understanding business nickels 10th edition

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment

TEST PLANNING TABLE FOR CHAPTER 1

Learning GoalLL:1

Knows BasicTerms and Facts

LL:2UnderstandsConcepts and

Principles

LL:3Alies Principles

1. Describe the relationshipbetween profit and risk and showhow bsinesses and nonprofitor!ani"ations can raise thestandard of li#in! for all.

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2%$2&$2'$2($2)$2*$3+$31$32$1"&#1"1#1"'#1"(#1")#1"*#1"!#1"%#1""#1"$

33$3%$3&$3'$3($3)$3*$%+$%1$%2$1$&#1$1#1$'#1$(#1$)#1$*#1$!#''1#('!+# ((&+

2. Compare and contrast bein!

an entreprener and workin! forothers.

%3$%%$%&$%'$%($%)$%*$&+$&1$&2$&3$&%$&&$1$%#1$"#1$$#'&&#'&1#'&'#'&(#'&)#'&*

&'$&($&)$'&!#'&%#'&"#'&$#'1&#'11

&*$'+$'1$'1'#'1(#'1)#'1*#'1!

3. ,nal-"e the affect of theeconomic en#ironment and taes

on bsinesses.

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'1%#'1"#'1$#''&#''1#'''

(1$(2$''(#''()#''*#''!

(3$(%$ ''%#''"#''$#'(&#

'(1,#('&#('$+

%. Describe the effect oftechnolo!- on bsiness.

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*2$*3$*%$*&$')!#')%#')"#')$,

*'$*($*)$**$1++$1+1'*&#'*1#'*'#'*(#'*)#'**#'*!#'*%#'*"#'*$#('1

&. Demonstrate how bsinessescan meet and beat competition.

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111$112$113$'!)#'!*#'!!#'!%

11%$11&$'!"#'!$#'%&#'%1#'%'#(''#('%+

'. ,nal-"e the social chan!esaffectin! bsiness.

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12($12)$12*$13+$'"'#'"(#'")#'"*#'"!

131$132$133$'"%#'""#'"$#('(#('"+

(. /dentif- what bsinessesmst do to meet the !lobalchallen!e$ which incldes warand terrorism.

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1%3$1%%$1%&$1%'$'$!#'$%#'$"#'$$#(&&

1%($1%)$1%*$1&+$(&1#(&'#(&(#(&)#(&*#('),

). 0e#iew how past trends arebein! repeated in the presentand what those trends will meanfor tomorrows colle!e !radate.

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1'3$1'%$1'&$(1(#(1)#(1*

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Total n-./er o0 test ite.s ((&

Trefalse estions are in plain tet.4ltiple choice estions are in /old te2t35estions on boed material are in /old te2t wit4 a tilde,36ssa- estions are in /old -nderlined te2t34inicase estions are in /old wit4 an asteris5+3

1-1




Chapter 01

Taking Risks and Making Profits within the Dynamic Business

Environment and !nswer "ey

True !a"se #uestions

1$ Businesses proide goods# $o%s# and serices to others&

Answer: True

Page: 4

AACSB: Reflective Thinking

Bloom's: Knowledge earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& terms

Toic: (ntrereneurshi and )ealth Building

%$ Businesses seek to earn a profit %y proiding goods and serices to others&

Answer: True

Page: 4

AACSB: Reflective Thinking Bloom's: Knowledge

earning !oal: "#$#



&$

Reenue is the amount a %usiness earns a%oe and %eyond what it spends for e'pensesand costs&

Answer: *alse Page: 4


Bloom's: Knowledge

earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& termsToic: Revenues+ Profits+ and osses

Bloom's: Knowledge

'$ Profit is the amount of money a %usiness earns a%oe and %eyond what it spends forsa(aries and other e'penses&

Answer: True

Page: 4 AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$#


Toic: Revenues+ Profits+ and osses

1-)




($ *ince a(( %usinesses make a profit# starting a %usiness is not risky&

Answer: *alse

Page: ,


earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& termsToic: -atching Risk with Profit

)$ !n entrepreneur risks time and money to start and manage a %usiness&

Answer: True

Page: ,


earning !oal: "#$#


Toic: -atching Risk with Profit

*$ +f a %usiness,s costs and e'penses are greater than its reenue# it wi(( suffer a (oss&

Answer: True

Page: 4


earning !oal: "#$#



+$ Profits of a %usiness inc(ude the sa(aries paid to its emp(oyees&

Answer: *alse

Page: 4





Bloom's: Knowledge

,$ Reenue is the tota( amount of money a %usiness takes in during a gien period %yse((ing goods and serices&

Answer: True

Page: 4


earning !oal: "#$#



1-




10$ Risk is the chance an entrepreneur takes of (osing time and money on a %usiness thatmay not proe profita%(e&

Answer: True

Page: , AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$#



11$ The .nited *tates has one of the highest standards of (iing in the wor(d&

Answer: True

Page: . AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$#


Toic: Standard of iving and /ualit& of ife

1%$ The term /standard of (iing/ refers to the amount of de%t peop(e can incur on a gienincome&

Answer: *alse

Page: ,


earning !oal: "#$#



1&$ ea(th care aai(a%i(ity# a c(ean enironment# and good schoo(s a(( contri%ute to a highua(ity of (ife&

Answer: True Page: .


Bloom's: Knowledge

earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& termsToic: Standard of iving and /ualit& of ife

1-2




1'$ Maintaining a high ua(ity of (ife reuires the com%ined efforts of %usinesses# nonprofitorgani3ations# and goernment agencies&

Answer: True

Page: .


earning !oal: "#$#



1($ *takeho(ders are a(( the peop(e who stand to gain or (ose %y the po(icies and actiities of a %usiness&

Answer: True


Bloom's: Knowledge

earning !oal: "#$# evel of %ifficult& #: Knowledge of ke& terms

Toic: Resonding to the 0arious Business Stakeholders

1)$ *takeho(ders inc(ude customers# emp(oyees# stockho(ders# supp(iers# dea(ers# %ankers#goernment officia(s and enironmenta(ists&

Answer: True Page: .


Bloom's: Knowledge

earning !oal: "#$#



1*$ 4utsourcing means se((ing goods and serices to peop(e in other countries&

Answer: *alse


earning !oal: "#$#



Page: 1

1-5




1+$ 4utsourcing has caused many comp(ications in many states where $o%s hae %een (ost tooerseas companies&

Answer: True Page: 1


Bloom's: Knowledge

earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& termsToic: Resonding to the 0arious Business Stakeholders

1,$ +nsourcing refers to the practice of g(o%a( companies setting up design and productionfaci(ities in the .nited *tates&

Answer:

Page: 1


Bloom's: Knowledge earning !oal: "#$# evel of %ifficult& #: Knowledge of ke& terms


%0$ The know(edge and ski((s (earned in %usiness courses are se(dom re(eant to students whowork for nonprofit organi3ations or o(unteer groups&

Answer: *alse

Page: 1



evel of %ifficult& #: Knowledge of ke& termsToic: 2sing Business Princiles in 3onrofit rgani5ations

%1$ Businesses and nonprofit organi3ations often strie to accomp(ish the same o%$ecties&

Answer: True

Page: 1




Toic: 2sing Business Princiles in 3onrofit rgani5ations

1-6




%%$ 7onprofit organi3ations use financia( gains to meet stated socia( or educationa( goa(s ofthe organi3ation rather than persona( profit&

Answer: True

Page: 1


earning !oal: "#$#



%&$ *ocia( entrepreneurs are peop(e who start and manage organi3ations that are not-for- profit& Their mission is to he(p others improe their ua(ity of (ife&

Answer: True


Bloom's: Knowledge



%'$ The on(y rea( purpose of a %usiness is to make money for entrepreneurs&

*eed6ack: Businesses don,t $ust make money for entrepreneurs& Businesses proide a(( of uswith necessities such as food# c(othing# housing# medica( care# and transportation# as we(( asother goods and serices that make our (ies easier and %etter&

Answer: *alse


Bloom's: Comrehension

earning !oal: "#$#

evel of %ifficult& 7: 2nderstanding of concets and rinciles


%($ The on(y way a firm can increase its profits is to increase its sa(es reenue&

*eed6ack: Reenues minus e'penses 8 profits& ! firm with sta%(e or een dec(ining sa(esmight %e a%(e to improe profits %y reducing e'penses&

Answer: *alse Page: 4



earning !oal: "#$#

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: Revenues+ Profits+ and osses

1-9




%)$ The amount of profit or (oss earned %y a %usiness can %e found %y su%tracting the firm,se'penses from its reenues&

*eed6ack: Reenues minus e'penses 8 profits&




earning !oal: "#$# evel of %ifficult& 7: 2nderstanding of concets and rinciles


%*$ 7onprofit organi3ations are simi(ar to %usinesses in that they often proide goods andserices that satisfy the needs of society&

*eed6ack: Businesses are not the on(y organi3ations that produce goods and serices&:oernment agencies# pu%(ic schoo(s# and charities such as the *a(ation !rmy proide goodsor serices# %ut are c(assified as nonprofit organi3ations since there is no profit motie&




earning !oal: "#$#

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: 2sing Business Princiles in 3onrofit rgani5ations

%+$ .n(ike %usinesses# emp(oyees of nonprofit organi3ations are not reuired to (earn the

%usiness ski((s of information management# marketing# or financia( management&

*eed6ack: +n order to achiee their goa(s# nonprofit organi3ations need peop(e with many ofthe same ski((s reuired %y for profit %usinesses& ;or e'amp(e# een though nonprofitorgani3ations do not seek a profit# they sti(( may dea( with (arge sums of money and mustkeep financia( records& 7onprofit organi3ations a(so need peop(e with (eadership# marketing#and information management ski((s&

Answer: *alse





1-<




%,$ Business decisions shou(d consider the interests of customers# emp(oyees# supp(iers#goernment (eaders# and stockho(ders&

*eed6ack: !(( stakeho(ders stand to gain or (ose %y the po(icies and actiities of a %usiness& !

ma$or cha((enge of %usinesses is to improe profits whi(e trying to accommodate the interestsof a(( stakeho(ders&

Answer: True



earning !oal: "#$#



&0$ By %a(ancing the demands of customers and stockho(ders# %usinesses satisfy the

demands of a(( stakeho(ders&

*eed6ack: Customers are interested in %enefiting from the products and=or serices produced %y %usinesses& *tockho(ders are usua((y profit oriented& *takeho(ders encompass customers#supp(iers# emp(oyees# stockho(ders# goernment organi3ations# enironmenta( groups# andother organi3ations that are somehow affected %y the %usiness in uestion&

Answer: *alse Page: .



earning !oal: "#$#

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: 2sing Business Princiles in 3onrofit rgani5ations

&1$ !n effort to p(ease one group of stakeho(ders eentua((y p(eases a(( stakeho(ders&

*eed6ack: Ba(ancing the demands of a(( stakeho(ders is a tremendous cha((enge fororgani3ations& Tradeoffs are common& Benefiting one group may hae a negatie impact onanother group of stakeho(ders& ;or e'amp(e# the need to stay competitie may ca(( foroutsourcing $o%s to other countries# %ut that might do great harm to the community %ecausemany $o%s wou(d %e (ost&

Answer: *alse


Bloom's: Comrehension earning !oal: "#$#



1->




&%$ +nsourcing creates new $o%s# and he(ps offset the num%er of $o%s %eing outsourced&

*eed6ack: Many companies are setting up design and production faci(ities here in the .nited*tates& ;or e'amp(e# yundai is doing design and engineering work in Detroit and producing

cars in Montgomery# !(a%ama& *uch insourcing creates many new $o%s# and he(ps offset thenum%er of $o%s %eing outsourced&

Answer: True



earning !oal: "#$#



&&$ Ro%in has started her own +nternet consu(ting firm& ?hi(e she recogni3es the risks

ino(ed in operating a %usiness# she is sti(( wi((ing to inest her time# effort# and moneyin hopes of earning a profit& Ro%in is an e'amp(e of an entrepreneur&

*eed6ack: !n entrepreneur is someone who risks time and money to start and manage a %usiness

Answer: True

Page: 4

AACSB: Reflective Thinking Bloom's: Alication

earning !oal: "#$#

evel of %ifficult& 8: Alication of rinciles


&'$ Backstreet Books# an ec(ectic %ookstore on a (arge co((ege campus generated tota(reenues of @15 mi((ion whi(e incurring e'penses of @1) mi((ion& During the yearBackstreet Books earned a profit of @ mi((ion&

*eed6ack: The profit a firm earns is found %y su%tracting tota( costs from tota( reenue&

Answer: True

Page: 4


Bloom's: Alication earning !oal: "#$#



1-10




&($ *ince %usinesses strie to earn a profit# their owners %enefit at the e'pense of the rest ofsociety&

*eed6ack: +n the pursuit of profit# %usinesses create $o%s# produce goods and serices that

contri%ute to a higher standard of (iing# and pay ta'es that support important goernment programs& Thus# %usinesses %enefit others in society as we(( as their owners&

Answer: *alse


Bloom's: Alication

earning !oal: "#$#



&)$ Aohn earned the same amount of money this year as he did (ast year& Thus# his standard of

(iing must %e the same as it was (ast year&

*eed6ack: The standard of (iing refers to the amount of goods peop(e can %uy with themoney they hae& There are two factors that determine the standard of (iing a person,searnings and the price of goods and serices& +f the prices of goods and serices haeincreased or decreased oer the past year# Aohn,s standard of (iing wi(( change een if theamount of money he earns is the same&

Answer: *alse

Page: ,


Bloom's: Alication

earning !oal: "#$#

evel of %ifficult& 8: Alication of rincilesToic: Standard of iving and /ualit& of ife

1-11




&*$ *usan uit her $o% in a %ig city to take a (ess stressfu( position in a sma(( town (ocated ina scenic area& *he earns (ess money at her new $o% and has had to cut %ack on her purchases of materia( goods# %ut she has more (eisure time and rea((y en$oys the c(ean airand scenic %eauty of her new home& *usan has accepted a (ower standard of (iing in order to en$oy a higher ua(ity of (ife&

*eed6ack: The standard of (iing is the amount of goods and serices peop(e can %uy with themoney they hae& The ua(ity of (ife is a %roader measure of socia( we(fare that refers to thegenera( we(( %eing of a nation,s citi3ens& +f citi3ens %enefit from a c(eaner enironment# more po(itica( freedom# or more (eisure time# their oera(( we(fare ua(ity of (ife may improeeen if they are not a%(e to purchase more goods and serices with their incomes&

Answer: True

Page: .


Bloom's: Alication

earning !oal: "#$# evel of %ifficult& 8: Alication of rinciles


&+$ Po(itica( freedom# ua(ity education# access to hea(th care# and a c(ean enironment are a((factors that contri%ute to an improed ua(ity of (ife&

*eed6ack: The ua(ity of (ife focuses on the genera( we((-%eing of a society# and inc(udesfactors such as freedom# security# (eisure time# and other factors %eyond the goods andserices peop(e can %uy with their incomes&

Answer: True

Page .




1-1)




&,$ Peop(e (iing in *an Aose# C! on aerage earn more money than peop(e (iing in *t&ouis# M4& The citi3ens of *an Aose en$oy a higher standard of (iing than the citi3ens of*t& ouis&

*eed6ack: The standard of (iing depends on the price (ee( as we(( as the income peop(eearn& ;or e'amp(e# as our te't indicates# peop(e in :ermany and Aapan may earn more moneythan !mericans# %ut they hae a (ower standard of (iing %ecause the prices they pay forgoods and serices are higher&

Answer: *alse

Page: .





