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Test Bank for Business Essentials, 13th Edition

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    1 Business Essentials, 13e (Ebert/Griffin) Chapter 1 The U.S. Business Environment 1) Which of the following best describes profit? A) Total money taken in by a corporation B) Increases in income from year to year C) Increases in a corporation's stock price D) Revenue generated by goods and services E) Difference between revenues and expenses Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 2) Which of the following is defined as the environment where a firm conducts its operations and derives its revenues known as? A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political - legal environment Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 3) Factors such as international trade agreements, economic conditions, and political unrest will have the greatest impact on which type of business environment? A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political - legal environment Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of busine ss, and discuss how these environments affect the success or failure of organizations.

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    2 4) Changes in which type of business environment can reduce or replace the need for traditional working methods, physical equipment, and other platforms needed to con duct business? A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political - legal environment Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 5) As a teenager, Melinda started cutting grass for her neighbor. She did a g ood job, and more and more neighbors began to hire her. After saving money and investing in additional equipment, Melinda began to earn an even greater profit. Which of the following did Melinda create when she began cutting her neighbor's yard and earning income? A) Nonprofit B) Corporate culture C) Market economy D) Monopolistic competition E) Business Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 6) In which way does consumer choice and demand affect the way a business operates? A) Businesses must take into account what consumers want or need. B) Businesses must produce most of the goods and services we consume. C) Businesses must find opportunity and develop a plan to capitalize on it. D) Business must prepare to compete in the gl obal marketplace. E) Business must use technology to track changing demographics in the community. Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the ext ernal environments of business, and discuss how these environments affect the success or failure of organizations.

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    3 7) Which of the following consists of everything outside an organization's boundaries that might affect how the business operates? A) Oppo rtunities and enterprise B) Corporate culture C) External environment D) Domestic business environment E) Political - legal environment Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 8) Aimee wants to open her retail shop in her local community so that she can establish strong relationships with suppliers and customers, and distinguish herself and her shop from the competition. In which environment does Aimee wish to do business? A) Global B) Political - legal C) Domestic D) Economic E) Technological Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the succ ess or failure of organizations. 9) The Basic Broom Company orders much of its raw material from overseas markets, even though the product is made locally. Which of the following business environments might prevent The Basic Broom Company from being able to get its supply of raw material when they need it? A) Changes in the global business environment B) Changes in the technological environment C) Changes in the economic environment D) Changes in the factors of production E) Changes in the labor force Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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    4 10) Which of the following includes all the ways a firm creates value for their customers? A) Technological environment B) Profitability C) Economic environment D) Creation of a market economy E) Law of supply and demand Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 11) Sally's Supply shop has recently had to change her process for shipping supplies because of changes in government regulations. She now also has to change how she reports profit and loss, and when those reports are processed. Which of the following is forcing these changes for Sally's Supply shop A) The laws of supply and demand B) Political - legal environment C) The establishment of perfect competition D) Changes in the market economy E) Economic environment Answer: B Difficulty: M oderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 12) A new restaurant recently opened in the local community. It serves a variety of ethnic foods, and plays background music in keeping with the customers and values of the local demographics make up of the community. Which external environment of business is this restaurant considering when they support the customs, values, and demographics of the local community? A) Monopoly B) Sociocultural C) Freedom of choice D) Perfect competition E) Global Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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    5 13) Which of the following include rel evant conditions that exist such as wage rates, number of people looking for jobs, and competition? A) Global business environment B) Technological environment C) Political - legal environment D) Sociocultural environment E) Economic environment Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 14) Which of the following business environments includes the customers, mores, values, and demographic characteristics of the society where the organization functions? A) Sociocultural B) Technological C) Political - legal D) Fiscal E) Econo mic Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failur e of organizations. 15) The pursuit of profits is how a business differs from organizations such as public universities, public hospitals, and government agencies. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 16) An organization's external environment consists of ever ything outside of the organization that might affect it. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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    6 17) Businesses improve society by improving the quality of life in a society. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 18) The environment, not economic forces, play a major role in the success and fail ure of businesses everywhere. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments af fect the success or failure of organizations. 19) The customs, values, and demographic characteristics of the society in which an organization functions are the principal elements of the political - legal environment. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 20) The technological environment includes only electronics and telecommunications used to perform business activities. Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 1.1: Define the nature of U.S. business, d escribe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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    7 21) Compare a sociocultural environment to an economic environment. Answer: The sociocultural environment includes the cus toms, mores, values, and demographic characteristics of the society in which an organization functions. Sociocultural processes also determine the goods and services, as well as the standards of business conduct, that a society is likely to value and accep t. The economic environment refers to relevant conditions that exist in the economic system in which a company operates. For example, if an economy is doing well enough that most people have jobs and wages are high, a growing company may find it necessary to pay even higher wages and offer more benefits to attract workers from other companies. But if many people in an economy are looking for jobs, a firm may be able to pay less and offer fewer benefits. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 22) Describe the domestic business envi ronment. Answer: The domestic business environment refers to the environment in which a firm conducts its operations and derives its revenues. In general, businesses seek to be close to their customers, to establish strong relationships with their suppli ers, and to distinguish themselves from their competitors. Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 23) How do consumer choice and demand affect a capitalistic system? Answer: In a capitalistic system, such as that in the United States, businesses exist to earn profits for owners. Within certain broad constraints, an owner is free to set up a new business, grow that business, sell it, or even shut it down. But consumers also have freedom of choice. In choosing how to pursue profits, businesses must take into account what con sumers want or need. No matter how efficient a business is, it won't survive if there is no demand for its goods or services. Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, d escribe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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    8 24) What are the benefits of business for society? Answer: Businesses produce most of the goods and services we consume, a nd they employ most working people. They create most innovations and provide a vast range of opportunities for new businesses, which serve as their suppliers. A healthy business climate also contributes to the quality of life and standard of living of peop le in a society. Business profits enhance the personal incomes of millions of owners and stockholders, and business taxes help to support governments at all levels. Many businesses support charities and provide community leadership. Difficulty: Easy AACSB : Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 25) What is the ge neral term for resources used by a business to produce a good or service referred to as? A) Labor B) Human Resources C) Human capital D) Factors of production E) Economic systems Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Ca tegory: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 26) Which of the following denotes a nation's basis for allocating its resources among its citizens? A) Capital structure B) Economic system C) Ownership processes D) Distribution network E) National regulations Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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    9 27) Which of the following is the process for converting government enterprises into individually owned firms? A) Production allocation B) Privatization C) Entrepreneurship D) Demand assessment E) Profit maximization Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems accordi ng to the means by which they control the factors of production. 28) Which is the term for the physical and intellectual contributions of people while engaged in the production of goods and services? A) Human resources B) Working capital C) Physical resou rces D) Planned resources E) Market resources Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 29) Who is described as the person who accepts the risks and opportunities inherent in a new business opportunity? A) Capital managers B) Entrepreneurs C) Human resources D) Home country economic systems managers E) Info rmation technology managers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of prod uction.

