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Unit 3 of 5

Unit 3: Controlling and Operations

Study guide for CLEP CLEP Principles of Management — Unit 3: Controlling and Operations. Practice questions, key concepts, and exam tips.

67

Practice Questions

2

Flashcards

7

Key Topics

Key Concepts to Study

control process
benchmarking
balanced scorecard
quality management
TQM
supply chain
inventory management

Sample Practice Questions

Try these 5 questions from this unit. Sign up for full access to all 67.

Q1MEDIUM

A country has an absolute advantage in producing both wheat and cloth compared to its trading partner. What is the most likely outcome of trade between the two countries?

A) The country with the absolute advantage will stop trading with its partner.
B) The country with the absolute advantage will specialize in producing the good for which it has a comparative advantage.
C) The country with the absolute advantage will produce both goods and not trade with its partner.
D) The country with the absolute advantage will only import goods from its trading partner.
E) The country with the absolute advantage will export both goods to its trading partner
Show Answer

Answer: B — A country with an absolute advantage in producing both goods will still benefit from trade if it specializes in producing the good for which it has a comparative advantage.

Q2MEDIUM

A country can produce either 100 units of wheat or 50 units of cotton with the same amount of resources. Another country can produce either 80 units of wheat or 60 units of cotton with the same amount of resources. Which country has a comparative advantage in producing cotton?

A) The country that can produce 100 units of wheat
B) The country that can produce 60 units of cotton
C) The country that can produce 80 units of wheat
D) Neither country has a comparative advantage
E) The country that can produce 50 units of cotton
Show Answer

Answer: B — Comparative advantage is determined by opportunity cost. The country that can produce 60 units of cotton has a lower opportunity cost of producing cotton (80/60 = 1.33 units of wheat per unit of cotton) compared to the other country (100/50 = 2 units of wheat per unit of cotton).

Q3MEDIUM

A company is considering the production of a new product that will generate significant profits, but also produce pollution as a byproduct. Which of the following is an example of an externality in this scenario?

A) The cost of raw materials used to produce the product
B) The revenue generated from the sale of the product
C) The negative impact of pollution on the local community
D) The salary paid to the company's employees
E) The positive impact of job creation on the local economy
Show Answer

Answer: C — An externality is a cost or benefit that affects a third party, such as the local community, and is not reflected in the company's profits or costs.

Q4HARD

What type of control focuses on preventing errors?

A) Feedback control
B) Feedforward control
C) Concurrent control
D) Financial control
E) Operational control
Show Answer

Answer: B — Feedforward control is correct because feedforward control prevents errors, while A is incorrect as it corrects errors after they occur.

Q5MEDIUM

What is the purpose of a variance analysis?

A) To determine the cause of a problem
B) To identify areas for cost reduction
C) To evaluate employee performance
D) To compare actual and planned outcomes
E) To develop a new budget
Show Answer

Answer: D — To compare actual and planned outcomes is correct because variance analysis compares actual and planned outcomes, while A is incorrect as it's a broader problem-solving tool.

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Study Tips for Unit 3: Controlling and Operations

  • Focus on understanding concepts, not memorizing facts — CLEP tests application
  • Practice with timed questions to build exam-day speed
  • Review explanations for wrong answers — they reveal common misconceptions
  • Use flashcards for key terms, practice questions for deeper understanding

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