'0$ The ma$or difference %etween %usinesses and nonprofit organi3ations is that on(y %usinesses can increase the standard of (iing# whi(e on(y nonprofit organi3ations canimproe the ua(ity of (ife&

*eed6ack: The standard of (iing refers to the amount of goods peop(e can %uy with theirmoney& Both %usinesses and nonprofit organi3ations can produce and distri%ute goods andserices# so they %oth affect the standard of (iing& *imi(ar(y# %oth %usinesses and nonprofitorgani3ations can hae an impact on the physica( enironment# hea(th care# and otherdeterminants of the ua(ity of (ife&

Answer: *alse

Page: 1


Bloom's: Alication



1-1




'1$ ! charita%(e organi3ation# such as the !merican Red Cross or *a(ation !rmy# isc(assified as a for-profit organi3ation&

*eed6ack: ! charita%(e organi3ation is not c(assified as a for-profit organi3ation since it does

not seek a profit& Charities are c(assified as nonprofit organi3ations&

Answer: *alse

Page: 1





'%$ +t was reported %y a Bei$ing newspaper that China succeeded in improing its peop(e,sstandard of (iing and esta%(ishing a re(atie(y aff(uent society in the past seen years&

This report c(ear(y indicates that %oth income (ee(s and the price of goods and sericesrose significant(y during that time period&

*eed6ack: +f the peop(e of China improed their standard of (iing# this means that they can purchase more with their current income than they were a%(e to do in the past& +n order to purchase the same or more goods than they were a%(e to purchase in the past# the price ofgoods and serices either stayed the same or decreasedF or the price of goods and sericesstayed the same# %ut income (ee(s rose&

Answer: *alse

Page: ,


earning !oal: "#$#



'&$ *tarting a %usiness is a riskier path toward %usiness success than working your way upthe ranks of a (arge %usiness&

Answer: True

Page: 9


earning !oal: "#$7


Toic: (ntrereneurshi 0ersus )orking *or thers

1-12




''$ ?orking as an entrepreneur is the on(y way to succeed in %usiness&

Answer: *alse

Page: 9


Bloom's: Knowledge earning !oal: "#$7



'($ Paid acations and hea(th care insurance are among the %enefits proided %y thegoernment to entrepreneurs&

Answer: *alse

Page: 9


earning !oal: "#$7

evel of %ifficult& #: Knowledge of ke& termsToic: (ntrereneurshi 0ersus )orking *or thers

')$ ?omen current(y own (ess than ten percent of a(( %usinesses&

Answer: *alse

Page:




Toic: ortunities for (ntrereneurs

'*$ The num%er of %usinesses owned %y !sians# ispanics# and 7atie !mericans has growndramatica((y&

Answer: True

Page: 9


earning !oal: "#$7



1-15




'+$ and# sometimes ca((ed natura( resources# is the most critica( factor of production ine'p(aining why some countries are poor whi(e others are rich&

Answer: *alse

Pages: $#"


earning !oal: "#$7


Toic: The ;mortance of (ntrereneurs to the Creation of )ealth

',$ Money is one of the fie factors of production that contri%ute to the creation of wea(th&

Answer: *alse

Page:


earning !oal: "#$7

evel of %ifficult& #: Knowledge of ke& termsToic: The ;mortance of (ntrereneurs to the Creation of )ealth

(0$ Too(s# machinery# and %ui(dings are e'amp(es of capita( resources&

Answer: True

Page: #"





(1$ The ma$or adantage rich nations hae oer poor nations is an a%undance of (and and(a%or&

Answer: *alse

Page: #"


earning !oal: "#$7



1-16




(%$ Entrepreneurship is one of the fie factors of production that contri%ute to the creation ofwea(th&

Answer: True

Page: #"


earning !oal: "#$7



(&$ Business consu(tant Peter Drucker said that the most important factor of production isknow(edge&

Answer: True

Page: #" AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$7 evel of %ifficult& #: Knowledge of ke& terms


('$ Most %usiness e'perts agree that entrepreneurship and the effectie use of know(edge arethe most important contri%utors to the creation of wea(th&

Answer: True Page: #"


Bloom's: Knowledge

earning !oal: "#$7



(($ The %usiness enironment refers to the surrounding factors that either he(p or hinder thedee(opment of %usinesses&

Answer: True

Page: ##


Bloom's: Knowledge


Toic: The (conomic and egal (nvironment

1-19




()$ Aing is a recent .&*& co((ege graduate who is interested in starting an import tea %usiness&+f she fo((ows through with her p(ans# she wi(( %e a pioneer# %ecause on(y a handfu( ofwomen choose to start %usinesses in the .&*&

*eed6ack: During the past two decades there has %een a rapid increase in the num%er ofwomen-owned %usinesses# increasing from a%out mi((ion firms in 1><0 to oer 10&6 mi((ionwomen-owned firms today& ?omen current(y own oer a third of a(( %usinesses&

Answer: *alse Page:



earning !oal: "#$7

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: ortunities for (ntrereneurs

(*$

Countries with an inadeuate(y trained work force and few entrepreneurs often achieethe highest (ee(s of income %y re(ying on a (arge num%er of workers&

*eed6ack: Poor countries often hae p(enty of (a%or and access to adeuate capita(& oweer#the two factors of production that are most critica( in generating nationa( wea(th areentrepreneurship and know(edge& ! country found (acking in these wi(( e'perience re(atie(y(ow (ee(s of income&

Answer: *alse

Page: #"



earning !oal: "#$7

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The ;mortance of (ntrereneurs to the Creation of )ealth

(+$ +f they wish to create more wea(th# poor nations shou(d focus on po(icies that increaseentrepreneurship and the effectie use of know(edge&

*eed6ack: Poor nations often hae p(enty of (a%or and (and# as we(( as access to capita(&oweer# the a%sence of entrepreneurship and know(edgea%(e workers seems to %e the reasonthat most poor countries remain poor&

Answer: True

Page: #" AACSB: Reflective Thinking

Bloom's: Comrehension earning !oal: "#$7



1-1<




(,$ To rea(i3e his passion# !(e' recent(y opened 4rigina( Tunes# +nc&# a sma(( state of the artrecording studio in 7ashi((e# T7& e pro%a%(y cou(d hae set-up shop in seera( ma$orcities# %ut 7ashi((e offered him the two most important factors that he (earned in %usinessschoo( wou(d enhance the creation of wea(th (a%or and po(itica( freedom&

*eed6ack: !ccording to (eading economists and %usiness ana(ysts (ike Peter Drucker#Entrepreneurship and know(edge are the two key factors that enhance the creation of wea(th&

Answer: *alse Page: #"


Bloom's: Knowledge

earning !oal: "#$7

evel of %ifficult& 8: Alication of rincilesToic: The ;mortance of (ntrereneurs to the Creation of )ealth

)0$ :reg recent(y comp(eted his co((ege degree in construction management& e is headingto Me'ico City to start a %usiness dee(oping apartment dwe((ings& !fter researching

seera( potentia( areas# he chose Me'ico City due to its high popu(ation& :reg fe(t that thisfactor wou(d create a (arge (a%or poo(# the most important of the fie factors of production&

*eed6ack: ?hi(e (a%or is inc(uded in the factors of production# entrepreneurship andknow(edge are considered the most important factors in the creation of wea(th&

Answer: *alse

Page: #"





1-1>




)1$ Aared is supposed to %e cramming for fina(s %ut his mind keeps wandering to theCo(orado s(opes& *eera( years ago# his .nc(e Mike made it %ig and now owns a ski (odge $ust north of !spen& e promised Aared a management trainee position and the opportunityto %uy into the company %y contri%uting a portion of his paycheck each month %ack into

the %usiness& !s he dreams a%out the opportunity to %e his own %oss# rea(ity %ites as Aaredscans his %usiness %ook and reads# /freedom to succeed a(so means freedom to fai(&/

*eed6ack: Entrepreneurship promises its participants the opportunity for great successFhoweer the potentia( of fai(ure a(so (ooms in the process&

Answer: True

Page: 9


earning !oal: "#$7



)%$ Ta'es and goernment regu(ations are part of the economic and (ega( enironment inwhich %usinesses operate&

Answer: True

Page: #7 AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$8



)&$ igh ta'es and goernment restrictions he(p to encourage entrepreneurs %y proidinggreater incenties for peop(e to work hard and create profit&

Answer: *alse Page: #7


Bloom's: Knowledge

earning !oal: "#$8

evel of %ifficult& #: Knowledge of ke& termsToic: The (conomic and egal (nvironment

1-)0




)'$ 4ne of the %est things the goernments of dee(oping countries can do to increase wea(this to minimi3e interference with the free e'change of goods and serices&

Answer: True

Page: #7


earning !oal: "#$8



)($ +n countries where %usinesses cannot enter into %inding contracts# %usiness ownersassume additiona( risk&

Answer: True

Pages: #7$#8 AACSB: Reflective Thinking

Bloom's: Knowledge


Toic: (conomic and egal (nvironment

))$ +n an effort to increase wea(th and their country,s standard of (iing# many goernmentsare taking oer ma$or industries and operating them as nonprofit organi3ations&

Answer: *alse

Pages: #7$#8


Bloom's: Knowledge



)*$ Corruption and i((ega( actiities are e'pected in a capita(ist system and can %e %eneficia(&



Bloom's: Knowledge

earning !oal: "#$8


1-)1




)+$ 4ne way for a goernment to actie(y promote entrepreneurship is to esta%(ish a currencythat,s trada%(e in wor(d markets so that you can %uy and se(( goods anywhere in the wor(dusing that currency&

Answer: True Page: #8


Bloom's: Knowledge

earning !oal: "#$8


),$ onesty# integrity# and high ethica( standards are essentia( to a capita(ist economic system(ike the one that operates in the .nited *tates&

Answer: True

Page: #8




*0$ aws that a((ow companies to write enforcea%(e contracts decrease the risk of doing %usiness&

Answer: True

Pages: #7$#8





1-))




*1$ +n rich countries such as the .nited *tates# changes in the (ee( of ta'ation hae (itt(eimpact on the incenties of entrepreneurs&

*eed6ack: igh ta'es and e'cessie regu(ation tend to discourage entrepreneurship een in

wea(thy nations& +n the .nited *tates# those states with the highest ta'es and most %urdensomeregu(ations tend to drie out entrepreneurs whi(e states with (ower ta'es and fewer regu(ationstend to attract them&




earning !oal: "#$8

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The (conomic and egal (nvironment

*%$ The fai(ure to upho(d high ethica( %usiness standards %y a few companies can negatie(yimpact the entire .&*& %usiness community&

*eed6ack: The te't%ook proided the e'amp(e of the fai(ure of mortgage %rokers to performdue di(igence on their customers& +n their uest to capture a (arge home %uying market# theyfai(ed to check the credit worthiness of their customers& !s interest rates on ad$usta%(e ratemortgages increased# some homeowners were una%(e to pay their mortgages& The ripp(e effectof these fai(ures (ed to $o% (oss# which sent many homes into forec(osure&

Answer: True

Page: #8

AACSB: Reflective Thinking Bloom's: Comrehension

earning !oal: "#$8



1-)




*&$ *eera( years ago# the goernment of the sma(( nation of !((egro owned the nation,ste(ephone company and (and(ines& This re(atie(y poor goernment re(ied on ta'es todee(op this industry and proide serice to its citi3ens& +f the goernment desired torapid(y improe peop(e,s access to phone serice# its %est course of action wou(d ino(e

se((ing the te(ephone company to priate inestors&

*eed6ack: :oernment can actie(y promote entrepreneurship %y encouraging priateownership of %usinesses& +f the goernment owns the %usinesses there is (itt(e incentie for peop(e to work hard to create profits&

Answer: True

Pages: #7$#8


earning !oal: "#$8



*'$ The goernment of the nation of Bing(and is trying to achiee a high ua(ity of (ife %yimposing strict regu(ations to protect the enironment and ensure safe working conditionsin factories and mines& The goernment a(so has esta%(ished am%itious programs to he(pthe poor# financing them %y setting high ta' rates& These efforts %y Bing(and,s goernmentshou(d create an atmosphere that encourages entrepreneurship&

*eed6ack: 4ne of the things a goernment can do to encourage entrepreneurship and theformation of wea(th is to keep regu(ations and ta'es to a minimum&

Answer: *alse

Page: #7


Bloom's: Alication

earning !oal: "#$8 evel of %ifficult& 8: Alication of rinciles


*($ Though it has receied a (ot of attention# the dee(opment of the +nternet has had (ess ofan impact on the way %usinesses operate than many other techno(ogica( changes&

Answer: *alse

Page: #8


Bloom's: Knowledge earning !oal: "#$4 evel of %ifficult& #: Knowledge of ke& terms

Toic: The Technological (nvironment

1-)2




*)$ !n increase in productiity indicates that more can %e produced in a gien time periodwith the same amount of resources&

Answer: True

Page: #, AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$4



**$ Techno(ogy can he(p %usinesses %ecome more efficient and productie&

Answer: True

Pages: #4$#, AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$4



*+$ Productiity is the amount of output you generate gien the amount of input such ashours worked&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



*,$ Effectieness means producing goods and serices using the (east amount of resources&

Answer: *alse


Bloom's: Knowledge

earning !oal: "#$4



+0$ Effectieness means producing the desired resu(t&

Answer: True Page: #,


earning !oal: "#$4



1-)5




+1$ Techno(ogy refers to eerything that makes %usiness operations more effectie# efficient#and productie&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



+%$ E-commerce is the %uying and se((ing of goods oer the +nternet&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



+&$ The B)B +nternet market consists of se((ing goods and serices to consumers&

Answer: *alse

Page: #,


earning !oal: "#$4



+'$ The rise of +nternet marketing has %ecome particu(ar(y important in doing %usiness in theB)B markets&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



+($ The %usiness-to-%usiness segment of e-commerce is of (ess importance than the %usiness-to-consumer segment of e-commerce&

Answer: *alse


Bloom's: Knowledge

earning !oal: "#$4



1-)6




+)$ Techno(ogy a((ows firms to %e more responsie to their customers, wants and needs&

Answer: True

Pages: #8$#.


earning !oal: "#$4

evel of %ifficult& #: Knowledge of ke& termsToic: The Technological (nvironment

+*$ Bar codes are a form of techno(ogy that has enhanced a company,s a%i(ity to %eresponsie to consumer needs&

Answer: True

Page: #. AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$4



++$ !n e(ectronic storage fi(e where information is kept is ca((ed a CP.&

Answer: *alse

Page: #.


earning !oal: "#$4



+,$ The data%ases of a %usiness often inc(ude a great dea( of information a%out the firm,scustomers&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



,0$ +nformation in a data%ase a((ows firms to carry on(y the products that the (oca( popu(ationwants&

Answer: True


Bloom's: Knowledge

earning !oal: "#$4



1-)9




,1$ +dentity theft is when indiidua(s or firms access peop(e,s persona( information and thenuse it for i((ega( purposes and actiities&

Answer: True

Page: #.


earning !oal: "#$4



,%$ The main difference %etween B)C and B)B e-commerce is that B)C uses on(y the+nternet# whi(e B)B com%ines e-commerce with traditiona( %ricks-and-mortar out(ets&

*eed6ack: The ma$or difference %etween B)C and B)B is the customer& B)C stands for %usiness-to-consumer& Businesses ino(ed in B)C se(( main(y to househo(ds& B)B stands for

%usiness-to-%usiness& Businesses ino(ed in B)B se(( main(y to other %usinesses&

Answer: *alse



earning !oal: "#$4



,&$ There is (ess risk ino(ed in starting an e-commerce on(y %usiness than there is in tryingto add e-commerce to a traditiona( %ricks-and-mortar store&

*eed6ack: !(though there is no uestion that some +nternet %usinesses wi(( grow and prosper#it is a(so eident that many e-commerce firms wi(( fai(& 4n the other hand# many traditiona( %usinesses hae successfu((y e'panded %y incorporating e-commerce into their p(ans&

Answer: *alse



earning !oal: "#$4



1-)<




,'$ 4ne of the ma$or adantages to firms ino(ed in e-commerce is that the techno(ogy issti(( so new that the +nternet-%ased firms face ery (itt(e competition&

*eed6ack: The rise of e-commerce has (ed to intense competition& The rise of +nternet

marketing drew hundreds of competitors into the fray&

Answer: *alse

Page: #.





,($ !(though the +nternet is e'citing# ery few peop(e hae access to it outside the .&*&

*eed6ack: !ccording to the te't%ook# oer 250 mi((ion Chinese citi3ens use the +nternet&

Answer: *alse

Page: #.





