Type:
Test Bank
Resource:
Business Essentials
Edition:
7th Edition
Author(s):
Ronald J. Ebert Ricky W. Griffin
Business Essentials, 7e (Ebert/Griffin) Chapter 1 The U.S. Business Environment 1) A business provides goods or services in order to earn profits. Answer: TRUE Diff: 1 Page Ref: 4 Reference: Learning Objective 1 / Business Goals and Functions 2) Non-profit businesses operate in many of the same ways as businesses that seek profits. Answer: TRUE Diff: 1 Page Ref: 4 Reference: Learning Objective 1 / Business Goals and Functions 3) The external environment consists of everything inside an organization's boundaries that might affect it. Answer: FALSE Diff: 1 Page Ref: 4 Reference: Learning Objective 2 / External Environments of Business 4) Businesses seek to be close to customers, establish strong relationships with suppliers and distinguish themselves from competitors. Answer: TRUE Diff: 2 Page Ref: 4 Reference: Learning Objective 2 / External Environments of Business 5) Global business environment refers to the international forces that affect a business. Answer: TRUE Diff: 1 Page Ref: 4 Reference: Learning Objective 2 / External Environments of Business 6) Technology only includes electronics and telecommunications used to perform business activities. Answer: FALSE Diff: 2 Page Ref: 4,5 Reference: Learning Objective 2 / External Environments of Business 7) Political-legal environment includes the customs, mores, values and demographic characteristics of the society in which an organization functions. Answer: FALSE Diff: 1 Page Ref: 5 Reference: Learning Objective 2 / External Environments of Business
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8) An example of economic environment is when most people have jobs and therefore a growing company may find it necessary to pay higher wages and offer more benefits in order to attract workers from other companies. Answer: TRUE Diff: 1 Page Ref: 5 Reference: Learning Objective 2 / External Environments of Business 9) A factor of production is a nation's system for allocating resources among its citizens. Answer: FALSE Diff: 1 Page Ref: 5 Reference: Learning Objective 3 / Factors of Production 10) An entrepreneur is a business that accepts the risks and opportunities to create and operate. Answer: FALSE Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Entrepreneurship and Types of Economic Systems 11) Physical resources are the data and other information used by businesses. Answer: FALSE Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Entrepreneurship and Types of Economic Systems 12) A planned economy relies on a centralized government to control all or most of the factors of production and to make all or most production and allocation decisions. Answer: TRUE Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Types of Economic Systems 13) Capitalism allows for the private ownership of the factors of production. Answer: TRUE Diff: 1 Page Ref: 8 Reference: Learning Objective 3 / Types of Economic Systems 14) In a socialist economy, the government owns and operates selected major industries. Answer: TRUE Diff: 1 Page Ref: 8 Reference: Learning Objective 3 / Types of Economic Systems 15) Economic systems allocate the factors of production differently. Answer: TRUE Diff: 1 Page Ref: 5 Reference: Learning Objective 3 / Types of Economic Systems 16) The law of demand states that buyers will purchase more of a product as its price drops and less of a product as its price increases. Answer: TRUE Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 2 .
17) The point at which the supply curve and the demand curve intersect is the market price. Answer: TRUE Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 18) There are many sellers in an oligopoly. Answer: FALSE Diff: 1 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 19) A differentiating strategy used in monopolistic competition is to use brand names such as Tide and Cheer. Answer: TRUE Diff: 1 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 20) Standard of living refers to the quantity and quality of goods and services that people can purchase with the currency used in their economic system. Answer: TRUE Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 21) Aggregate output refers to the pattern of short-term ups and downs in the economy. Answer: FALSE Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 22) The Gross National Product (GNP) is the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located. Answer: TRUE Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 23) Purchasing power parity is a principle that states that exchange rates are set so that the prices of similar products in different countries are about the same. Answer: TRUE Diff: 1 Page Ref: 14 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 24) A positive balance of trade results when a country imports more than it exports. Answer: FALSE Diff: 1 Page Ref: 15 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living
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25) Inflation refers to widespread price increases in an economic system. Answer: TRUE Diff: 1 Page Ref: 16 Reference: Learning Objective 6 / Economic Stability 26) The consumer price index measures the prices of typical products purchased by consumers living in urban areas. Answer: TRUE Diff: 1 Page Ref: 16 Reference: Learning Objective 6 / Economic Stability 27) The United States government manages the collection and spending of its revenues through monetary policy. Answer: FALSE Diff: 1 Page Ref: 16 Reference: Learning Objective 6 / Managing the U.S. Economy 28) The pursuit of profits distinguishes a business from organizations such as most universities, hospitals, and government agencies. Answer: TRUE Diff: 2 Page Ref: 4 Reference: Learning Objective 2 / External Environments of Business 29) Physical resources, labor, capital, and entrepreneurs are four traditional factors of production. Answer: TRUE Diff: 2 Page Ref: 5 Reference: Learning Objective 3 / Factors of Production 30) Communism and capitalism are the two basic forms of planned economies. Answer: FALSE Diff: 2 Page Ref: 7 Reference: Learning Objective 3 / Types of Economic Systems 31) One of the four elements that must be present in private enterprise is reasonable prices. Answer: FALSE Diff: 2 Page Ref: 8 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 32) As a rule, in perfect competition there will be very few sellers. Answer: FALSE Diff: 2 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 33) Similar products are differentiated in monopolistic competition. Answer: TRUE Diff: 2 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 4 .
