I. Multiple Choices. Choose the letter of the right answer (14 * 2.5 = 35 Points)
    
D1. What is meant by process innovation?
a. The development of new services.
b. Technological developments to create new services.
c. The development of new products.
d. Changes that take place in the production or service process.
2. What name is given to "a complex set of values, norms, beliefs, attitudes, customs, systems and artifacts handed down from generation to generation"?
a. Secondary reference data
b. Society
c. Culture
d. Reference data
3. Which of the following are most likely to differ between two different cultures?
a. Average height and weight.
b. The percentage of male births.
c. Who decides what product should be bought.
d. How business is conducted.
4. Which of the following are the most likely changes that may result from an ageing population?
a. An increase in spending on food products.
b. A decrease in spending on travel.
c. Increased spending on leisure services.  
d. An increase in spending on education.
5. What are the main benefits of having an organisational structure?
a. It separates management from the day-to-day work of the organisation.
b. It defines the pattern of relationships between individuals and roles.
c. It increases each person's levels of motivation.
d. It creates a model through which communication can occur.
6. What is downsizing?
a. Employing a fit and healthy workforce.
b. Reducing the number of employees by increasing the layers of management.
c. Reducing the overall size and shape of the company.
d. Aiming to minimize the cost of inputs.
7. What is re-engineering?
a. Re-cycling management approaches to meet modern requirements.
b. Radically redesigning business processes.
c. Reducing the size and structure of an organization.
d. Re-cycling products to meet modern requirements.

8. What is meant by the term market segmentation?
9. All business organisations are transformation systems. What do they transform?
10. How would you classify “Materials, Labour and technology” in relation to a business organisation?             


11. An organisation's need for resources makes it particularly dependent on one of the following. Which?
a. Trade unions      b. Governments         c. Suppliers          d. Customers
12. What is likely to happen to a business that decides to ignore changes in its external environment?.
a. Customer will respect its position.
b. It will need to balance the needs of its suppliers and customers.
c. It is likely to experience significant decline
d.. It will benefit from its independent stance and grow.
13. Which of the following statements best applies to business organizations?
a. Influences from outside their own markets are the primary influences.
b. They can operate to a large extent independently of their market.
c. They are only affected by their immediate markets.
d. They are affected by influences outside their immediate markets
14. Which one of the following statements is correct?
a. Firms operate independently of the environment in which they operate.
b. Only small firms are affected by the environment in which they exist.
c. Only large firms are affected by the environment in which they exist.
d. All firms are affected by the environment in which they exist.


II. Identification. Give what is being asked.           (18 * 2.5 = 45 Points)
Number 1-6     Give 6 objectives of government in the macro-economy.
Number 7-9    Give the three key factors in the social environment that influences the consumption of goods and services.
Number 10-12       Give the three common forms of business in the private sector.
Number 13-14   Give the two basic macro-economy policies of government.
Number 15-17   Give the three importance of innovation in business activity.
Number 18      What unemployment is caused by technology replacing workers?  
        

III. True or False .Write (T) if true, and（F）if false (10 * 2 = 20 Points)
    
1. Economic scarcity is the inadequacy of resources to meet and satisfy the demand
(needs and wants) of a society.
2. In Centrally planned economy the government determines the price of goods and services using a fixed price system.
3. The income of firms is determined by demand of consumers.
4. Products to be produced and resources to be used depend on consumers.
5. Reduction of consumption in the economy can cause a recession.
6. Savings is an example of leakage.
7. Consumers buying exports is an example of injection due to leakage.
8. Rising prices may result in businesses losing sales.
9. Employees seeking higher wage is a result of rising prices.
10. Overseas buyers purchase products produced by domestic firms is an example of injection.

KEY：
II. Identification ( 18 * 2.5 = 45 Points )
1-6          Controlling inflation , Economic Growth ,Controlling public borrowing , A stable exchange rate ,favorable balance of payment
7-9          Social class , lifestyle , reference groups
10-12      Sole trader , partnership , limited company
13-14      Fiscal and Monetary
15-17      Innovation is important in product development
     Important in competitive advantage
     Important in the production process
18       Technological unemployment