,)$ 7iki has $oined with seera( other inestors to form a new company that se((s foot care products to consumers oer the +nternet& 7iki has inested in a B)C e-commercecompany&

*eed6ack: B)C companies specia(i3e in se((ing goods to consumers oer the +nternet&

Answer: True

Page: #,


Bloom's: Alication



1-)>




,*$ 4er the past seera( years# workers in the sma(( nation of Rain(and hae en$oyed anincrease in the num%er of ho(idays and a reduction in the aerage (ength of the workdaythat has reduced the tota( num%er of hours they work each year& oweer# the output perworker in Rain(and is higher now than it was %efore the reduction in hours& These facts

suggest that productiity in Rain(and has increased&

*eed6ack: Productiity is measured %y diiding tota( output %y work hours& *ince output ishigher whi(e work hours hae dropped# productiity must %e higher&

Answer: True

Page: #,


Bloom's: Alication earning !oal: "#$4



,+$ *(eek?rap is a company that produces industria( coatings for the stee( industry& .nti(recent(y it re(ied on who(esa(ers to distri%ute its products to other %usinesses# %ut now ita(so se((s direct(y to its %usiness customers through its we%site& This is an e'amp(e of the(argest and most important type of e-commerce transaction&

*eed6ack: !s important as the +nternet has %een in the consumer market B)C# it has %ecomeeen more important in the %usiness-to-%usiness B)B market&

Answer: True

Page: #,


earning !oal: "#$4



,,$ !s emerging techno(ogies %ecome widespread# %usinesses tend to find %etter uses forthem& oweer# in the case of the +nternet# %usinesses that se(( B)B hae not %enefitedfrom direct(y se((ing to their %usiness customers in the same way that B)C companieshae done&

*eed6ack: The +nternet has %ecome an important %usiness too( in %oth the B)B market andthe B)C market&

Answer: *alse Page: #,


Bloom's: Alication

earning !oal: "#$4

evel of %ifficult& 8: Alication of rincilesToic: The Technological (nvironment

1-0




100$ ?ith the emergence of the +nternet# Aasmine finds it easy to do a(( her gift %uying on(ine&*he takes comfort in the fact that new techno(ogies if insta((ed proper(y are se(dom used inunethica( ways&

*eed6ack: !(though techno(ogica( wonders such as the +nternet hae improed the way we

communicate with customers and friends# pro%(ems such as identity theft hae surfaced&

Answer: *alse

Page: #.


earning !oal: "#$4



101$ Techno(ogica( innoation has a ripp(e effect& ?ith the adent of the +nternet# Ty(eran(ey# a certified tech-nerd# is %eing courted %y companies to write the ne't generationof antiirus software& e te((s us its %ig %usinessG

*eed6ack: Ty(er is rightF the +nternet has created tremendous $o% opportunities for specia(ists(ike him&

Answer: True


Bloom's: Alication

earning !oal: "#$4



10%$ To remain competitie in today,s market# firms must produce a ua(ity product and offeroutstanding serice at a reasona%(e price&

Answer: True Page: #.


Bloom's: Knowledge

earning !oal: "#$,

evel of %ifficult& #: Knowledge of ke& termsToic: The Cometitive (nvironment

10&$ Producing a high ua(ity product wi(( ensure success in the competitie enironment&

Answer: *alse


Bloom's: Knowledge

earning !oal: "#$,


Toic: The Cometitive (nvironment

1-1




10'$ *uccessfu( firms fo((ow a customer-drien strategy# as opposed to the management-drienstrategy used in the past&

Answer: True


Bloom's: Knowledge

earning !oal: "#$,



10($ Hero defects means that there is a company goa( of no mistakes in making products&

Answer: True


Bloom's: Knowledge

earning !oal: "#$,



10)$ Traditiona( %usinesses hae a manageria( focus rather than a customer focus&

Answer: *alse

Page: #.


earning !oal: "#$,



10*$ Competition is fierceG 4ne way to respond uick(y to customer needs is to dee(op astrategy of empowering emp(oyees&

Answer: True


Bloom's: Knowledge

earning !oal: "#$,



10+$ ! po(icy of empowerment encourages managers to make decisions uick(y for their front(ine emp(oyees&

Answer: *alse


Bloom's: Knowledge

earning !oal: "#$,



1-)




10,$ Empowerment means giing front(ine workers the responsi%i(ity# authority# and freedomto respond uick(y to customer reuests&

Answer: True


Bloom's: Knowledge

earning !oal: "#$,



110$ The goa( of empowerment in the work enironment is to preent mistakes& Mistakes can %e preented %y giing management more contro( oer the actions of (ower-(ee(workers&

Answer: *alse

Page: #1


Bloom's: Knowledge

earning !oal: "#$, evel of %ifficult& #: Knowledge of ke& terms


111$ The primary focus of successfu( firms is designing and producing high ua(ity goods&!dertising is then used to conince consumers to %uy their superior products&

*eed6ack: *uccessfu( %usinesses are customer-drien# meaning that they (isten to the wantsand needs of customers and ad$ust their products# po(icies and practices to %etter meetcustomer demands&

Answer: *alse Page: #.



earning !oal: "#$, evel of %ifficult& 7: 2nderstanding of concets and rinciles


11%$ +t,s important that firms are as efficient as possi%(e& This is done %y %ecomingmanagement-drien for efficiency&

*eed6ack: Business is %ecoming customer-drien# not management-drien as in the past& This

means that customers, wants and needs must come first&

Answer: *alse Page: #.



earning !oal: "#$,

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The Cometitive (nvironment

1-




11&$ Customer-drien organi3ations reuire managers to c(ose(y direct and contro( theiremp(oyees&

*eed6ack: Customer-drien organi3ations wi(( e'ceed their customers, e'pectations %y

empowering their front (ine emp(oyees& The moement toward empowerment suggests that(ower (ee( workers are (ike(y to assume more responsi%i(ity in the future# whi(e managerswi(( gie up some of their authority& Managers must train front(ine peop(e to make decisionswithout the need to consu(t managers&

Answer: *alse

Pages: #.$#1


Bloom's: Comrehension earning !oal: "#$,



11'$ Bruno and :ino are worthy competitors in the %akery %usiness in a sma(( upsca(e resorttown& :ino recent(y negotiated a contract with a supp(ier for rea((y cheap cooking oi(& eknows that %akery customers want cheap products& +n this competitie enironment#keeping the price down is a(( that matters&

*eed6ack: +n the current competitie enironment of eery industry# customers are (ookingfor high ua(ity and good a(ue# at competitie prices&

Answer: *alse

Page: #.


earning !oal: "#$,



1-2




11($ Brett runs a (awn care serice& !(though he and his emp(oyees cou(d serice eighthouseho(ds in one day# he aerages si' yards per crewmem%er# per day& Brett recent(yrestructured his work crew and proided each cutter with an incentie to acuire two newcustomers each month through customer referra(s& !s a recent %usiness graduate# you te((

him he,s pro%a%(y on the right track&

*eed6ack: Companies now hae to offer %oth high-ua(ity products and good a(ue# %ut a(sooutstanding serice at competitie prices& Through restructuring# owners=managers often gie-up some of their authority and empower emp(oyees to make decisions that e'ceed customer,se'pectations&

Answer: True Page: #.


Bloom's: Alication

earning !oal: "#$,



11)$ The statistica( study of the human popu(ation to descri%e its si3e# age# gender# and incomeis known as diersity recognition&



Bloom's: Knowledge

earning !oal: "#$.

evel of %ifficult& #: Knowledge of ke& termsToic: The Social (nvironment

11*$ The .&*& popu(ation tends to %uy the same things and spend time in rough(y the sameway as peop(e did a decade ago&

Answer: *alse

Page: #1


Bloom's: Knowledge

earning !oal: "#$. evel of %ifficult& #: Knowledge of ke& terms

Toic: The Social (nvironment

11+$ Demographic changes create new %usiness opportunities&

Answer: True

Page: #1


Bloom's: Knowledge

earning !oal: "#$.



1-5




11,$ Diersity groups identified in the market today inc(ude e'troerts# introerts# atheists# andthe deout&

Answer: True


Bloom's: Knowledge

earning !oal: "#$.



1%0$ Companies hae responded to a dierse customer %ase %y hiring a more dierseworkforce&



Bloom's: Knowledge

earning !oal: "#$.


1%1$ Current(y peop(e %etween the ages of 25 and 52 are the richest group in the .nited*tates&

Answer: *alse

Page: #1


Bloom's: Knowledge



1%%$ 7ew we(fare ru(es hae made it easier for sing(e parents to remain at home with theiryoung chi(dren without %eing reuired to seek emp(oyment&

Answer: *alse

Page: #9


Bloom's: Knowledge earning !oal: "#$.



1-6




1%&$ +n some cities the num%er of (ega( and i((ega( immigrants has caused goernments toadapt %y changing signs to other (anguages&

Answer: True

Page: #1


earning !oal: "#$.



1%'$ The federa( goernment reuires companies to take diersity ery serious(y# eenrecommending esta%(ishing a chief diersity officer in the e'ecutie suite&

Answer: *alse


Bloom's: Knowledge



1%($ 4ne factor that has had a ma$or effect on %usinesses is the growth of sing(e-parentfami(ies&



Bloom's: Knowledge

earning !oal: "#$.



1%)$ Businesses that cater to o(der consumers in the future wi(( (ike(y not %e successfu(&

Answer: *alse


Bloom's: Knowledge

earning !oal: "#$.



1-9




1%*$ Businesses use demographic studies to understand where peop(e (ie# their (ifesty(es# andwhat they are (ike(y to %uy&

*eed6ack: Demography is the statistica( study of the human popu(ation to (earn its si3e#density and characteristics& *ince many goods and serices appea( to customers with specific

demographic characteristics such as age or income# studying demographic trends can he(p %usinesses determine whether the demand for a good is (ike(y to rise or fa((&




earning !oal: "#$.

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The Social (nvironment

1%+$ Diersity management wou(d not %e an issue if firms wou(d treat a(( of their emp(oyeesthe same&

*eed6ack: ! dierse workforce can consist of minorities# women# the disa%(ed# homose'ua(s#atheists# and the deout& These differences can %e a strength on(y if management works tomeet the needs of each group whi(e achieing the organi3ationa( goa(s& The interaction ofthese different iews can encourage new perspecties and creatie approaches to so(ing pro%(ems&

Answer: *alse

Page: #1


earning !oal: "#$.


1%,$ Demographic trends suggest that %usinesses wi(( %enefit from offering f(e'i%(e workschedu(es# e(dercare# and chi(dcare to he(p emp(oyees %a(ance the demands of $o% andfami(y&

*eed6ack: The increase in the num%er of sing(e parent fami(ies is a powerfu( demographictrend& *uccessfu( organi3ations wi(( ad$ust and accommodate these changes in their socia(enironment&

Answer: True Page: #9 AACSB: Reflective Thinking


earning !oal: "#$.



1-<




1&0$ The current *ocia( *ecurity system wi(( ensure that the young peop(e of today wi(( hae*ocia( *ecurity %enefits in the future when they retire&

*eed6ack: The current *ocia( *ecurity system means that today,s workers pay for today,sretirees& To date this has worked since there are more workers supporting each retiree&

oweer soon# (ess money wi(( %e coming into *ocia( *ecurity than wi(( %e going out andthere wi(( %e a shortfa((# suggesting that today,s young peop(e wi(( not hae *ocia( *ecurity %enefits in the future&

Answer: *alse

Page: #9



earning !oal: "#$. evel of %ifficult& 7: 2nderstanding of concets and rinciles


1&1$ Iaier# a recent co((ege graduate# is thinking of inesting in a home hea(th care %usiness&e %e(iees this wi(( %e a profita%(e enture %ecause of the increasing num%er of peop(e inthe .&*& that wi(( %e oer 60 in the near future and more (ike(y to need this type of serice&This accurate(y descri%es a demographic trend that wi(( affect his %usiness choice&

*eed6ack: ?hen scanning the socia( enironment for opportunities and threats# %usiness professiona(s study demographic changes in their respectie markets& Demographic changescan hae a significant impact on %usiness choices and career opportunities&

Answer: True Pages: #1$#9



earning !oal: "#$. evel of %ifficult& 8: Alication of rincilesToic: The Social (nvironment

1&%$ *ue is a sing(e mother with two sma(( chi(dren& er emp(oyer is considering proidingfami(y (eae& *ince *ue is a sing(e mom with sma(( chi(dren# she is un(ike(y to %enefitfrom this program&

*eed6ack: ;ami(y (eae a((ows workers to take time off to attend to a sick chi(d and shou(d %euite %eneficia( to *ue since she has two sma(( chi(dren&

Answer: *alse Page: #9 AACSB: Reflective Thinking


earning !oal: "#$.



1->




1&&$ Ro% is an emergency room nurse at a (oca( hospita( in Te'as& 4n a week(y %asis# he wi((sere a num%er of patients who are not (ega((y .&*& citi3ens& Many of them are giing %irth to %a%ies& ;ortunate(y# Ro% speaks enough *panish to communicate with the patients&Ro% is e'periencing the rea(ities of the socia( enironment in some states&

*eed6ack: There is a si3ea%(e *panish speaking popu(ation that (ies in this state& The socia(enironment in many states and many countries can differ& Both for profit and non-profitcompanies must ad$ust to accommodate for changes in the socia( enironment&

Answer: True

Page: #1


Bloom's: Alication

earning !oal: "#$. evel of %ifficult& 8: Alication of rinciles


1&'$ :(o%a(i3ation has increased among nations&

Answer: True Page: #


Bloom's: Knowledge

earning !oal: "#$1

evel of %ifficult& #: Knowledge of ke& termsToic: The !lo6al (nvironment

1&($ !n important enironmenta( change in the g(o%a( enironment is the growth ofinternationa( competition&



Bloom's: Knowledge


Toic: The !lo6al (nvironment

1&)$ +mproed distri%ution systems hae (ed to more g(o%a( trade&



Bloom's: Knowledge

earning !oal: "#$1 evel of %ifficult& #: Knowledge of ke& termsToic: The !lo6al (nvironment

1-20




1&*$ :(o%a( trade has suffered %ecause of increased pro%(ems with the +nternet&

Answer: *alse

Page: #





1&+$ :(o%a(i3ation has great(y increased (iing standards around the wor(d&

Answer: True

Page: #


Bloom's: Knowledge



1&,$ China and +ndia hae %ecome ma$or .&*& competitors&



Bloom's: Knowledge



1'0$ The threat of terrorism increases the costs of operating most %usinesses&

Answer: True Page #


Bloom's: Knowledge

earning !oal: "#$1

evel of %ifficult& #: Knowledge of ke& termsToic: The !lo6al (nvironment

1'1$ ?ars are cost(y to a(( companies&

Answer: *alse

Page: # AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$1



1-21




1'%$ The war on terrorism has had a significant effect in drawing many resources from the.&*& economy and (ed to many additiona( costs for %usinesses&

Answer: True


Bloom's: Knowledge

earning !oal: "#$1



1'&$ +n most industries# the on(y producers that pose a serious threat to .&*& manufacturers arethose in Aapan and ?estern Europe&

Producers in countries (ike China and +ndia hae %ecome ma$or .&*& competitors& ;ore'amp(e# enoo# a Chinese firm# recent(y %ought +BM,s PC unit&

Answer: *alse





1''$ Companies that participate in the defense industry %y making weapons and othercompanies that make armored ehic(es and een food companies do we(( when the .&*& isat war&

*eed6ack: !(though wars are uite cost(y for most companies# there are some whose

reenues and profits grow& These are usua((y companies with goernment contracts thatsupport the war effort&

Answer: True Page: ##



earning !oal: "#$1

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The !lo6al (nvironment

1-2)




1'($ 4ne of the pro%(ems with g(o%a(i3ation is that distri%ution systems and communicationsystems (ack efficiency&

*eed6ack: Distri%ution systems and Communication systems hae improed dramatica((y#

and hae contri%uted toward wor(d trade&

Answer: *alse

Page: #





1')$ The eidence for c(imate change is uestiona%(e& ?e((-known .&*& companies are takinga wait-and-see approach toward addressing c(imate change&

*eed6ack: C(imate change is a key uestion on the minds of most companies&

Answer: *alse

Page: #


earning !oal: "#$1



1'*$ Car(os :on3a(e3 owns a sma(( manufacturing company that makes enti(ation systemsused in the construction of office %ui(dings& !s the .&*& continues to %e ino(ed in wars

around the g(o%e# Car(os may notice that his %usiness wi(( %e growing more s(ow(y in thefuture as more money continues to %e put into the war effort&

*eed6ack: The war in +ra has drawn %i((ions of do((ars from the !merican economy& Mostcompanies hae (ost workers to the armed forces and hae grown more s(ow(y as money has %een dierted to the war effort&

Answer: True

Page: #





1-2




1'+$ ucy owns a restaurant in os !nge(es& *he heard on the radio that the home(and securitythreat (ee( has %een increased due to anticipated terrorist actiities# especia((y in (argecities in the .&*& *he wi(( (ike(y not %e a%(e to get insurance to coer any (osses her %usiness may suffer shou(d an attack occur in &!&

*eed6ack: ucy,s restaurant is (ocated in a ery (arge .&*& city& ;irms hae found it difficu(tto get insurance against terrorist attacks&