34) The market for clothing is best characterized as monopolistic competition. Answer: TRUE Diff: 2 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 35) In an oligopoly, the entry of new competitors is hard because large capital investment is needed. Answer: TRUE Diff: 2 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 36) Electric companies are good examples of natural monopolies. Answer: TRUE Diff: 2 Page Ref: 12 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 37) Nearly every economic system has two broad goals: economic growth and economic stability. Answer: TRUE Diff: 2 Page Ref: 12 Reference: Learning Objective 6 / Economic Indicators 38) The primary measure of growth in the business cycle is inflation. Answer: FALSE Diff: 2 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 39) Standard of living tends to decrease with growth in the economy. Answer: FALSE Diff: 2 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 40) Gross domestic product (GDP) refers to the total value of goods and services produced by a national economy within a given period regardless of where the factors of production are located. Answer: FALSE Diff: 2 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 41) GDP per capita is computed by dividing a nation's GDP by its total population. Answer: TRUE Diff: 2 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 42) Inflation results in increased purchasing power for the consumer. Answer: FALSE Diff: 2 Page Ref: 16 Reference: Learning Objective 6 / Economic Stability 5 .
43) Tax increases and decreases are a form of fiscal policy. Answer: TRUE Diff: 2 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy 44) When the Fed restricts the money supply, it is practicing a tight monetary policy. Answer: TRUE Diff: 2 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy 45) The purpose of monetary and fiscal policy is to smooth out fluctuations in output and unemployment and to stabilize prices. Answer: TRUE Diff: 2 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy 46) Product differentiation exists in a market characterized by monopolistic competition. Answer: TRUE Diff: 3 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 47) Price decreases by one company in an oligopoly are likely to be matched by other companies. Answer: TRUE Diff: 3 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 48) Monopolistically competitive businesses may be large or small and may enter or exit the market easily. Answer: TRUE Diff: 3 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 49) Electric companies are good examples of natural monopolies because their price is government-regulated and they can supply all the power needed in a local area. Answer: TRUE Diff: 3 Page Ref: 12 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 50) The main measure of growth in the business cycle is aggregate output. Answer: TRUE Diff: 3 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living
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51) An increase in aggregate output, offset by an increase in inflation, will typically result in a recession. Answer: FALSE Diff: 3 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 52) The real growth rate of the U.S. economic system, as well as the standard of living, has decreased in recent years. Answer: FALSE Diff: 3 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 53) Profits from an American-owned automobile factory in Brazil are included in the GDP of Brazil. Answer: TRUE Diff: 3 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 54) If productivity increases, prices charged to consumers will tend to increase as well. Answer: FALSE Diff: 3 Page Ref: 14 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 55) Inflation increases the purchasing power of your money. Answer: FALSE Diff: 3 Page Ref: 16 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 56) With a price index change of 2.5 and an initial price index of 160.5, the inflation rate would be 1.6 percent. Answer: TRUE Diff: 3 Page Ref: 14 Reference: Learning Objective 6 / Economic Stability 57) With a 1998 CPI of 148.2 and a 1999 CPI of 152.4, the inflation rate would be 1.5%. Answer: FALSE Diff: 3 Page Ref: 14 Reference: Learning Objective 6 / Economic Stability 58) Taken together, fiscal policy and monetary policy make up growth policy during inflationary times. Answer: FALSE Diff: 3 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy
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59) After considering the textbook's definition of business, how are universities and hospitals different from the organizations described? A) They typically are not profit-seeking. B) They are not affected by the global environment. C) Their organizational boundaries are narrower than normal. D) They do not produce goods or services. Answer: A Diff: 1 Page Ref: 4 Reference: Learning Objective 1 / Business Goals and Functions 60) Which of the following is an important element of an organization's external environment? A) political-legal environment B) sociocultural environment C) technological environment D) all of the above Answer: D Diff: 1 Page Ref: 5 Reference: Learning Objective 2 / External Environments of Business 61) The political-legal environment reflects the relationship between ________. A) business and industry B) business and foreign trade C) business and labor unions D) business and government Answer: D Diff: 1 Page Ref: 5 Reference: Learning Objective 2 / External Environments of Business 62) A(n) ________ is a nation's basis for allocating its resources among its citizens. A) capital structure B) economic system C) ownership system D) distribution network Answer: B Diff: 1 Page Ref: 5 Reference: Learning Objective 3 / Economic Systems 63) The funds needed to create and operate a business enterprise are ________. A) physical resources B) the money supply C) capital D) liabilities Answer: C Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Factors of Production
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64) A(n) ________ is an individual who accepts the risks and opportunities entailed by creating and operating a new business. A) proprietor B) entrepreneur C) partner D) officer Answer: B Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Factors of Production 65) Tangible goods that organizations use in conducting their businesses are referred to as ________. A) physical resources B) the money supply C) information resources D) capital Answer: A Diff: 1 Page Ref: 6 Reference: Learning Objective 3 / Factors of Production 66) A ________ economy has characteristics of both planned and market economies. A) mixed market B) privatized C) capitalist D) hybrid Answer: A Diff: 1 Page Ref: 8 Reference: Learning Objective 3 / Types of Economic Systems 67) The process of converting government enterprises into privately owned firms is called ________. A) demand B) privatization C) socialism D) entrepreneurship Answer: B Diff: 1 Page Ref: 10 Reference: Learning Objective 3 / Types of Economic Systems 68) A ________ shows how many of a given product will be bought at different prices. A) demand curve B) supply curve C) price control D) price list Answer: A Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 9 .
69) The point at which the supply curve and the demand curve intersect on a graph is referred to as the ________. A) equilibrium price B) decision point C) surplus price D) perfect price Answer: A Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 70) The price at which the quantity of goods demanded and the quantity of goods supplied are equal is referred to as ________. A) the equilibrium price B) consumer equality price C) the deal-maker price D) the fixed point price Answer: A Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 71) The price at which the quantity of goods demanded and the quantity of goods supplied are equal is referred to as ________. A) the going rate at the auction B) the point-of-no-return price C) the market price D) the better price Answer: C Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 72) A ________ occurs when the quantity supplied exceeds the quantity demanded. A) demand deficit B) shortage C) surplus D) overage Answer: C Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy
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73) In the city of Westminster, Christmas trees are being sold for $25. At this price, buyers are able to satisfy their demand, though some trees remain unsold. This is the market condition known as ________. A) demand deficit B) surplus C) stoppage D) shortage Answer: B Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 74) When the quantity demanded exceeds the quantity supplied, a ________ will result. A) demand deficit B) surplus C) equilibrium point D) shortage Answer: D Diff: 1 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy 75) ________ occurs when two or more businesses vie for the same resources or customers. A) Socialism B) Competition C) Differentiation D) Conflict Answer: B Diff: 1 Page Ref: 10 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 76) ________ exists when an industry has only a handful of sellers, most of which are large. A) A monopoly B) An oligopoly C) Perfect competition D) Monopolistic competition Answer: B Diff: 1 Page Ref: 11 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 77) Which of the following exists when an industry or market has only one producer? A) perfect competition B) oligopoly C) monopoly D) communism Answer: C Diff: 1 Page Ref: 12 Reference: Learning Objective 5 / Private Enterprise and Competition in a Market Economy 11 .
