Chapter 10 & 12 Test Review Answer Key
1. Debt financing – borrowing money to finance a business.
2. Long-term financing – the kind of financing a company uses to finance a major
expansion, such as building a new plant.
3. According to cost-benefit analysis, management should expand a company if
expected profits will more than cover the cost of financing the expansion.
4. Quality control – the process of checking products to make sure they meet a
company’s standards.
5. Where does the money that businesses borrow to finance their operations come
from? Individuals’ deposits in financial institutions.
6. Common stock – owners of these investments have the right to vote at
shareholder meetings.
7. Collective bargaining – the process in which unions and employees negotiate the
conditions of employment.
8. The AFL-CIO is made up of which unions? Craft and industrial unions
9. Injunction – court order preventing an activity.
10.Strike – a deliberate work stoppage by employees.
11.Closed shop – company in which only union members may be hired.
12.Labor union – association of workers organized to improve wages and working
conditions for its members.
13.White-collar workers – workers employed in offices, sales, or professional
positions.
14.Blue-collar workers – workers employed in crafts, manufacturing, and nonfarm
labor.
15.Lockout – situation in which management prevents workers from returning to work
until they agree to a new contract.
16.Profit – revenues minus costs.
17.Cost-benefit analysis – process in which a business estimates the cost of action and
compares it with the benefits of that action.
18.Automation – production process in which machines do the work and people
oversee them.
19.Division of labor – breaking down of a job into small tasks performed by different
workers.
20.Assembly line – production system in which the good being produced moves on a
conveyor belt past workers who perform individual tasks.
21.Production – process of changing resources into goods that satisfy the needs and
wants of individuals and businesses.
22.Revenues – total income from sales of output.
23.Robotics – sophisticated computer controlled machinery that operates an assembly
line.
24.Consumer goods – goods produced for individuals and sold directly to the public.
25.Skilled worker – person who learns a trade or craft.
26.Agency shop – company in which employees are not required to join the union but
must pay union dues.
27.Industrial union – union made up of workers in an industry, regardless of job or skill
level.
28.Service worker – person who provides services directly to individuals.
29.Semiskilled worker – person whose job requires some training.
30.Mediation – stage in contract negotiations between union and management in
which a neutral person steps in to try to get both sides to reach an agreement.