Bloom's: Alication

earning !oal: "#$1

evel of %ifficult& 8: Alication of rincilesToic: The !lo6al (nvironment

1',$ !fter seera( years of study as a part-time student# !(e' recent(y earned a degree inmarketing at a (oca( co((ege& The growth in g(o%a( markets may increase !(e',s $o%

opportunities# %ut it wi(( a(so reuire him to continua((y update his ski((s or seek furthereducation&

*eed6ack: !s %usinesses e'pand to sere g(o%a( markets# new $o%s wi(( %e created& But g(o%a(markets wi(( a(so create more competition& +n order to remain competitie# .&*& workers wi((hae to continua((y update their know(edge and ski((s&

Answer: True

Page: #





1(0$ Maya is an engineer for ?indy Ridge# +nc& a maker of wind tur%ines& Recent(y# a (argecompany has shown interest in inesting in this sma(( operation& This is not surprisingsince firms that are creating products for a(ternatie sources of energy are attracting theattention of goernments and other %usinesses&

*eed6ack: Energy and sources of energy promise to %e key considerations that wi(( attract theattention of goernment and other %usinesses&

Answer: True

Page: # AACSB: Reflective Thinking Bloom's: Alication

earning !oal: "#$1



1-22




1(1$ 4er many years the nature of .&*& %usiness has changed ery (itt(e from century tocentury&

Answer: *alse

Page: 7" AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$9


Toic: The (volution of 2<S< Business

1(%$ The num%er of .&*& $o%s in manufacturing has increased in the past fie years&

Answer: *alse Pages: 7"$7#


Bloom's: Knowledge

earning !oal: "#$9


Toic: Progress in the Agricultural and -anufacturing ;ndustries

1(&$ Techno(ogy he(ped the manufacturing industry to %ecome more productie&

Answer: True Pages 7"$7#


Bloom's: Knowledge

earning !oal: "#$9

evel of %ifficult& #: Knowledge of ke& termsToic: Progress in the Agricultural and -anufacturing ;ndustries

1('$ ?hi(e the proportion of workers emp(oyed in agricu(ture has remained re(atie(yconstant# the aerage si3e of farms has steadi(y decreased oer the past century&

Answer: *alse Page: 7"


Bloom's: Knowledge

earning !oal: "#$9


1(($ +ncreases in productiity hae a((owed fewer farmers to feed more and more peop(e&

Answer: True Page: 7"


Bloom's: Knowledge

earning !oal: "#$9


1-25




1()$ The adice proided %y a marriage counse(or is an e'amp(e of the serice industry&

Answer: True

Page: 7#




Toic: Progress in Service ;ndustries

1(*$ !(most a(( of the growth in emp(oyment opportunities since the mid-1><0s has %eengenerated %y the serice sector&

Answer: True

Page: 7#


earning !oal: "#$9

evel of %ifficult& #: Knowledge of ke& termsToic: Progress in Service ;ndustries

1(+$ !(though emp(oyment in the serice sector has increased rapid(y in recent years# the astma$ority of workers are sti(( emp(oyed in the goods producing sector&

Answer: *alse

Page: 7# AACSB: Reflective Thinking

Bloom's: Knowledge

earning !oal: "#$9



1(,$ There are more high-paying $o%s in the serice sector than in the goods-producing sector&

Answer: True

Page: 7#


earning !oal: "#$9



1-26




1)0$ The %est emp(oyment strategy for today,s co((ege graduates is to search for $o%s that arec(ose(y re(ated to their co((ege ma$or&

Answer: *alse

Page: 7#


earning !oal: "#$9


Toic: =our *uture in Business

1)1$ The growth in the serice sector in the .nited *tates appears to %e giing way to aninformation-%ased g(o%a( era&

Answer: True


Bloom's: Knowledge



1)%$ The transition from an agricu(tura( economy to a manufacturing economy to a serice %ased economy has resu(ted in a serious increase in (ong-term unemp(oyment&

Answer: *alse Page: 7"


Bloom's: Knowledge

earning !oal: "#$9



1)&$ 4ne reason gien for the dec(ine in the num%er of .&*& workers emp(oyed inmanufacturing is that manufacturing firms in the .&*& hae %ecome more efficient&

*eed6ack: Techno(ogy has a((owed .&*& workers to %e more productie# resu(ting in the needfor fewer workers& Many !merican manufacturing firms hae downsi3ed %ecause of thisincreased efficiency&

Answer: True

Pages: 7"$7#


earning !oal: "#$9 evel of %ifficult& 7: 2nderstanding of concets and rinciles


1-29




1)'$ The continuing increase in the num%er of .&*& workers in the serice sector means thatmore and more workers are emp(oyed in (ow-wage positions&

*eed6ack: *ome $o%s in the serice sector do pay (ow wages# %ut there are actua((y morehigh-paying $o%s in the serice sector than in the goods-producing sector& *erice $o%s inc(ude

high wage positions in such industries as hea(th care# accounting# architecture# (aw# andte(ecommunications&

Answer: *alse Page: 7#



earning !oal: "#$9

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: Progress in Service ;ndustries

1)($ istorica((y $o%s (ost in one sector of the economy hae %een rep(aced %y increasedemp(oyment opportunities in other sectors&

*eed6ack: The history of our nation,s economy shows that as $o%s were (ost in agricu(tureear(ier in the (ast centuryF disp(aced farm workers were often a%(e to find emp(oyment in thegrowing manufacturing sector& More recent(y# dec(ines in manufacturing emp(oyment hae %een offset %y rapid growth in the serice sector& The (atest growth area for new $o%s is ininformation techno(ogy&

Answer: True

Pages: 7"$7#


earning !oal: "#$9

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The (volution of 2<S< Business

1))$ Dee Duction is a financia( p(anner who he(ps peop(e find ways to sae for retirement and(ower their ta'es& Cee is emp(oyed in the serice sector of the economy&

*eed6ack: The serice sector produces intangi%(e goods& ;inancia( p(anning is one type ofserice&

Answer: True

Page: 7#


Bloom's: Alication earning !oal: "#$9 evel of %ifficult& 8: Alication of rinciles


1-2<




1)*$ !fter (osing her manufacturing $o% in the .&*& automo%i(e industry# Auanita has found thatwe(( paid serice sector $o%s reuire retraining and further education&

*eed6ack: igh-paying serice sector $o%s can %e found in hea(th care# accounting# finance#entertainment# te(ecommunications# architecture# (aw# and software engineering& oweer#

these $o%s reuire specia(i3ed training and education&

Answer: True

Page: 7#


earning !oal: "#$9



Mu"tip"e Choice #uestions

1)+$ !n actiity which seeks to earn a profit %y proiding a good or serice is known as an!& industry&B& corporation&C$ %usiness&D& serice&

Answer: C


Bloom's: Knowledge

earning !oal: "#$#



1),$ JJJJJJJJJJ is the amount a %usiness earns after deducting what it spends for sa(aries andother e'penses&-$ ProfitB& ReenueC& +nterestD& Diidends

Answer: A

Page: 4





1-2>




1*0$ ! %usiness incurs a JJJJJJJJJJJ if its costs and e'penses e'ceed its reenues&-$ (ossB& (ia%i(ityC& de%itD& diidend

Answer: A

Page: 4


Bloom's: Knowledge



1*1$ JJJJJJJJJJ is the chance a %usiness owner wi(( (ose the time and money inested in a %usiness that proes to %e unprofita%(e&!& Depreciation

B$ Risk C& ;a((i%i(ityD& Redundancy

Answer: B


Bloom's: Knowledge

earning !oal: "#$#



1*%$ The tota( amount of money that %usinesses take in %y se((ing goods and serices is ca((ed JJJJJJJJ&!& profitB$ reenueC& (ossD& retained earnings

Answer: B

Page: 4


earning !oal: "#$#



1-50




1*&$ !n JJJJJJJJJJJJ is a person who assumes the risk of starting a %usiness&!& manager B$ entrepreneur C& priate inestor D& stakeho(der

Answer: B

Page: 4


Bloom's: Knowledge



1*'$ *tarting a %usiness a(ways ino(es JJJJJJJJ&!& profitB& (oss

C& reenueD$ risk

Answer: %

Page: ,


earning !oal: "#$#



1*($ 4ften in %usiness the greater the risk# the JJJJJJJJJJJJ&-$ greater the potentia( rewardB& (ower the e'pected reenuesC& (ower the a(ue proided to societyD& greater the num%er of stakeho(ders

Answer: A Page: ,


Bloom's: Knowledge

earning !oal: "#$#

evel of %ifficult& #: Knowledge of ke& termsToic: -atching Risk with Profit

1-51




1*)$ JJJJJJJJJJJ is a measure of the genera( we((-%eing and satisfaction deried from aariety of factors inc(uding po(itica( freedom# safety# education# and a c(ean enironment&!& *tandard of (iingB$ Kua(ity of (ifeC& :ross nationa( income

D& *ocia( satisfaction inde'

Answer: B

Page: .





1**$ The amount of goods and serices peop(e can %uy with the money they hae is ca((edtheir

!& nomina( income&B& consumer price inde'&C& profit margin&D$ standard of (iing&

Answer: %

Page: ,


Bloom's: Knowledge



1*+$ The customers# emp(oyees# stockho(ders# supp(iers# creditors# and others who stand togain or (ose %y the po(icies and actiities of a %usiness represent the firm,s!& market makers&B& economic enironment&C$ stakeho(ders&D& socia( mentors&

Answer: C Page: .



evel of %ifficult& #: Knowledge of ke& termsToic: Resonding to the 0arious Business Stakeholders

1-5)




1*,$ The most important difference %etween for-profit %usinesses and nonprofit organi3ationsis that!& %usinesses do not %enefit society&B& nonprofit organi3ations seek to make a profit for its owners and organi3ers&C$ nonprofit organi3ations do not seek a profit for its owners or organi3ers&

D& nonprofit organi3ations do not fi(e ta' returns&

Answer: C

Page: 1





1+0$ ast year# !denture Enterprises reported reenues of @)2 mi((ion whi(e its tota( e'penseswere @10 mi((ion& Based on this information# !denture reported

-$ profits of @12 mi((ion&B& profits of @2 mi((ion&C& (osses of @12 mi((ion&D& (osses off @2 mi((ion&

*eed6ack: Profits are found %y su%tracting costs and e'penses from reenues# so !dentureEnterprises profits are @)2 mi((ion - @10 mi((ion 8 @12 mi((ion&

Answer: A

Page: 4





1+1$ ! common characteristic of most entrepreneurs is that they-$ accept the risks ino(ed in starting and managing a %usiness&B& hae a high (ee( of scientific and technica( e'pertise&C& possess a great dea( of persona( wea(th&D& hae e'perience in running (arge# comp(e' organi3ations&

*eed6ack: !n entrepreneur is a person who risks time and money to start and manage a

%usiness&

Answer: A Page: 4



earning !oal: "#$#

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: (ntrereneurshi and )ealth Building

1-5




1+%$ ?hich of the fo((owing is the %est e'amp(e of a %usiness whose goa( is to earn a profitL!& ! community co((egeB& The *a(ation !rmy

C& Boy *couts of !mericaD$ Best Buy# +nc&

*eed6ack: Best Buy is the on(y one of the organi3ations (isted which seeks to earn a profit&!(( of the others are nonprofit organi3ations&

Answer: %



earning !oal: "#$#



1+&$ +n order to make an inte((igent inestment decision# entrepreneurs shou(d!& (imit their options to those %usiness inestments that are %acked %y the .&*&goernment&B& inest in %usinesses that hae generated a sta%(e rate of profit for at (east the past tenyears&C& inest on(y in %usiness opportunities where it is possi%(e to take an actie ro(e inmanagement&D$ compare the risks of potentia( inestments to their e'pected profits and find the right %a(ance %etween profit and risk&

*eed6ack: Those companies with high risk a(so often possess the potentia( for high profits&Entrepreneurs must weigh risk and profit and find the right %a(ance&

Answer: %

Page: ,


earning !oal: "#$#



1-52




1+'$ Companies that outsource research and dee(opment and design $o%s!& hae a(ways made a wise decision&B& wi(( %e more profita%(e in the (ong run&C$ run the risk of oerseas companies using the information to produce competitie

products&D& a(ways inest in the oerseas companies that take on these $o%s&

*eed6ack: Companies hae gone from outsourcing production $o%s to outsourcing researchand dee(opment and design functions& *uch outsourcing may proe disastrous to those firms#in that oerseas companies may use the information to produce their own# competitie products&

Answer: C

Page: 1





1+($ onda and Toyota hae used insourcing for years to produce cars in the .nited *tates&+nsourcing-$ he(ps offset the num%er of $o%s %eing outsourced&B& increases the num%er of $o%s %eing outsourced&C& damages the .nited *tates economy&D& causes $o%s to %e (ost to oerseas competitors&

*eed6ack: Companies inc(uding onda and Toyota hae set up design and productionfaci(ities in the .nited *tates# ca((ed insourcing & +nsourcing creates many new $o%s# and he(psoffset the num%er of $o%s %eing outsourced& Because insourcing creates $o%s it actua((y he(psthe .&*& economy&

Answer: A

Page: 1


earning !oal: "#$#



1-55




1+)$ Pu%(ic schoo(s# charities and goernment agencies genera((y JJJJJJJJJJJ&!& are incorporatedB$ do not seek to earn a profitC& proide goods rather than serices

D& do not hae any stakeho(ders

*eed6ack: !(though schoo(s# charities# and goernment agencies often proide goods andserices# they do not seek a profit& Therefore# they are nonprofit organi3ations rather than %usinesses&

Answer: B

Page: 1


earning !oal: "#$#



1+*$ ;or-profit %usinesses and nonprofit organi3ations are simi(ar in that they %oth-$ contri%ute to the we(fare of society&B& seek to earn a profit&C& hae a (imited (ife&D& must %e contro((ed %y a %oard of directors&

*eed6ack: ! %usiness is an actiity that seeks to profit %y proiding goods and serices toothers& 7onprofit organi3ations# such as charities and goernment agencies# a(so proidegoods and serices in order to satisfy the needs of peop(e within a society# %ut they do not

seek a profit&

Answer: A



earning !oal: "#$#



1-56




1++$ The standard of (iing for a nation,s peop(e depends main(y on!& the ua(ity of the natura( enironment&B& how much po(itica( freedom they hae&C$ their income and the prices of the goods and serices they %uy&

D& the amount of (a%or and capita( aai(a%(e emp(oyed in the manufacturing sector&

*eed6ack: The standard of (iing of a country refers to the amount of goods and serices peop(e can %uy with the money they hae&

Answer: C

Page: ,


Bloom's: Comrehension earning !oal: "#$#



1+,$ ?or(d-c(ass %usinesses attempt to meet the needs of!& their customers# een if it comes at the e'pense of emp(oyees and other stakeho(ders inthe %usiness&B& their emp(oyees# een if it means shortchanging customers %y charging higher prices&C$ a(( of their stakeho(ders&D& e'c(usie(y their owners# since they are u(timate(y the ones who pay the %i((s&

*eed6ack: *takeho(ders are a(( of the peop(e affected %y a %usiness& ?or(d-c(ass firms of thefuture wi(( attempt to meet the needs of a(( of their stakeho(ders&

Answer: C

Page: .