78) The term ________ refers to the total quantity and quality of goods and services that people living in an economic system can purchase. A) business cycle B) aggregate output C) standard of living D) consumer price index Answer: C Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 79) The ________ refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production. A) standard of living B) aggregate output C) gross domestic product D) gross national produce Answer: C Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 80) The ________ is the pattern of short-term ups and downs in an economy. A) aggregate output B) business cycle C) standard of living D) balance of payments Answer: B Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 81) The ________ is the growth rate of the GDP adjusted for inflation and changes in the value of the country's currency. A) GDP per capita B) adjusted growth rate C) real growth rate D) real GDP Answer: C Diff: 1 Page Ref: 13 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living
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82) The principle of ________ states that exchange rates are set so that the prices of similar products in different countries are about the same. A) purchasing power parity B) consumer price index C) gross national product D) nominal GDP Answer: A Diff: 1 Page Ref: 14 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 83) ________ is a measure of economic growth that compares how much a system produces with the resources needed to produce it. A) Purchasing power parity B) Productivity C) Stability D) Inflation Answer: B Diff: 1 Page Ref: 14 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 84) The ________ is the amount of money that the government owes to its creditors. A) business cycle B) aggregate output C) standard of living D) national debt Answer: D Diff: 1 Page Ref: 15 Reference: Learning Objective 6 / Economic Growth, Aggregate Output, and Standard of Living 85) ________ is the condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate. A) Unemployment B) Stability C) Deflation D) Expansion Answer: B Diff: 1 Page Ref: 15 Reference: Learning Objective 6 / Economic Stability 86) ________ is the economic condition characterized by widespread increased prices without increased purchasing power. A) Unemployment B) Inflation C) Expansion D) Deflation Answer: B Diff: 1 Page Ref: 16 Reference: Learning Objective 6 / Economic Stability 13 .
87) The ________ is a measure of the prices of typical products purchased by consumers living in urban areas. A) Gross national product B) National debt C) Consumer price index D) Gross domestic product Answer: C Diff: 1 Page Ref: 16 Reference: Learning Objective 6 / Economic Stability 88) A nation manages the collection and spending of its revenues through ________ policy. A) fiscal B) monetary C) foreign D) economic Answer: A Diff: 1 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy 89) A nation controls the size of its money supply through ________ policy. A) fiscal B) monetary C) economic D) welfare Answer: B Diff: 1 Page Ref: 17 Reference: Learning Objective 6 / Managing the U.S. Economy 90) What are profits? A) total money taken in by a corporation B) difference between revenues and expenses C) increases in income from year to year D) increases in a corporation's stock price Answer: B Diff: 2 Page Ref: 4 Reference: Learning Objective 1 / Business Goals and Functions 91) The external environment of business consists of all of the following except ________. A) the global business environment B) the technological environment C) corporate culture D) the technological environment Answer: C Diff: 1 Page Ref: 4 Reference: Learning Objective 2 / External Environments of Business
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92) Which of the following is NOT a factor of production? A) labor B) capital C) entrepreneurs D) government Answer: D Diff: 2 Page Ref: 5 Reference: Learning Objective 3 / Factors of Production 93) The key difference between economic systems is the different ways in which they manage ________. A) the factors of production B) the transportation of goods within their borders C) government rules and regulations D) the payment of workers Answer: A Diff: 2 Page Ref: 5 Reference: Learning Objective 3 / Factors of Production 94) Which of the following is NOT an example of physical resources? A) market forecasts B) office facilities C) computers D) land Answer: A Diff: 2 Page Ref: 6 Reference: Learning Objective 3 / Factors of Production 95) Which of the following is an example of information resources? A) market forecasts B) specialized knowledge about satellite technology C) economic data D) all of the above Answer: D Diff: 2 Page Ref: 6 Reference: Learning Objective 3 / Factors of Production 96) A planned economy relies on a centralized government to ________. A) support free enterprise in every way possible B) 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 Answer: B Diff: 2 Page Ref: 6 Reference: Learning Objective 3 / Types of Economic Systems
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97) In a market economy, the factors of production are allocated by ________. A) state commerce department B) the federal government C) producers and consumers D) all of the above Answer: C Diff: 2 Page Ref: 7 Reference: Learning Objective 3 / Types of Economic Systems 98) The two most basic forms of planned economies are ________. A) communism and socialism B) socialism and the welfare state C) socialism and free-enterprise D) capitalism and socialism Answer: A Diff: 2 Page Ref: 7,8 Reference: Learning Objective 3 / Types of Economic Systems 99) Which economic system provides for the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive? A) socialism B) communism C) capitalism D) marxism Answer: C Diff: 2 Page Ref: 8 Reference: Learning Objective 3 / Types of Economic Systems 100) In which economic system does the government own and operate select major industries? A) communism B) socialism C) free enterprise D) capitalism Answer: B Diff: 2 Page Ref: 8 Reference: Learning Objective 3 / Types of Economic Systems 101) The term supply is best defined as ________. A) giving something to someone who needs it B) the willingness and ability of producers to offer a good or service for sale C) the area in which a firm keeps its wholesale stock for future use D) the willingness and ability of buyers to buy a good or service Answer: B Diff: 2 Page Ref: 9 Reference: Learning Objective 4 / Demand and Supply in a Market Economy
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