trading company

Which of the following functions is not performed by a trading company?

A.Linking buyers and sellers in different countries

B.Manufacturing products for foreign trading

C.Performing activities necessary to move goods to the foreign country

D.Taking title to products

E.Buying products at the lowest price consistent with quality
1
Which of the following is a potential drawback of licensing?
A.If quality is compromised, it may reflect poorly on the company providing the license.
B.Licensing will provide the original producer with much foreign marketing experience.
C.It is a relatively inexpensive way to market your product internationally.
D.It provides no compensation for the original company.
E.It is an extremely expensive and highly involved method of international expansion.

2

Which of the following is an example of a vertical merger?
A.The purchase of Gulf Oil by Standard Oil Company of California
B.The purchase of Kentucky Fried Chicken by PepsiCo
C.The purchase of Marathon Oil Company by U.S. Steel
D.The purchase of TWA by American Airlines
E.The purchase of Malone’s Cost-Plus Supermarkets by the Kroger supermarket chain
3

Which of the following is uncharacteristic of a socialist economy?

A.What to produce and how to produce it are based on national goals.

B.Distribution of goods and services is controlled by the state.

C.Land and raw materials may be the property of the state.

D.The government owns and controls key industries.

E.All capital and capital goods are privately owned.
4
Which of the following organizations would be considered a small business?

A.Producer of semiconductors with 2,000 employees

B.Wholesaler with 50 employees

C.Construction company with average annual receipts of $32 million

D.Farmer with annual receipts of $10 million

E.Retail clothing store chain with annual sales of $26 million

5
Which of the following statements is true?
A.Takeovers always increase a firm’s productivity
B.Mergers in the first part of the twenty-first century will be driven by cash-rich companies looking toacquire businesses that will enhance their position in the marketplace.
C.Mergers in the first part of the twenty-first century will see an increase in debt financing.
D.Economists and financial analysts agree that mergers are good for the economy
E.There will be fewer mergers that involve investors from other countr

6
Which of the following statements reflects the socioeconomic model of social responsibility?
A.”It’s an absolutely preposterous proposal. The idea that any corporation has the right to reach beyondcompany gates to what you could even describe as the bedroom of the employee is ridiculous.” —a
spokesperson for the Tobacco Institute
B.”We will not allow our motion pictures to be shown in any movie house in South Africa unless it is fully integrated.” —the president of UnitedInternational Pictures Corporation
C.”It’s easier and better to ban smoking than to risk multimillion-dollar lawsuits.” —a university professor
D.”I did it my way!” —Frank Sinatra
E.”In the private sector, employers can get away with quite a bit.” —an attorney
7

With regard to taxation of partnerships, which of the following statements is correct?
A.Each partner is taxed in the same way as a sole proprietor
B.Taxes are paid on a partnership’s profits, after which each partner pays taxes on his or her share of the profits.
C.The partnership is taxed as a separate entity
D.A partnership is exempt from taxes
E.Profits are taxed twice