1-59




1,0$ *he(%y recent(y started se((ing her inention ! %ed that (ooks (ike it f(oats in mid- air&The %ed is actua((y suspended %y magnetic forces& *he(%y is an!& ar%itrageur&B$ entrepreneur&

C& specu(ator&D& account manager&

*eed6ack: !n entrepreneur is a person who assumes the risk of starting a %usiness&

Answer: B

Page: 4





1,1$ Ross wants to inest some money that he $ust inherited& e found that his %ank offers asaings account paying a guaranteed rate of return& oweer# he wou(d (ike to earn ahigher return& Ross shou(d keep in mind that to earn a higher return on his money he!& wi(( hae to inest oerseas&B& shou(d inest in a %usiness that has a ery sta%(e and predicta%(e rate of return&C$ wi(( pro%a%(y hae to accept a higher (ee( of risk&D& wi(( pro%a%(y hae to engage in i((ega( actiities&

*eed6ack: +nesting in a saings account certificate of deposit at a %ank entai(s ery (itt(erisk# %ut earns a re(atie(y sma(( return& Business opportunities that offer the potentia( for high

profits are often associated with a high (ee( of risk& !n inestor must weigh the potentia( profit of an inestment with its risk&

Answer: C Page: ,


Bloom's: Alication

earning !oal: "#$#

evel of %ifficult& 8: Alication of rincilesToic: -atching Risk with Profit

1-5<




1,%$ ?hich of the fo((owing is the most accurate statement a%out the impact of %usiness onsocietyL!& ?hen %usinesses earn a profit for their owners# they usua((y do so at the e'pense of therest of society# which proes it is neer a win-win situation&

B& ?hi(e %usinesses often improe the standard of (iing within a society# they can do(itt(e to improe the ua(ity of (ife&C& Businesses often improe the ua(ity of (ife# %ut can do (itt(e to improe the standard of (iing of most peop(e due to inf(ation&D$ Businesses can hae a positie impact on %oth the standard of (iing and the ua(ity of(ife within a society&

*eed6ack: Businesses are part of an economic system that he(ps create a higher standard of(iing and ua(ity of (ife for eeryone&

Answer: %


Bloom's: Alication

earning !oal: "#$#



1,&$ Aane,s income has remained sta%(e oer the past few years whi(e the prices of things she %uys hae gone up& 7eerthe(ess# Aane fee(s %etter off %ecause the enironment is c(eaner#the crime rate has dec(ined# she has more (eisure time# and the ua(ity of medica( care hasimproed& +f Aane,s e'perience is typica(# we can conc(ude that the standard of (iing has!& increased# %ut the ua(ity of (ife has decreased&B& increased# and so has the ua(ity of (ife&C$ dec(ined# %ut the ua(ity of (ife has increased&D& dec(ined# and so has the ua(ity of (ife&

*eed6ack: The standard of (iing refers to how much peop(e can %uy with their income& *ince prices hae gone up faster than her income# Aane,s standard of (iing has dec(ined& oweer#ua(ity of (ife refers to a %roader measure of genera( we((%eing& The improed ua(ity of theenironment# safer streets# increased (eisure time# and improed medica( care wou(d a((contri%ute to an improement in genera( we((%eing# and hence wou(d increase the ua(ity of(ife&

Answer: C

Page: .





1-5>




1,'$ Ee and her three co((ege friends en$oy perfumes& !s a specia( gift to each of them (astho(iday season# Ee found a way to make scented cand(es with each friend,s faorite perfume scent& The three friends (oed her gift idea and encouraged Ee to create moreand se(( them on the +nternet& Recent(y# she is fi((ing orders from her we%site# and turning

a profit& Ee is proof that!& me too %usinesses work&B$ when you successfu((y fi(( a market need# you can make money&C& the +nternet is a way to distri%ute $ust a%out anything&D& the cost of supp(ies to make cand(es is re(atie(y cheap&

*eed6ack: +n order to stay competitie# entrepreneurs must find a market niche - somethingthe market needs&

Answer: B

Page: 4





1,($ ?hich of the fo((owing statements a%out socia( entrepreneurs such as Muhammad Nunuswho won the 7o%e( Pri3e descri%es their cha((engeL!& *ocia( entrepreneurs may switch socia( causes seera( times %efore finding their niche&B& *ocia( entrepreneurs understand that their %usiness enironments are (ess dynamic thanother %usinesses# especia((y during a recession&C& *ocia( entrepreneurs use different %usiness ski((s than entrepreneurs who start other %usinesses& They shou(d focus on a different educationa( curricu(um than otherentrepreneurs&D$ .sing the same %usiness ski((s as other entrepreneurs# socia( entrepreneurs dee(op %usinesses to improe the ski((s and=or ua(ity of (ife of others&

*eed6ack: *ocia( entrepreneurs dee(op %usinesses to improe the ski((s and ua(ity of (ife ofothers& Many of these %usinesses are organi3ed as non-profit companies&

Answer: %

Page: 1


earning !oal: "#$#

evel of %ifficult& 8: Alication of rincilesToic: 2sing Business Princiles in 3onrofit rgani5ations

1-60




1,)$ P(anet Earth Dee(opers is a (arge nation-wide construction company with home officesin ansing# M+& The (oca( media often remarks a%out the pristine (andscaping thatsurrounds the home office that sits on a 0-acre comp(e'& !t the %ack end of the comp(e'are seera( (arge warehouses and garages that ho(d (arge euipment& The grounds

surrounding these warehouses (ook (ike a we((-maintained park& !cross the street from thegarages are seera( shops and %usinesses& The CE4# /P(anet Pau(/ as his emp(oyees ca((him# often ta(ks a%out how thankfu( he is that the town permits him to store the companyeuipment at that site# and ows to a(ways maintain the premises for his neigh%ors theother %usinesses that thrie in that area# not to mention that he asks 100 emp(oyees tocome to work there eeryday& ?hich of the fo((owing statements descri%es P(anet Pau(,s %usiness phi(osophyL!& P(anet Pau( is a nice guy whose company made a (ot of money# so he is wi((ing tospread it around&B$ P(anet Pau( understands that een though it may cost a (itt(e more# stakeho(derconsiderations are ery important if you want your %usiness to thrie&

C& P(anet Pau( is more concerned a%out town po(itics than a%out the company profits& eshou(d ask his emp(oyees if they wou(d rather hae that money in their pockets than onthe (awns&D& P(anet Pau( is taking a %usiness risk that his trucks and euipment wi(( not make toomuch noise as they enter and e'it the garages&

*eed6ack: ?hen considering the socia( enironment of one,s %usiness# it is important toconsider a(( stakeho(ders that your %usiness affects& *takeho(ders inc(ude customers#emp(oyees# supp(iers# and een other %usinesses and residentia( areas that are (ocated within pro'imity of your %usiness (ocation&

Answer: B Page: .





1,*$ The growth of ispanic owned %usinesses!& remained re(atie(y constant during the past decade&B& s(ow(y increased during the past decade&C$ increased dramatica((y in recent years&D& decreased s(ight(y compared to other minority groups who hae stared %usinesses&

Answer: C

Page: 9


earning !oal: "#$7



1-61




1,+$ ow is the profi(e of %usiness owners changingL!& +n the .&*&# men %etween the ages of 1< and )2 are starting %usinesses at a faster ratethan men of a(( ages# or women of a(( ages&B& Recent ma(e immigrants# who can (ega((y work in the .&*&# are starting %usinesses at a

faster rate than natura(-%orn ma(e citi3ens# and at a faster rate than a(( women&C$ Businesses owned %y minority women are growing at a faster rate than %usinessesowned %y men or nonminority women&D& +t is difficu(t to co((ect information on the profi(e of %usiness owners& Most new %usinesses do not fi(e so they donOt hae to pay ta'es&

Answer: C

Page:


Bloom's: Knowledge



1,,$ The num%er of %usinesses owned %y ispanics and !sians has!& has decreased after the >-11 terrorist attack&B& s(ow(y increased&C$ significant(y increased&D& remained re(atie(y constant&

Answer: C

Pages: 9$





%00$ ?hich of the fo((owing entai(s the greatest amount of riskL!& ?orking for the goernmentB& ?orking for a (arge %usinessC& ?orking for a sma(( %usinessD$ *tarting a %usiness

Answer: %


Bloom's: Knowledge

earning !oal: "#$7



1-6)




%01$ The resources that contri%ute to the creation of wea(th are known as JJJJJJJJ&!& production coefficientsB$ factors of productionC& production techno(ogiesD& production aggregates

Answer: B

Pages: $#"


Bloom's: Knowledge



%0%$ ?hich of the fo((owing is a factor of productionL!& %ondsB& money

C$ know(edgeD& serice

Answer: C

Page: #"


earning !oal: "#$7



%0&$ !s a factor of production# the term capita( inc(udes

!& stocks and %onds issued %y corporations&B& natura( resources such as (and and water&C$ too(s# machinery# and %ui(dings&D& serices proided %y the goernment that ena%(e %usinesses to %e more productie&

Answer: C Page: #"


Bloom's: Knowledge

earning !oal: "#$7

evel of %ifficult& #: Knowledge of ke& termsToic: The ;mortance of (ntrereneurs to the Creation of )ealth

1-6




%0'$ Two factors of production that seem to contri%ute the most to a nation,s a%i(ity to createwea(th are!& (and and (a%or&B& (and and capita(&C& entrepreneurship and (a%or&

D$ entrepreneurship and know(edge&

Answer: %

Page: #"





%0($ JJJJJJJJJJJJJJJ is=are the e'terna( and interna( circumstances that surround the %usiness&

-$ The %usiness enironmentB& The factors of productionC& The %usiness corra(D& The %usiness discip(ines

Answer: A

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Bloom's: Knowledge


Toic: The Business (nvironment

1-62




%0)$ Entrepreneurs weigh the differences %etween the %enefits of starting a %usiness and thosethings that they are (ike(y to forego %ecause they choose to work for themse(es& *uchthings they are (ike(y to pass-up on are!& the freedom to make their own decisions&

B& (oca( goernment %enefits such as enterprise 3one ta' credits&C$ emp(oyer paid %enefits such as paid acation and hea(th insurance&D& tickets to sporting eents that trading partners may proide&

*eed6ack: Entrepreneurs and sma(( %usiness owners do not receie the emp(oyer paid %enefitsthat a (arge firm can offer# inc(uding such things as paid acations and hea(th insurance %enefits& They gie-up these opportunities for the freedom to work for themse(es and keepthe profits that their %usinesses rea(i3e&

Answer: C

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%0*$ ?hich of the fo((owing is a %enefit of owning your own %usinessL-$ ;reedom to keep the profits from your %usinessB& :oernment supported hea(th insuranceC& More camaraderie with emp(oyeesD& *horter work hours

*eed6ack: 4ne of the %enefits of owning your own %usiness is the freedom to keep the profitsafter ta'es& !nother is the en$oyment of %eing your own %oss&

Answer: A Page: 4



earning !oal: "#$7

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: (ntrereneurshi 0ersus )orking *or thers

1-65




%0+$ eanne owns a nursery %usiness& The trucks# handcarts# and fork(ift she purchased for the %usiness are ca((ed JJJJJJJJJJ inestments&!& natura( resourcesB& intangi%(e resourcesC& current asset

D$ capita(

*eed6ack: !s a factor of production# capita( inc(udes too(s# machinery# euipment# such as thetrucks# hand carts# and fork(ift machines mentioned in this uestion&

Answer: %

Page: #"


earning !oal: "#$7


Toic: The ;mortance of (ntrereneurs to the Creation of )ealth> figure #<7

%0,$ !s you consider the factors of production# which of the fo((owing did managementtheorist# Peter Drucker %e(iee to %e one of the most important contri%uting factors toincreasing our nation,s wea(thL!& (andB& (a%or C$ know(edgeD& capita(

*eed6ack: !ccording to the (ate Peter Drucker# know(edge is and wi(( %e the most importantfactor of production in our economy& e specifica((y refers to the high-tech workers in the*i(icon a((ey as know(edge workers&

Answer: C

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1-66




%10$ ?hen we compare the factors of production in wea(thy and poor nations# we find!& poor nations hae p(enty of (and and know(edge# %ut ery (itt(e (a%or&B& poor and wea(thy nations %oth hae an a%undance of know(edge# it is the (and thataries# with rich nations a(ways haing more&C$ wea(thy nations hae know(edge and entrepreneuria( opportunities# whi(e poor nations

are often (acking in these areas&D& wea(thy nations hae (and and (a%or# whi(e poor nations hae capita( andentrepreneurship&

*eed6ack: The factors of production known as /know(edge/ and /entrepreneurship/contri%ute toward a nation,s opportunity to innoate and create new products and serices&Entrepreneurs use their know(edge to grow their %usinesses and increase wea(th&

Answer: C

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evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The ;mortance of (ntrereneurs to the Creation of )ealth

%11$ ! nation progresses socia((y when it has good schoo(s# c(ean air and water# and more&?hich of the fo((owing statements addresses conditions for socia( progressL!& *ocia( progress wi(( eo(e when capita( is apportioned to eeryone in eua( amounts&B$ ! city# state# or nation,s socia( progress needs the right %usiness enironment&C& The foundation for socia( progress is a handfu( of wea(thy entrepreneurs wi((ing tospread the wea(th&D& *ocia( progress can on(y improe when there is a strong (a%or poo( to draw from&

*eed6ack: The foundation for socia( progress is haing the right %usiness enironment& ?hen %usinesses create wea(th and $o%s# they are a%(e to contri%ute to the socia( progress in the areawhere they operate& The resu(t is usua((y good schoo(s and other socia( serices# such a po(ice protection# and good hea(th enironment&

Answer: B



earning !oal: "#$7



1-69




%1%$ ?hich of the fo((owing statements a%out factors of production is the most accurateL!& The fie factors of production are energy# capita(# (a%or# (eadership and money&B& ?ea(th creation in poor nations is s(owed %y chronic shortages of (a%or&C& Each of the factors of production is eua((y important in creating wea(th&D$ Entrepreneurship and know(edge are the most important in creating wea(th&

*eed6ack: There are fie ma$or categories of factors of production (and# (a%or# capita(#entrepreneurship and know(edge& Poor nations often hae p(enty of (a%or and (and# %ut (ackentrepreneurship and know(edge resources& Thus# the on(y accurate statement is thatknow(edge and entrepreneurship are the most important factors of production for the creationof wea(th&

Answer: %

Pages: $#"


earning !oal: "#$7


%1&$ 7o(iia is a sma(( and poor nation# %ut its current president has a genuine desire to createmore wea(th for 7o(iia citi3ens& The president has receied recommendations fromseera( of her adisors& ?hich of the fo((owing recommendations is (ike(y to create themost wea(th for 7o(iiaL!& !cuire more (and %y inading a neigh%oring country that is een poorer and weakerthan 7o(iia&B& .se foreign aid from other nations to purchase more too(s and machinery&C$ Esta%(ish a %usiness enironment that promotes and rewards entrepreneurship&

D& Esta%(ish %arriers to trade to protect 7o(iia %usinesses from foreign competition&

*eed6ack: The factors of production that seem to contri%ute most to the generation of wea(thare entrepreneurship and know(edge& Thus one key to promoting wea(th creation is to fosterentrepreneurship&

Answer: C

Pages: ##$#7


Bloom's: Alication



1-6<




%1'$ Ben and Chris com%ined their (oe of hockey with a %usiness enture& They purchased asma(( porta%(e cart and %egan se((ing hockey memora%i(ia outside of the hometownhockey arena& Their first year went we((# %ut this past year has %een a rea( strugg(e& Due to poor economic conditions inc(uding a (oss of $o%s# ticket sa(es at the arena are down#which has significant(y hurt their sa(es as we((& !s a recent %usiness schoo( graduate# you

e'p(ain to Ben and Chris!& this type of %usiness is a(ways high risk %ecause it is seasona(&B& the %usiness does not fi(( a sufficient need for most peop(e&C$ enironmenta( circumstances are dynamic and tough to contro(&D& socia( entrepreneurs are current(y getting most of the attention&

*eed6ack: The %usiness enironment consists of surrounding factors that either he(p or hinder the dee(opment of %usinesses& +n this case the economic enironment has seere(y affectedthe num%er of peop(e attending hockey games& Business enironments are dynamic& They areconstant(y changing and %usiness must (earn to naigate the changes&

Answer: C Page: ##





%1($ 7ick is a recent finance graduate who has two passions music and finance& .pongraduation# he was offered an opportunity to $oin a strugg(ing rock %and with a (ot of potentia(# or a $o% at a (arge we((-esta%(ished financia( serices company& By $oining the %and# he wi(( forego which of the fo((owingL-$ !dded %enefits such as hea(th insurance proided to emp(oyees of (arge corporations&B& The freedom to contri%ute as an innoator in his work enironment&C& ong hours at work# whi(e he (earns the %usiness and contri%utes to making itsuccessfu(&D& Ao% protection&

*eed6ack: Entrepreneuria( entures and sma(( %usinesses# particu(ar(y in their infancy cannotoffer owners=emp(oyees the same %enefits as (arge# esta%(ished companies& +n this case# it isthe hea(th %enefits 7ick wi(( forego&

Answer: A

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1-6>




%1)$ China is a nation with a ast amount of (and and a ery (arge popu(ation& !nothercharacteristic of this nation is its peop(e,s affinity for saing money& Referring to the fiefactors of production# the goernment of China has made significant progress in %ui(dingits %usiness enironment %y focusing on factors that needed improement& +ts strategy wasto

!& increase the supp(y of (a%or&B& increase sources for capita(&C$ increase entrepreneurship&D& encourage neigh%oring nations to proide the necessary (and for %usiness dee(opment&

*eed6ack: Entrepreneurship is one of two factors of production that management theorists %e(iee to %e most important for wea(th creation& The other is know(edge&

Answer: C

Page: #"




%1*$ Ta'es and goernment regu(ations are part of the JJJJJJJJJJJJJJJJ enironment of %usiness&-$ economic and (ega(B& competitieC& socia(D& techno(ogica(

