Type:
Test Bank
Resource:
Business in Action
Edition:
6th Edition
Author(s):
Courtland L. Bovee John V. Thill
Business in Action, 6e (Bovee/Thill) Chapter 1 Developing a Business Mindset 1) Business is any profit-seeking organization that provides goods and services designed to satisfy customers' needs. Answer: TRUE Explanation: In a general sense business can be defined as any profit-seeking organization that provides goods and services designed to satisfy customers' needs. Page Ref: 3 Difficulty: Easy Chapter LO: 1 Classification: Concept 2) Profit refers to the money the company brings in through the sale of goods and services. Answer: FALSE Explanation: Profit is the amount of money left over after expenses–all the costs involved in doing business–have been deducted from revenue. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 3) Businesses add value by transforming lower-value inputs (like paper and ink) into highervalue outputs (like textbooks). Answer: TRUE Explanation: Businesses add value by transforming lower-value inputs to higher-value outputs. In other words, they make goods and services more attractive from the buyer's perspective. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 4) In a free-market economy, companies generally have limited autonomy in deciding which customers they want to focus on and how they want to compete. Answer: FALSE Explanation: In a free-market economy, companies generally have considerable freedom in deciding which customers they want to focus on and how they want to compete. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept
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5) A company has competitive advantage when its products are more appealing to its chosen customers. Answer: TRUE Explanation: Competitive advantage makes a company's products or the company as a whole more appealing to its chosen customers. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 6) Assets refer to the tangible economic resources owned by a firm. Answer: FALSE Explanation: Assets refer to anything of meaningful value, from patents and brand names to real estate and company stock. Page Ref: 4 Difficulty: Moderate Chapter LO: 1 Classification: Concept 7) A firm uses strategic sourcing techniques to reduce its costs. This is an example of barrier to entry. Answer: FALSE Explanation: Barrier to entry refers to any resource or capability a company must have before it can start competing in a given market. Page Ref: 6 Difficulty: Moderate AACSB: Analytic Skills Chapter LO: 1 Classification: Application 8) Difficulty in obtaining business permits or licenses to do a particular business would be an example of a barrier to entry for a firm. Answer: TRUE Explanation: Barrier to entry refers to any resource or capability a company must have before it can start competing in a given market. Page Ref: 6 Difficulty: Easy Chapter LO: 1 Classification: Concept
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