Economics Today and Tomorrow

Chapter 10: Financing and Producing Goods

Financing and Producing Goods

1
The purpose of a cost-benefit analysis is to ___________
A)determine the short-term needs of a business.
B)determine the long-term needs of a business.
C)finance business expansion.
D)compare the estimated cost of an action, such as business expansion, to its estimated benefits.
2
When you invest in a certificate of deposit at a bank that finances corporate expansion, your reward is ___________
A)the interest the corporation pays on its loan.
B)dividends on the corporation's stock.
C)the interest on a corporate bond.
D)the interest earned on the CD.
3
When the cost of financing is high, ___________
A)it is not a good time for a business to expand.
B)only businesses that expect to earn the highest profits will borrow money.
C)a business that borrows money can expect to earn higher profits on its expansion.
D)more companies will decide that they can profitably expand.
4
Which of the following types of financing is short-term?
A)a loan with a repayment period of 1-3 years
B)bonds
C)trade credit
D)leasing
5
The four factors that affect a company's financing decisions include all the following EXCEPT ___________
A)control of the company.
B)size of the company.
C)financial condition of the company.
D)market climate.
6
Which one of the following steps in the production process includes choosing a business location and production scheduling?
A)inventory control
B)quality control
C)purchasing
D)planning
7
Which of the following statements about the use of technology in production is TRUE?
A)The technological advance in which machines oversee people that are actually doing the work is known as automation.
B)Robotics refers to sophisticated computer-controlled machinery that operates the assembly line.
C)With mechanization, skilled handiwork became even more important to a company's production process.
D)Because the assembly line results in more efficient use of machines and labor, the costs of production are greatly increased.
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