Answer: A


Bloom's: Knowledge

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%1+$ Businesses faor-$ minima( goernment spending %ecause it keeps ta'es to a minimum&B& more goernment serices %ecause it minimi3es ta' conseuences&C& ma'imum goernment spending %ecause it raises %usiness profits&D& (ess goernment spending %ecause it (owers %usiness profits&

Answer: A


Bloom's: Knowledge

earning !oal: "#$8



1-90




%1,$ +n order to create more wea(th and proide %etter serices# some nations recogni3e that JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ&!& raising ta'es %enefits a(( %usinessesB$ a good strategy is to minimi3e interference with the free e'change of goods andserices

C& restricting trade with other countries a(ways he(ps domestic %usinessesD& taking contro( of priate(y owned %usinesses and making them goernment -run wi((decrease ta'es and improe the (ies of eeryone

Answer: B Page: #7


Bloom's: Knowledge

earning !oal: "#$8


%%0$ +n countries where %usinesses are goernment owned-$ there is (ess incentie to work hard&B& the right amount of each good is produced&C& profits tend to %e higher&D& the ua(ity of goods is high %ut profits are (ow&

Answer: A

Page: #7





%%1$ igh ta' rates tend to!& promote economic dee(opment&B& make a nation,s currency trada%(e&C$ discourage entrepreneurship&D& reduce the amount of money created %y the goernment&

Answer: C Page: #7




1-91




%%%$ The capita(ist system re(ies heai(y on!& protectionist po(icies with respect to wor(d markets&B& minimi3ing goernment interention in corrupt %usiness practices&C& making sure that currencies are neer under-a(ued&D$ honesty# integrity# and high ethica( %usiness standards&

Answer: %


Bloom's: Knowledge

earning !oal: "#$8



%%&$ Contemporary goernments promote %usiness dee(opment %y!& increasing %usiness regu(ations&B& proiding goernment ownership of %usinesses&C& permitting %usinesspeop(e to conduct %usiness without the use of contracts&

D$ esta%(ishing a currency that,s trada%(e in wor(d markets&

*eed6ack: The goernment can esta%(ish a currency that,s trada%(e in wor(d markets so that %usinesspeop(e can %uy and se(( goods and serices anywhere in the wor(d using thatcurrency&

Answer: %

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%%'$ ?hich of the fo((owing po(icies wou(d tend to foster entrepreneurshipL-$ Minimi3e ta'es and regu(ations&B& Promote more regu(ations to protect the enironment&C& Dee(op po(icies to reduce corruption %etween indiidua(s&D& Encourage pu%(ic ownership of %usinesses&

*eed6ack: Minimi3ing ta'es and fewer goernment regu(ations are faora%(e po(icies towardthe creation of %usinesses&

Answer: A

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1-9)




%%($ ?hen corruption is present in the %usiness enironment-$ company (eaders can threaten competitors and minimi3e competition&B& factories are easier to %ui(d without a goernment permit&C& it promotes fair competition&D& (a%orers can make more money&

*eed6ack: :oernments shou(d he(p to minimi3e corruption in %usiness for seera( reasons&+t,s hard to do %usiness in many poor countries %ecause the goernments ignore corruptionamong %usinesses and the goernments are a(so corrupt& +t,s ery difficu(t in such countries toget permission to %ui(d a factory or open a store without a goernment permit# which iso%tained (arge(y through %ri%ery of pu%(ic officia(s& !mong %usinesses themse(es# (eaderscan threaten competitors and minimi3e competition&

Answer: A

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evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The (conomic and egal (nvironment

%%)$ Kuestiona%(e %usiness practices such as those fo((owed %y many mortgage (endingcompanies in the past few years!& encouraged inestors to increase their stock market ho(dings&B$ fundamenta((y weakened the entire economic enironment&C& he(ped retired emp(oyees at the e'pense of current emp(oyees&D& resu(ted from too much goernment regu(ation&

*eed6ack: Corrupt and i((ega( actiities at some companies do negatie(y affect the %usinesscommunity and the economy as a who(e& The capita(ist system re(ies heai(y on honesty#integrity# and high ethica( standards& ?hen these fundamenta(s fai(# the who(e system isweakened&

Answer: B

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1-9




%%*$ ?hich of the fo((owing goernment po(icies wou(d %e "east (ike(y to encourageentrepreneurshipL!& Passage of (aws that ena%(e %usinesspeop(e to write enforcea%(e contracts&B& Esta%(ishment of a currency that is trada%(e in wor(d markets&C$ Esta%(ishment of strict regu(ations specifying e'act(y how products shou(d %e made to

ensure safety and afforda%i(ity&D& Passage of (aws that e(iminate corruption in goernment and %usiness&

*eed6ack: 4ne of the things goernments can do to encourage entrepreneurship is keep %usiness regu(ations to a minimum& Regu(ations may %e desira%(e in other respects# %ut theytend to discourage entrepreneurship %y making the formation and management of %usinessesmore difficu(t and e'pensie&

Answer: C

Page: #7



evel of %ifficult& 8: Alication of rincilesToic: The (conomic and egal (nvironment

1-92




%%+$ +tOs no secret that B(ock%usterQ stores are c(osing# whi(e 7etf(i'Q is growing (ikegang%ustersG Both companies participate in the ideo renta( %usiness& 7etf(i' ea(uatedthe (ifesty(e needs of ideo customers# understanding that time# fami(y# and worko%(igations ca((ed for more conenient methods to receie ideo entertainment& 7etf(i'

em%raced the opportunity to uti(i3e the +nternet# and Ts with specia( modems# to streamideos direct(y to customers& The company a(so managed to keep customer costs down# %y passing a(ong the saings it rea(i3ed in (a%or& B(ock%uster did not keep its eye oncompetitor moements# permitting 7etf(i' to uick(y capture ideo market share& +nsi3ing up the situation# which e'terna( enironments pro%a%(y had the (east effect on 7etf(i'Os successL!& *ocia( enironmentB& Competitie enironmentC$ Economic and (ega( enironmentD& Techno(ogica( enironment

*eed6ack: 7etf(i' em%raced new opportunities in T techno(ogy permitting ideo to streamthrough the +nternet and through the modem& 7etf(i' a(so saw opportunities in the socia(enironment& ?ith sing(e and dua( income fami(ies pressed for time# customers are seekingadded coneniences& 7etf(i' differentiates its product# positioning itse(f as friend(ier andcheaper& B(ock%uster was ery s(ow to react to competitie pressures& !(though customersen$oyed the cheaper prices# the techno(ogica( enironment made it cheaper for 7etf(i' to keepcosts down and pass a(ong saings to the customer& The economic downturn had (itt(e effecton this situationF and the firms operate within the (ega( (imits of the (aw&

Answer: C





1-95




%%,$ ! recent 7ew Nork Times artic(e a%out Bernard Madoff and his i((ega( Pon3i schemestated# /?hen money goes g(o%a(# fraud does too&/ !(though the goa( of inestors whotrusted Madoff,s inestment company was to earn the highest return possi%(e on theirinestments# they turned a %(ind-eye toward the fact that some of those returns were too

good to %e true& +ndiidua( inestors# companies# and een charities (ost (arge sums ofmoney %y inesting with Madoff,s company& ?hich of the fo((owing statements re(ates tothis storyL-$ The unethica( %ehaior of one company had a wor(dwide ripp(e effect that can impactthe we(( %eing of an economy&B& Too much regu(ation caused the capita(istic nature of Mr& Madoff,s %usiness mode( tofai(&C& Peop(e (ost money %ecause of the f(uctuations in wor(d trading currencies# uestioningthe (egitimacy of trading a%road&D& +nestors did not sign contracts with Mr& Madoff,s company& The goernment can on(y protect indiidua(s and companies who sign enforcea%(e contracts&

*eed6ack: .nethica( %ehaior can hae a steamro((ing effect on %usiness as consumers (oseconfidence and the oera(( effect on the economy turns negatie&

Answer: A

Pages: #7$#8

AACSB: (thics




1-96




%&0$ !dam Rip(ey se((s custom %icyc(es& !dam %uys seera( %ike parts inc(uding whee(s andtires from the :ood Treads Company& !(though seera( goernment-supported regu(ationshe(p !dam in his %usiness# regu(ations that make it easy for !dam,s %usiness to en$oygood endor re(ationships are!& (ower ta'es that %usiness to %usiness customers pay to each other&

B& (aws that permit minima( corruption in %anking institutions&C& (aws that permit sma(( %usinesses to use the goernment as an intermediary when doing %usiness with other sma(( %usinesses&D$ (aws that support enforcea%(e contracts %etween firms&

*eed6ack: ?ithout enforcea%(e contracts %etween firms# sma(( and (arge %usinesses cannotefficient(y conduct %usiness& The goernment can (essen the risks of entrepreneurship %y passing (aws that ena%(e peop(e to write good %usiness contracts that are enforcea%(e in court&

Answer: %

Page: #7 AACSB: (thics




1-99




%&1$ Aay and Aim *pears own a (awn irrigation system %usiness& They perform insta((ations andmaintenance of these systems& *eera( of their customers are go(f courses# %ut they sere a(arge group of residentia( customers as we((& ?hen they started the %usiness ten years ago#they made a pact to a(ways operate within the (ega( (imits of the (aw# %ut (ate(y# the

competition is eating them a(ie& oca( competitors hae hired i((ega( immigrants to perform the manua( (a%or& They do not pay ta'es on these emp(oyees - they $ust pay themin cash at the end of the week& Emp(oyment ta'es are a %urden for sma(( %usinesses& Aayand Aim do not want to hire i((ega( workers& There,s a risk if you permit an i((ega( workerto drie a truckF or# if he=she has an accident on the $o%& Nou hae $ust studied %usinessethics in your c(ass& Nou inform this partnership that!& Ta'es on(y need to %e paid for the owners&B$ They are not on(y taking a chance that a %igger pro%(em may occur# they are indirect(ysetting the ethics code for their firm&C& *ma(( %usinesses may not %e a%(e to worry a%out ethics codes& These types ofdocuments are %etter suited for %ig %usiness&

D& +t is not unethica( to try to %etter the (ies of others& Eeryone needs $o%s&

*eed6ack: !s the student wi(( read in Chapter 2# management,s %usiness ethics sets the tonefor the company,s a(ue system& Corruption and i((ega( actiities at some companies donegatie(y affect the %usiness community as a who(e& The capita(ist system re(ies heai(y onhonesty# integrity# and high ethica( standards&

Answer: B

Page: #4

AACSB: (thics

Bloom's: Alication


Toic: -aking (thical %ecisions 6o?

%&%$ The +nternet and the emergence of an information-%ased economy are important parts ofthe JJJJJJJJJJJ enironment in which %usinesses operate&!& economic and (ega(B$ techno(ogica(C& competitieD& g(o%a(

Answer: B Page: #8





1-9<




%&&$ Techno(ogy affects peop(e in-$ a(( industries&B& most industries&C& information techno(ogy industries with the e'ception of agricu(ture&D& primari(y high income countries&

Answer: A

Pages: #8$#.


Bloom's: Knowledge



%&'$ Emp(oyers proide too(s and techno(ogy for their emp(oyees in order to!& increase the cost of production and profita%i(ity&B$ improe their efficiency and productiity&

C& reduce corruption in %usiness and e(iminate scanda(s&D& encourage the priate ownership of %usinesses&

Answer: B

Page: #,


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%&($ Efficiency means

!& producing the desired resu(t&B$ producing goods and serices using the (east amount of resources&C& the amount of output you generate gien the amount of input&D& the %uying and se((ing of goods using the most amount of resources&

Answer: B Page: #,


Bloom's: Knowledge

earning !oal: "#$4


1-9>




%&)$ JJJJJJJJJJJ refers to the amount of output generated with a gien amount of input# e&g&#the num%er of pi33as produced per worker per hour&!& EfficiencyB& Techno(ogyC& Te(ecommuting

D$ Productiity

Answer: %

Page: #,





%&*$ JJJJJJJJJJJ means producing the desired resu(t&-$ Effectieness

B& Techno(ogyC& E-productionD& Productiity

Answer: A

Page: #,


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%&+$ JJJJJJJJJJJ means producing items using the (east amount of resources&-$ EfficiencyB& Techno(ogyC& E-productionD& Productiity

Answer: A Page: #,


Bloom's: Knowledge

earning !oal: "#$4



1-<0




%&,$ The two main types of e-commerce are!& on(ine and off(ine&B& ED+ and EDC&C& who(esa(e and retai(&D$ B)B and B)C&

Answer: %

Page: #,


Bloom's: Knowledge



%'0$ ?hen %usinesses se(( to other %usinesses oer the +nternet# these transactions are knownas!& B)C transactions&

B& e-who(esa(e transactions&C$ B)B transactions&D& intermediate e-commerce transactions&

Answer: C


Bloom's: Knowledge

earning !oal: "#$4



%'1$ Companies that se(( goods to consumers oer the +nternet are engaging in-$ B)C transactions&B& +4. transactions&C& B)B transactions&D& N)" transactions&

Answer: A

Page: #,





1-<1




%'%$ The series of (ines on a product packaging that the cashier scans when you check out at agrocery store or discount store is ca((ed a-$ %ar code&B& 3ip code&C& scan code&

D& (aser code&

Answer: A

Page: #.





%'&$ !n e(ectronic storage fi(e where firms keep customer information is known as an JJJJJJJJJJ&

!& MP fi(eB& management information systemC$ data%aseD& e-mai( serer

Answer: C

Page: #.


Bloom's: Knowledge



%''$ JJJJJJJJJJ is i((ega((y o%taining and i((ega((y using priate information a%out a person#such as using someone,s credit card num%er&!& Petty theftB$ +dentity theftC& Banking theftD& 4n(ine theft

Answer: B Page: #.




1-<)




%'($ 4ne adantage of a data%ase is!& it permits a retai( store to direct(y gather information on the customers who do %usinesswith its competitors# so it can target promotiona( materia(s to those peop(e&B$ it creates efficiency in that the store can uick(y rep(enish items that are purchased&C& it preents identity theft&

D& it preents stores from e'changing customer information with each other&

Answer: B

Page: #.





%')$ ?hich of the fo((owing is an adantage of uti(i3ing techno(ogyL!& Techno(ogy increases the cost of production&

B& Techno(ogy reduces the need for a marketing p(an&C$ Productiity increases&D& Management %ecomes iso(ated from the demands of stakeho(ders&

Techno(ogy is eerything from phones to software programs that make %usinesses moreefficient and productie& Productiity is the amount of output you generate gien the amountof input&

Answer: C

Page: #,





1-<




%'*$ ?hich of the fo((owing %est descri%es the main difference %etween B)B and B)CtransactionsL B)B transactions-$ ino(e transactions where the %uyers and se((ers are %oth %usinesses# whi(e B)Cino(es transactions %etween %usinesses and consumers&

B& focus on financia( transactions whi(e B)C e-commerce focuses on the sa(e ofmanufactured goods&C& refer to %usiness %etween nonprofit organi3ations whi(e B)C e-commerce is carried out %y %usiness firms seeking to earn a profit&D& ino(e sa(es in foreign markets whi(e B)C e-commerce is restricted to domesticmarkets&

*eed6ack: B)B stands for %usiness-to-%usiness and B)C stands for %usiness-to-consumer&

Answer: A

Page: #,





%'+$ +n recent years# %usinesses in genera( hae e'perienced a (asting impact due to theemergence of JJJJJJJJJJJJJ&!& motor-re(ated techno(ogiesB& techno(ogies re(ated to %rain studiesC& counterfeit techno(ogiesD$ information techno(ogies

*eed6ack: Too(s and machines dee(oped throughout history hae changed the techno(ogica(enironment& +nformation techno(ogy %enefits workers in a(( industries and proides %usinesses with the a%i(ity to %e more responsie to customer needs&

Answer: % Page: #8



earning !oal: "#$4

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The Technological (nvironment

1-<2




%',$ !ccording to the .ocia" Media in Business %o'# mega-retai(er ACPenney is aggressie(yaddressing changes in the socia( enironment to reach its customers& ?hich of thefo((owing statements %est e'pands upon strategies that this company recent(y acted uponL!& ACPenney spent promotiona( do((ars on ads during the *uper Bow( and ?or(d Cup totarget the Mi((ennia( generation& +t p(ans to constant(y sponsor g(o%a( eents %roadcast

through traditiona( media&B& ACPenney argued that it is a traditiona( company with traditiona( a(ues# so it refused to %e forward thinking a%out $oining the NouTu%e generation when it comes to promoting itsc(othing (ines& +n order to attract its (oya( market# it agreed to continue to reach them in thesame way as in the past&C& Rea(i3ing that the stores were (ooking outdated# ACPenney strategi3ed to put moremarketing do((ars into reamping the (ook of its stores# and (ess money on adertising& +twas confident that it wou(d reach the 1<-)2-year-o(d market %ecause this group spendsmore time in the store than on(ine&D$ !ddressing the surge in interactie media such as %(ogs and socia( media sites#ACPenney created a promotiona( campaign featuring we((-known fashion %(oggers& +t was

the on(y retai( sponsor for the 4scarsF and it (aunched a sweepstakes on its ;ace%ookQ page&

*eed6ack: ACPenney has em%raced the fact that the Mi((ennia( generation is receiinginformation through new forms of media& The company is interacting with its customersthrough %(ogs# socia( media sites# and other ways that make its promotiona( campaignsinteractie& +t asked we((-known fashion %(oggers to se(ect their faorite c(othes fromACPenney# and then used these sty(es in promotiona( ads&

Answer: % Page: #,



earning !oal: "#$4

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: Social -edia in Business Bo?

