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PRAXIS Praxis Business Education: Content Knowledge (5101)Exam Sample Questions (Q74-Q79):
NEW QUESTION # 74
Which of the following describes how a company is most likely to benefit from expanding a product line?
Answer: B
Explanation:
Expanding a product line leverages brand loyalty, encouraging existing customers to try new products due to trust in the brand. Option B (generic product line) is unclear and not a primary benefit. Option C (limiting shelf space) is a potential drawback, not a benefit. Option D (consistency) is not guaranteed by expansion alone. This question aligns with the Management and Marketing category, emphasizing product strategy.
Reference:ETS Praxis Business Education: Content Knowledge (5101) Study Companion, Section on Management and Marketing; Principles of Marketing, Chapter 8.
NEW QUESTION # 75
The primary purpose of the income statement of a business is to provide
Answer: A
Explanation:
The income statement, also known as the profit and loss statement, summarizes a company's revenues, expenses, and profits or losses over a specific period of time. Its primary purpose is to show the financial progress of the business, indicating whether it has made a profit or incurred a loss during that period. Option A (debt-to-equity ratio) is incorrect because this ratio is derived from the balance sheet, not the income statement. Option B (financial projections) refers to forecasts or budgets, not historical performance, which is the focus of the income statement. Option D (accounts receivable and payable) is also related to the balance sheet, not the income statement. The correct answer, C, aligns with the Praxis 5101 content category of Accounting and Finance, which includes understanding financial statements.
Reference:ETS Praxis Business Education: Content Knowledge (5101) Study Companion, Section on Accounting and Finance; Horngren's Financial & Managerial Accounting, Chapter 2.
NEW QUESTION # 76
Martha sold 1,000 poinsettia plants at $9 each and had 100 remaining in inventory. Joe sold 1,000 poinsettia plants at $8 each and had none remaining in inventory. Which of the following can be inferred from the scenario?
Answer: B
Explanation:
In a market, equilibrium price clears inventory (no surplus or shortage). Joe sold all 1,000 plants at $8 with no inventory left, suggesting his price is at equilibrium. Martha sold 1,000 plants at $9 but has 100 left, indicating a surplus, so her price is above equilibrium. Option A is incorrect, as Martha's price is not below equilibrium. Option B is incorrect, as Martha's price is not at equilibrium. Option D is incorrect, as Joe's price is at equilibrium. This question falls under the Economics category, focusing on supply and demand.
Reference:ETS Praxis Business Education: Content Knowledge (5101) Study Companion, Section on Economics; Principles of Economics, Chapter 4.
NEW QUESTION # 77
The interest rate on short-term loans that large banks charge their commercial borrowers who have excellent credit ratings is called the
Answer: C
Explanation:
The prime rate is the interest rate that large banks charge their most creditworthy commercial borrowers for short-term loans. It serves as a benchmark for other lending rates. Option A (funds rate) refers to the federal funds rate, the rate at which banks lend to each other overnight. Option B (market rate) is a generic term and not specific to this context. Option C (discount rate) is the rate the Federal Reserve charges banks for short- term loans. The prime rate is a key concept in the Accounting and Finance category of the Praxis 5101 exam, as it relates to business financing and credit.
Reference:ETS Praxis Business Education: Content Knowledge (5101) Study Companion, Section on Accounting and Finance; Principles of Finance, Chapter 6.
NEW QUESTION # 78
Karl's Cleaners has been successful in selling spray kitchen cleaners and disinfectants. The company will soon be introducing a new product called Karl's Sponges. Which of the following marketing strategies is Karl' s Cleaners most likely using?
Answer: C
Explanation:
Brand extension involves introducing a new product (Karl's Sponges) under an existing successful brand (Karl's Cleaners), leveraging brand recognition. Option A (co-branding) involves partnering with another brand. Option B (brand licensing) allows another company to use the brand. Option D (brand insistence) is a consumer behavior, not a strategy. This question falls under the Management and Marketing category, focusing on branding strategies.
Reference:ETS Praxis Business Education: Content Knowledge (5101) Study Companion, Section on Management and Marketing; Principles of Marketing, Chapter 9.
NEW QUESTION # 79
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