product that is distributed nationally under a brand name owned by the producer or distributor.
		It refers to the changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.

2 points

QUESTION 34

An organization that manufactures readymade cotton shirts sources the raw material from all over the world. It does this as a precaution against the failure of one or more companies to deliver the raw materials. The above serves as an example of:

		open-sourcing.
		multisourcing.
		sole-sourcing.
		home sourcing.
		outsourcing.

2 points

QUESTION 35

Which of the following holds true for product adaptation?

		It refers to the company strategy of modifying an existing product in a way that makes it better fit local needs.
		It refers to the total composite of products offered by a particular organization.
		It refers to the strategy of taking the company's current products and selling them in other countries without making changes to the product.
		It refers to the creation of a new name, term, symbol, design, or a combination of them for an established brand with the intention of developing a differentiated position in the mind of stakeholders and competitors.
		It refers to the strategy of creating an entirely new product for a given local market.

2 points

QUESTION 36

In marketing, market segmentation refers to the:

		process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle.
		combination of the four Ps of marketing that can be customized for different countries.
		commerce areas where because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country.
		commerce areas where vendors purposely deceive buyers by altering products and then selling them as branded products at a bargain cost.
		set of expectations, memories, stories and relationships that-taken together-account for a consumer's decision to choose one product or service over another.

2 points

QUESTION 37

In marketing, which of the following holds true for counterfeit markets?

		It refers to the process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle.
		It refers to the trade of goods and services that are illegal in themselves and/or distributed through illegal channels.
		It refers to the commerce areas where, because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country.
		It refers to the commerce areas where vendors purposely deceive buyers by altering products and then sell them as branded products at a bargain cost.
		It refers to the secretive, unregulated (though often technically legal) trading in commodity futures.

2 points

QUESTION 38

_____ refers to buying raw materials, components, or services from one supplier exclusively, rather than buying from two or more suppliers.

		Open-sourcing
		Multisourcing
		Sole-sourcing
		Home-sourcing
		Outsourcing

2 points

QUESTION 39

_____ refers to a situation which means that there is no more stock of the company's product.

		Stock of record
		Stock-check
		Safety stock
		Stock call
		Stock-out

2 points

QUESTION 40

Which of the following statements holds true for the indirect channel of distribution?

		It refers to the shortest channel of distribution, consisting of just the producer and the end consumer.
		It refers to the combination of the four Ps of marketing that can be customized for different countries.
		It refers to a channel of distribution which contains one or more intermediaries between the consumer and the producer.
		It refers to a channel of distribution where the customer is the first and not the last link in the distribution chain.
		It refers to the channel of distribution where the company sells its products to the consumers in other countries via the internet without using local retailers.

ADMI 201 Study Guide - Midterm Guide: Planned Economy, Economic System, Market Economy

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