1-<5




%(0$ 7tercon is an +nternet-%ased company that proides on(ine support serices for %usinessesthat need he(p in setting up and maintaining their we%sites& 7tercon is an e'amp(e of acompany that is engaged in!& B)C e-commerce&

B& 7)N e-commerce&C& N)" e-commerce&D$ B)B e-commerce&

*eed6ack: *ince 7tercon is proiding serices to other %usinesses oer the +nternet# it isengaging in %usiness-to-%usiness B)B transactions&

Answer: % Page: #,


Bloom's: Alication

earning !oal: "#$4



%(1$ ife of u'ury# +nc&# is a mai( order firm that specia(i3es in e'pensie and unusua( giftsfor a(( occasions& The company keeps a (arge fi(e of information on a(( of its regu(arcustomers# inc(uding names# addresses# type of gifts they hae ordered in the past# and thesi3e and freuency of their orders& The e(ectronic fi(e which stores this information isan!& spreadsheet&B& MP fi(e&C& PERT fi(e&D$ data%ase&

*eed6ack: ! data%ase is an e(ectronic storage fi(e where information is kept&

Answer: %

Page: #.


earning !oal: "#$4



1-<6




%(%$ There is eidence that the recession is coming to an end for +nte((igent Engine Company& 7ew orders are coming in at a steady pace# and management is confident that newcontracts wi(( take them through the ne't coup(e of years& The company has startedinesting again# %ut not in peop(e& Emp(oyees tota( the same as when the company and itscompetitors faced their (owest reenues of the decade& Due to JJJJJJJJJJJJJJJJJJ #

the company is producing more product and serices with (ess peop(e&!& the (ack of ski((ed (a%or B& new competitionC& socia( changesD$ techno(ogica( adancement

*eed6ack: Due to the efficiency of new techno(ogy# %usinesses can produce the same or more#with (ess (a%or& !s we emerged from the recent recession# unemp(oyment remained high %ecause firms inested in techno(ogy that permitted them to produce at pre-recession (ee(swith fewer emp(oyees&

Answer: %

Pages: #8$#. AACSB: Reflective Thinking

Bloom's: Alication

earning !oal: "#$4



%(&$ ?hich of the fo((owing predictions a%out the impact of e-commerce on traditiona( %usinesses is (ike(y to %e most accurateL!& E-commerce wi(( hae (itt(e impact on most traditiona( %usinesses# %ecause on(y a fewtypes of products can %e so(d effectie(y oer the +nternet&

B$ Traditiona( %rick-and-mortar firms wi(( enter the e-commerce market %y creating theirown we% sites&C& E-commerce wi(( proe to %e ery successfu( in competing against traditiona( firms inB)C markets# %ut wi(( hae much (ess success in B)B markets&D& Brick-and-mortar %usinesses wi(( cease to e'ist within twenty years&

*eed6ack: Businesses that de(ight their customers %y proiding ua(ity products at good prices with great serice wi(( succeed& Esta%(ished firms hae uick(y adapted the techno(ogynecessary to compete in the e-commerce market&

Answer: B Page: #.





1-<9




%('$ Tyre(( recent(y noticed that he was receiing seera( cata(ogs and direct mai(adertisements than he had in the past een though he had not reuested any of them&?hich of the fo((owing %est e'p(ains why this is happeningL!& Tyre(( was a ictim of on(ine theft&B$ Tyre(( gae his persona( information to a %usiness# which then traded it to other

companies and these companies then %egan sending him cata(ogs&C& !(( %usinesses routine(y hae a(( customers, persona( information&D& Tyre((,s accountant gae his information to the direct mai( marketers&

*eed6ack: The information Tyre(( gae a %usiness when he purchased something from it wasentered into its data%ase and then traded to another company so that many more retai(ersknow what Tyre(( %uys and from whom he %uys it&

Answer: B


Bloom's: Alication



%(($ :a%rie((a wants to compare the price of a designer %ag she saw in a (oca( departmentstore# with other stores that may hae the same& *he (ocates the product on three differentwe%sites on the +nternet# and then stum%(es on a site that does the price shopping for her&:a%rie((a,s uest is an e'amp(e of how customers are using JJJJJJJJJJ to so(e pro%(ems&!& price shoppingB& data%ases

C$ information techno(ogyD& socia( networking

*eed6ack: The +nternet has (ed to the growth of e-commerce& Customers can interactie(y usethe +nternet to compare items# their ua(ity# and price& +t has dramatica((y changed theshopping e'perience&

Answer: C

Pages: #8$#.





1-<<




%()$ Char(es Ma(one recent(y renewed his card mem%ership at DiscountMania& The card hasan annua( @20 fee# %ut Char(es %e(iees that it pays for itse(f %ecause he receies good prices on e(ectronics# contact (enses# and een tires for his car& *hort(y after renewing thecard# Char(es %egan receiing ca((s from co((ection agencies c(aiming that he owedmoney& ?ith the he(p of others# he (earned that another Char(es Ma(one a(so owned a

DiscountMania card# and wrote checks with insufficient %ank funds when making purchases& DiscountMania had (inked Char(es, persona( information with the other Char(esMa(one,s persona( information& Char(es e'perienced JJJJJJJJJJJJJJJ&!& Buyer myopiaB& Data%ase fraudC& +nformation traffickingD$ +dentity theft

*eed6ack: +dentity theft is o%taining of priate information a%out a person# such as *ocia(*ecurity num%ers and =or credit card num%er# and using that information for i((ega( purposes#such as %uying things with it&

Answer: %

Page: #.


earning !oal: "#$4



%(*$ Mar(a *tap(es is concerned with identity theft& 4ne of the ways that she can protect herinformation from (eaking-out to the wrong hands is!& !oid a(( e-commerce transactions %ecause this is the on(y type of %uying transactionswhere we%sites and others hand(e sensitie# persona( information&B$ +nsta(( antiirus software# firewa((s# and anti-spyware software on her computer&C& imit her purchases with endors that she knows do not store her information in adata%ase&D& imit her trae(s to the .nited *tates %ecause identity theft is an internationa( pro%(em&

*eed6ack: +dentify theft continues to %e a concern as peop(e continue to use the +nternet andother sources to get uick and conenient information& +t is important to protect yourcomputer hardware and software with antiirus software# firewa((s# and anti-spywaresoftware& !s with any new techno(ogy# peop(e eentua((y find ways to corrupt the system& 7ew protections must %e dee(oped to com%at hackers and others who inade your computersystem to try and %enefit i((ega((y %y stea(ing your identity&

Answer: B

Page: #.


earning !oal: "#$4



1-<>




%(+$ 4pportunities and adancements in the technological environment during the past )0years hae opened the doors for a num%er of +nternet and te(ecommunications productsthat enhance the (ies of consumers& ;dentit& theft and other forms of cy%ercrime are a(so %y-products of these techno(ogica( adancements& ?hich of the fo((owing statements

descri%es a form of identity theftL!& Ce(( phone app(ications that permit the consumer to price compare %y scanning the %arcode of a product# such as a DD&B$ acking into a %usinessOs data%ase to o%tain customer credit card num%ers# and thense((ing those num%ers to others for use&C& 7aigation techno(ogy that permits you to find the e'act (ocation of a person# %yentering that personOs ce(( phone num%er into your app(ication&D& The app(ication of cookiesS to a consumerOs computer system that identifies his=her purchasing patterns&

*eed6ack: +t is a crimina( offense to participate in unauthori3ed entry into a companyOs

priate interna( data%ase# where sensitie information# such as credit card num%ers# isstored&

Answer: B Page: #.


Bloom's: Alication

earning !oal: "#$4


%(,$ !ndy B(ake got a ca(( yesterday from P(anet Bank# the company that issued his creditcard inuiring a%out an @<5&00 charge made in Caracas# ene3ue(a& .pon (earning that!ndy had not made this purchase# the Bank uick(y took steps to cance( the card and issuea new one& :ien the circumstances that !ndy,s credit card num%er had an i((ega(transaction# !ndy may a(so want to!& Check his computer,s firewa(( to make sure its working&B& Cance( his account with P(anet Bank# a(together and e(iminate credit cards from his(ife&C$ Check his credit report&D& Diersify his spending ha%its %y using one of seera( credit cards when making purchases&

*eed6ack: Checking your credit report is an important step in preenting identity theft&

Answer: C Page: #.


Bloom's: Alication

earning !oal: "#$4


1->0




%)0$ +n today,s competitie enironment# good a(ue means!& making products with 3ero defects&B& superior ua(ity that trans(ates into dura%(e productsC& offering the (atest trends without seeming (ike you are oer the top&

D$ proiding ua(ity products and serices at competitie prices&

Answer: %


Bloom's: Knowledge

earning !oal: "#$,



%)1$ *uccessfu( %usinesses are keen(y focused on their-$ customers&

B& managers&C& creditors&D& %ureaucrats&

Answer: A Page: #.


Bloom's: Knowledge

earning !oal: "#$,

evel of %ifficult& #: Knowledge of ke& termsToic: The Cometitive (nvironment

%)%$ Empowerment means-$ giing emp(oyees the authority to make decisions&B& making certain that emp(oyees a(ways defer to management when making decisions&C& hiring emp(oyees that do not reuire training due to the cost(y nature of this actiity&D& asking emp(oyees to write the po(icies which goern their $o%s&

Answer: A

Page: #1


earning !oal: "#$,



1->1




%)&$ Empowerment reuires that managers focus more on JJJJJJJJJJ (ower-(ee(emp(oyees&!& direct(y superisingB$ training

C& simp(ifying the $o%s of D& contro((ing and correcting

Answer: B

Page: #1


Bloom's: Knowledge

earning !oal: "#$, evel of %ifficult& #: Knowledge of ke& terms


%)'$ To imp(ement a po(icy of empowerment# the organi3ation wi(( restructure so that

!& managers hae more responsi%i(ity and emp(oyees (earn to fo((ow directions&B$ emp(oyees assume more responsi%i(ity&C& workers agree to work oertime without e'tra pay&D& an entire (ee( of management is remoed from the organi3ation&

*eed6ack: Empowering emp(oyees (eads to dee(oping entire(y new organi3ation structuresto meet the changing needs of customers and emp(oyees& +t may take years to restructure anorgani3ation so that managers are wi((ing to gie up some of their authority and emp(oyeesare wi((ing to assume more responsi%i(ity&

Answer: B Page: #1 AACSB: Reflective Thinking


earning !oal: "#$,



1->)




%)($ ?hich of the fo((owing statements a%out the competitie enironment is most accurateL!& ;irms that produce a ua(ity product wi(( a(most a(ways succeed in the competitiemarketp(ace&B& Traditiona( firms wi(( %e una%(e to successfu((y compete against the new +nternet firms

un(ess they immediate(y create a way to reach customers through this techno(ogy&C& ;irms that empower their emp(oyees wi(( continue to perform poor(y in the competitieenironment&D$ Companies now hae to offer %oth high-ua(ity products and outstanding serice atcompetitie prices&

*eed6ack: Companies now hae to offer %oth high-ua(ity products and outstanding sericeat competitie prices a(ue&

Answer: %

Page: #.


earning !oal: "#$,

evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: The Cometitive (nvironment

%))$ +n order to compete we(( and gain market share# contemporary %usinesses are changing to %e more JJJJJJJJJJJJJJJJJ&-$ customer-drienB& cash-drienC& management-drien

D& production-drien

*eed6ack: Competition among %usinesses has neer %een greater& The nature of thecompetitie enironment has encouraged %usinesses to offer high ua(ity products andoutstanding serice& The goa( is to %e customer-drien&

Answer: A



earning !oal: "#$,



1->




%)*$ Maintaining a competitie adantage is ery important to the success of todayOs %usinesses& !(( of the fo((owing strategies wi(( he(p a firm remain competitie# e'cept-$ +gnoring competitor moements# inc(uding new products and serices offered %y thecompetition&B& Restructuring interna( processes# inc(uding the e(imination of some $o%s&

C& *pending funds on customer serice training for front-(ine emp(oyees&D& !dhering to a ision of emp(oyee empowerment and striing to e'ceed customere'pectations&

*eed6ack: +f firms are to remain competitie# they must co((ect competitie inte((igence&

Answer: A

Pages: #.$#1



earning !oal: "#$, evel of %ifficult& 7: 2nderstanding of concets and rinciles


%)+$ amar is a sa(esperson for Bi-*tate Direct& e rea((y appreciates the amount of freedomand authority Bi-*tate gies its sa(es peop(e in order to %etter meet the needs of customers&amar,s e'perience suggests that Bi-*tate practices!& Centra(i3ed management&B& ;ast response theory&C& Enfranchisement&D$ Empowerment&

*eed6ack: Empowerment means giing front-(ine workers more freedom to respond uick(yto customer reuests&

Answer: %

Page: #1


Bloom's: Alication

earning !oal: "#$, evel of %ifficult& 8: Alication of rinciles


1->2




%),$ :reg is working as a marketing trainee for an on(ine Music CD and ideo retai(er& is %oss ca((ed a meeting for ne't week with one thing on the agenda /Bring with you yourideas a%out how we can gain a competitie adantage&/ :reg p(ans to proide thefo((owing response!& Create a management-drien enironment with (ots of emp(oyee training&

B$ Create a customer-drien enironment where we constant(y try to create customera(ue&C& Restructure the organi3ation so that there is a(ways a manager on duty to chat withon(ine customers who are haing pro%(ems with their orders&D& !(ways match the promotions of our competitors& Price is the on(y thing customerscare a%out&

*eed6ack: Businesses must %e customer-drien& ?hi(e consumers demand high ua(ity# theya(so hae come to e'pect reasona%(e prices and e'ceptiona( serice& +n today,s high(ycompetitie %usiness enironment# proiding a ua(ity product is no (onger enough&Consumers and industria( %uyers now e'pect more&

Answer: B

Page: #.


earning !oal: "#$,



%*0$ +t was <00 a&m& on *aturday morning& i3 $ust (earned that her we((-meaning cousinswere headed oer to he(p her unpack her househo(d& *he had $ust moed %ack to Chicagofrom the west coast& ?ere they rea((y p(anning to work# or were they e'pecting %runchL! %age( and pastry shop was $ust up the road& *he wou(d ca(( in a food order& ?hen she

arried to pick up# it was not what she ordered& The store associate uick(y made it right#and offered an e'tra do3en %age(s to make-up for the mistake& There was no need tocheck with the superisor# as the emp(oyee was JJJJJJJJJJJJJJJ to make decisions thattrans(ate into good customer serice&!& structuredB$ empoweredC& asked %y the customer D& deputi3ed

*eed6ack: Empowerment means permitting emp(oyees to make decisions in the process ofdoing their $o%&

Answer: B

Page: #1


Bloom's: Alication earning !oal: "#$,



1->5




%*1$ ?hich of the fo((owing statements %est descri%es how firms must treat their front-(ineworkers in order to remain competitieL ;ront-(ine workers must %e JJJJJJJJJJJJ&-$ empowered with the authority to respond uick(y to the unmet needs of customersB& c(ose(y superised to reduce the risk of product (ia%i(ity and discrimination (aw suitsC& e(iminated and rep(aced with automated euipment wheneer possi%(e

D& re(ieed of any %urden to make a customer decision

*eed6ack: +n order to meet the needs of customers# firms must gie their front-(ine workersmore freedom to respond uick(y to customer reuests& This is the concept of empowerment#which is an important theme throughout the te't&

Answer: A

Page: #1


Bloom's: Alication

earning !oal: "#$, evel of %ifficult& 8: Alication of rinciles


%*%$ Ma' is in charge of production for a fami(y-owned firm that makes and se((s sports g(oesinc(uding %ase%a(( g(oes# soft%a(( g(oes# go(f g(oes# and more& e has stated that speedof de(iery is the most important factor for success in the competitie enironment& ?hichof the fo((owing wou(d %e the %est response to Ma'L!& Nou are right on target# Ma'& Time is money&B& Nou are the man# Ma'& !s (ong as our price is competitie# speedy de(iery wi(( win intoday,s changing marketp(ace&C$ ?e(( Ma'# speed isn,t eerything& ?hat wou(d e'ceed our customers, e'pectationsL

*ome consumers may put more importance on high ua(ity and=or (ower prices&D& Dude# you cou(dn,t %e more wrong& Kua(ity is the name of the game& e who has the %est product wi(( win in the competitie enironment&

*eed6ack: *uccessfu( organi3ations are customer-drien& This means that customers, wantsand need are the first priority& !(( decisions are focused on the %(end of price# serice# andua(ity that wi(( %est de(ight the customers&

Answer: C

Page: #.


earning !oal: "#$,



1->6




%*&$ The statistica( study of human popu(ation to (earn its si3e# density# and characteristics isca((ed!& psychographics&B& econometrics&

C$ demography&D& geometry&

Answer: C Page: #1


Bloom's: Knowledge

earning !oal: "#$.