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    10 30) What factor of production is used to generate forecasts based on specialized knowledge and economic data? A) Economic resources B) Labor C) Information resources D) Entrepreneurs E) Physical resources Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 31) When making decisions about production and allocation, which type of system depends on individual producers and consumers to create a combination of supply and demand? A) Planned economy B) Communism C) Private economy D) Market economy E) Socialism Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 32) The idea that individuals w ould contribute according to their abilities and receive benefits according to their needs supports which type of economy? A) Market economy B) Socialist based economy C) Mixed market economy D) Capitalist market economy E) Communist based economy Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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    11 33) Which type of economy is the U nited States reflective of? A) Planned B) Mixed C) Market D) Private E) Socialist Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 34) What does a planned economy rely on a centralized government to do? A) Support free enterprise in every way possible B) Determine how to allocate all or most factors of production C) Encourage citizens to buy shares of stock in small companies D) Keep its control activities to a minimum E) Direct workers to start their own small businesses Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thi nking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 35) Which economic system emphasizes the private ownership of most factors of production? A) Socialism B) Commu nism C) Capitalism D) Marxism E) Federalism Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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    12 36) In which type of economy do the individual producer and consumer control production through supply and demand? A) Planned B) Communist C) Market D) Socialist E) Mixed Answer: C Difficulty: Moderate AACSB: Analytical thinkin g Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 37) Which of the following marks the key difference between economic systems? A) The way the factors of production are managed B) The way goods are transported within their borders C) The way rules and regulations are legislated D) The way workers are relocated to different regions E) The way basic necessities are determi ned Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 38) Which of the following represents the financial resources needed to operate a business? A) Factors of production B) Savings C) Economy D) Supply and demand E) Capital Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category : Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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    13 39) Kathleen has ordered new computers and office equipment of her tax preparation business. She is also considered renting a larger office for next year? Which of the following refer to the tangible things that Kathleen needs and uses to operate her business. A) Technological environment B) Private property C) Business cycle D) Physical resources E) Cap ital Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 40) Which of the following refers to a reliance on a centralized government to allocate most factors of production? A) Market economy B) Global business environment C) Information resources D) Planned economy E) Sociocultural environment Answer: D Di fficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 41) Which of the following do most c ountries rely on in terms of economic systems? A) Mixed market economy B) Privatization C) Market economies D) Capitalism E) Communism Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the di fferent types of global economic systems according to the means by which they control the factors of production.

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    14 42) Which of the following is a mechanism for exchange between buyers and sellers of specific goods or services? A) Market B) Entrepreneurs hip C) Communism D) Capitalism E) Free enterprise Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 43) Which of the following does a market economy depend on? A) Profits B) Freedom of choice C) Economic restrictions D) Competition E) Privatization Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of p roduction. 44) Which of the following is the economic basis of the market process? A) Profit and loss B) Supply and demand C) Planned and market economies D) Labor and capital E) Physical and technological resources Answer: B Difficulty: Moderate AACS B: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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    15 45) Which of the following is the underlying premise of a market economy? A) A matured society B) Direct ownership of factors of production C) Creation of shared value D) Centralized government E) A political basis of the market process Answer: C Difficulty: Moderate AACSB: Application of knowled ge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 46) Which of the following is the political basis of the market economy process? A) C ommunism B) Socialism C) Capitalism D) Planned economic support E) Centralized governments Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems acco rding to the means by which they control the factors of production. 47) In which planned economic systems does the government own and operate selected major industries and sources of production? A) Mixed B) Privatization C) Socialism D) Communism E) Capitalism Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 48) Physical resources include the data and other information used by businesses. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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