%*'$ Businesses co((ect JJJJJJJJ information on where peop(e (ie# what they %uy# and howthey spend their time&!& geometricB& econometricC$ demographicD& anthropo(ogic

Answer: C

Page: #1


Bloom's: Knowledge



%*($ Diersity is more than recruiting and keeping minorities and women& Diersity meansappreciating and understanding other differences in our customers and in our workforce&The statement that %est descri%es this difference is-$ disa%i(ities# se'ua( orientation# re(igious preferences# and een persona(ity differencessuch as e'troerts and introerts&B& gender ro(es&C& surface (ee( things such as green eyes ersus %rown eyes&D& racia( differences and gender differences&

Answer: A

Page: #1


Bloom's: Knowledge



1->9




%*)$ Efforts are underway to sere the needs of a dierse popu(ation& Diersity means!& se((ing products to immigrants&B$ dea(ing sensitie(y with workers and cu(tures around the wor(d&C& proiding goernment programs such as free hea(th care for i((ega( and (ega(

immigrants&D& meeting emp(oyment uotas so that dierse groups are a(ways represented in yourworkforce&

Answer: B

Page: #1


Bloom's: Knowledge



%**$ Due to popu(ation shifts#-$ %usinesses that cater to o(der consumers wi(( see e'ceptiona( growth&B& %usinesses that cater to o(der consumers wi(( see s(ower growth&C& %usinesses that se(( e(ectronic deices wi(( see a significant dec(ine&D& hea(thcare wi(( emerge as the on(y %usiness sector that wi(( grow&

Answer: A

Page: #1


Bloom's: Knowledge



%*+$ ?hich of the fo((owing industries wi(( %enefit from an aging popu(ationL!& ;inancia( serices to he(p c(ients p(an for their educationB$ ome hea(th care %usinessesC& Chi(dren,s day-care centersD& !uto industry

Answer: B


Bloom's: Knowledge

earning !oal: "#$.


1-><




%*,$ The socia( security system#!& continues to %urden %usinesses due to the fact that %usinesses must proide and pay forthis %enefit for their emp(oyees&B$ met the needs of our nation when it was conceied# %ut needs an oerhau(&

C& wi(( continue to sere the needs of .&*& citi3ens into the distant future# due to the factthat there are so few retirees p(acing a strain on it&D& is fai(ing %ecause the .&*& goernment fai(ed to inest the money that emp(oyeescontri%uted&

Answer: B


Bloom's: Knowledge

earning !oal: "#$.


%+0$ Peop(e %etween the ages of 65 and 92 represent!& the unemp(oyed generationB& the sing(e-parent fami(y generationC$ a (ucratie marketD& a group that has neer contri%uted to socia( security

Answer: C

Page: #1


Bloom's: Knowledge earning !oal: "#$.


%+1$ Businesses are supporting sing(e-parent fami(ies with!& socia( security %enefits&B& a more (enient we(fare system&C$ more f(e'i%(e work %enefits such as f(e' time and fami(y (eae&D& (imited %enefits due to the dec(ining num%ers of these fami(ies& ;ie-mem%er fami(iesare steadi(y growing&

Answer: C Page: #9


Bloom's: Knowledge

earning !oal: "#$.


1->>




%+%$ ?hich of the statements a%out demography is most accurateL Demographic studies!& focus on factors that hae great po(itica( re(eance# %ut (itt(e re(eance to %usinessfirms&B& suggest that the num%er of sing(e-parent fami(ies wi(( dec(ine in the future&

C$ proide %usinesses and indiidua(s with insights into %usiness and career opportunitiesfor the future&D& are an important source of information a%out changes in hea(th patterns&

*eed6ack: Demography is the statistica( study of the human popu(ation to (earn its si3e#density# and characteristics& Demographics can proide important insights into which marketsare growing and which are dec(ining&

Answer: C

Page: #1



earning !oal: "#$. evel of %ifficult& 7: 2nderstanding of concets and rinciles


%+&$ ?hich of the fo((owing %usiness po(icies wou(d most (ike(y he(p a sing(e-parent fami(yL!& Reuiring the emp(oyee to work regu(ar(y schedu(ed hours each day&B& !((owing sick (eae to %e used on(y if the emp(oyee is i((&C& Reuiring education outside of regu(ar %usiness hours to he(p the emp(oyee adance&D$ !((owing fami(y (eae and f(e'time&

*eed6ack: *ing(e parents hae encouraged %usinesses to imp(ement programs such as fami(y

(eae where workers can take time off to attend to a sick chi(d and f(e'time where workerscan come in or (eae at se(ected times&

Answer: %

Page: #9


earning !oal: "#$.



1-100




%+'$ The immigrant popu(ation %oth (ega( and i((ega( is haing a dramatic effect on!& car and truck makersB& mining and minera(s industryC$ schoo(s# hospita(s and other serices type industries

D& ice cream and confection industry

*eed6ack: The serice industry is great(y impacted %y immigration& !s the immigrant popu(ation increases# more socia( serices are needed# particu(ar(y hea(th serices andeducation serices& The goernment costs hae increased due to the need for accommodationsin seera( different (anguages&

Answer: C

Page: #1



earning !oal: "#$.


%+($ Retired peop(e wi(( %e draining the .&*& economy of wea(th& This is due to!& The fact that most hae smoked a(( their (ies and now are unwi((ing to pay forhea(thcare in order to stay a(ie&B$ The fact there are not enough workers in su%seuent generations to support the ongoingdrain of o(der persons into the socia( security system&C& Their (ack of interest in supporting restaurants# resorts# educationa( institutions# andserice-intensie companies&D& The fact that they refuse to use current information techno(ogy to improe efficiency&

*eed6ack: ! particu(ar situation that wi(( %e negatie(y impacting the socia( enironment isthe num%er of aging !mericans and the drain on the socia( security system& Today,s workers pay for today,s retirees& ?hen the system was enacted in 1>20# there were 2) workers for eachretiree& Today the ratio has %ecome much sma((er& ?ith %a%y-%oomers retiring# the ratio ismore (ike two workers for eery one retiree& *oon it is predicted that (ess money wi(( %e goinginto the socia( security system than money coming out&

Answer: B

Page: #9


Bloom's: Comrehension earning !oal: "#$. evel of %ifficult& 7: 2nderstanding of concets and rinciles


1-101




%+)$ +f you were to discuss and ana(y3e the social changes affecting the future of %usiness#which of the fo((owing statements shou(d %e part of that conersationL!& +t is %ecoming more difficu(t to proide e'pert pre-nata( care for women# resu(ting in anegatie impact on the future of (ie %irths&B$ The increase in o(der citi3ens may impact an emp(oyeeOs take-home pay if programs

such as *ocia( *ecurity wi(( need to %e funded at a higher (ee(& *ki((ed emp(oyees mayreuire higher wages to make up the shortfa((&C& ?ith (ess money to spend# o(der !mericans %etween the ages of 65 and 92 wi(( no(onger reuire transportation# entertainment# education# and (odging& This is high(y (ike(yto negatie(y impact these industries&D& Business ta'es are ery (ike(y to spike rise uick(y due to the fact that we(fare (awsare making it re(atie(y easy for sing(e parents to stay home with their chi(dren# ratherthan find $o%s& Ta'es wi(( hae to support parents choosing the stay-at-home (ifesty(e&

*eed6ack: The increasing rate and num%er of retiring workers hae impacted the .&*& *ocia(*ecurity system put in p(ace %y President ;rank(in D& Roosee(t in the 1>20s& +t is current(y a

hot topic affecting the socia( enironment of %usinesses how much of their earnings currentemp(oyees wi(( need to contri%ute or whether current emp(oyees shou(d hae to contri%ute tothis system& Many young emp(oyees specu(ate that the *ocia( *ecurity fund wi(( run out ofmoney %y the time they are ready to retire&

Answer: B



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1-10)




%+*$ Ai(( is (ooking into the possi%i(ity of opening up a day care center in her community# %ecause she is aware of many sing(e-parent fami(ies that need a p(ace for their chi(dren tostay whi(e the parents work& *he is concerned a%out the (ong-term prospects for such a %usiness& Ai(( %e(iees the future of her center wi(( depend on whether %irth rates and the

num%er of sing(e-parent fami(ies remain high& These concerns i((ustrate how %usinessescan %e affected %y!& econometric trends&B$ demographic trends&C& ho(ographic trends&D& psychometric trends&

*eed6ack: Demography is the statistica( study of the human popu(ation to (earn its si3e#density and characteristics& Birth rates and the num%er of sing(e-parent fami(ies are %othdemographic factors&

Answer: B

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%++$ *t& C(aire ospita( is considering a program that wou(d a((ow some of its workers to usef(e'time& 4ne group of workers who wou(d pro%a%(y %enefit from f(e'time is!& ?orkers who do not hae access to computers at home&B& ?orkers who hae (itt(e se(f-motiation to work eight-hour days&

C& ;ront-(ine workers who freuent(y go out to meet with home furnishing designers&D$ *ing(e-parent fami(ies&

*eed6ack: ;(e'time is the practice of coming in or (eaing work at se(ected times& This a((owsworkers with young chi(dren the f(e'i%i(ity they often need&

Answer: %

Page: #9


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1-10




%+,$ Preferred Pet Care# +nc&# a mo%i(e eterinary care company is p(anning for the future& !s a %usiness student who has studied socia( trends# which of the fo((owing statements ref(ectsthe need for Preferred Pet Care,s serice in the futureL!& Mo%i(e pet care wi(( not %e needed %ecause the ma$ority of peop(e are working which

means that no%ody is home&B& Peop(e wi(( a(ways prefer to take their pets to the eterinary c(inic&C$ The aging popu(ation wi(( %e a si3ea%(e market for this firm&D& Peop(e who wou(d reuire this serice wou(d %e higher income indiidua(s& Retired peop(e wou(d not %e a market for this firm %ecause they do not hae money to care for pets&

*eed6ack: Peop(e are (iing (onger and (iing (onger in their homes& There are many %usinessopportunities to sere the aging popu(ation& !s pets hae %ecome important fami(y mem%ers#the aging popu(ation is (ike(y to %e a si3ea%(e market for pet care and in-home pet care&

Answer: C Pages: #1$#9


Bloom's: Alication



%,0$ The g(o%a( enironment#!& is a new frontier&B$ is far reaching and affects a(( the other %usiness enironments&C& is shrinking&D& has not affected the .nited *tates due to its strong gross domestic product&

Answer: B

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Bloom's: Knowledge



%,1$ The threat of terrorism more often JJJJJJJJJJ the cost of operating a %usiness&-$ increasesB& decreases

C& sta%i(i3eD& desta%i(i3es

Answer: A


Bloom's: Knowledge

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%,%$ The war on terrorism wi((!& improe the confidence (ee( of most consumers&B& hurt the profita%i(ity of eery %usiness operating in the .&*&C$ he(p some %usinesses and hurt others&D& sta%i(i3e the %usiness sector&

Answer: C

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Bloom's: Knowledge



%,&$ !n increase in g(o%a( trade wi((!& increase prices&B& decrease $o%s&

C& increase po(itica( insta%i(ity&D$ increase g(o%a( competition&

Answer: %

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%,'$ :(o%a(i3ation-$ has great(y improed (iing standards around the wor(d&B& has significant(y reduced (iing standards around the wor(d&C& has opened doors to on(y a handfu( of markets&D& has great(y changed companies that hire peop(e to se(( products# %ut not for companiesthat hire peop(e to proide serices&

Answer: A

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1-105




%,($ :reening refers to!& the need for more car%on dio'ide in our air&B& firms acuiring more green %acks .&*& do((ars from wor(d trade&C$ finding ways to (essen the harm on our enironment&D& the agricu(tura( industry,s push to dee(op and produce new green egeta%(es to feed

the wor(d&

Answer: C Page: #


Bloom's: Knowledge



%,)$ Efficiency in distri%ution systems around the wor(d has (ed to-$ increased wor(d trade&B& decreased wor(d trade&

C& decreased internationa( competition&D& reduced standards of (iing around the wor(d&

*eed6ack: Two things that hae (ed to more trade are improements in transportation andcommunication inc(uding more efficient distri%ution systems&

Answer: A

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%,*$ !ir(ine companies around the wor(d are e'periencing increased costs in part due to JJJJJJJJJJJ&!& decreases in the cost of fue(B& decreasing wor(d tradeC$ the threat of terrorismD& (ack of interest in f(ying

*eed6ack: The threat of terrorism has (ed to increased costs for air(ines& They hae had toinsta(( stronger cockpit doors# %uy more security euipment# and hire new security personne(&

Answer: C

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1-106




%,+$ The war on terrorism in many parts of the wor(d shou(d (ead to JJJJJJ&!& an decrease in warring nationsB& consumers spending more %ecause they fee( more patrioticC& an increase in prosperity and peace throughout the wor(dD$ consumer and economic hardship due to increased mi(itary spending

*eed6ack: The war on terrorism wi(( cause hardships for consumers and the economy due tothe moement of goernment funds from socia( programs and issues to mi(itary spending&

Answer: %

Page: #


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%,,$ ?or(d trade has %oth %enefits and costs& ?hich of the fo((owing statements attests to thisfactL!& The .&*& economy and a(( %usinesses that participate in this economy were negatie(yimpacted %y the wars in +ra and !fghanistan&B& The standard of (iing for citi3ens in dee(oping nations has significant(y decreaseddue to g(o%a(i3ation&C& Economists are coninced that g(o%a( $o% creation wi(( neer occur if our po(iticianssupport wor(d trade&D$ arge companies and sma(( companies agree that the green moement is a g(o%a( issue&;irms are em%racing opportunities to %ring a(ue to consumers %y creating green productsand serices&

*eed6ack: The green moement has proided many opportunities for new %usiness offerings&The other statements are fa(se&

Answer: %

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1-109




&00$ The green moement is!& a trend that started with the .&*& goernment&B$ concerned with dep(etion of natura( resources and (eaing a (arge car%on footprint&C& dee(oping more green food products to feed the wor(d,s poor&D& our concern with the fact that eerywhere we (ook# things are remaining green for

(onger periods of time&

*eed6ack: The greening trend is a%out saing energy and natura( resources and concern withwhat we (eae %ehind&

Answer: B

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&01$ Mark recent(y graduated with honors from his co((ege& e has %ragged to his friends thathis academic performance has prepared him so we(( for a successfu( career that he canforget schoo( or training in his future& +n ea(uating the future of the workp(ace# Mark is!& e'act(y right& is past performance shou(d carry him to success&B& comp(ete(y wrong& *tudies show that a co((ege education has (itt(e to do with success&C$ oer confident& :(o%a( competition means that continuous (earning wi(( %e needed inthe future to adapt to rapid changes&D& pro%a%(y right& *pecia(i3ed training today is a key to continued success in the future&

*eed6ack: The high(y competitie nature of the g(o%a( economy and rapid changes in

techno(ogy mean that students must keep their ski((s and know(edge up to date een after theygraduate&

Answer: C

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Bloom's: Alication



1-10<




&0%$ The threat of terrorism#!& %enefits most %usinesses %ecause $ust a%out a(( companies contri%ute toward aertingthese threats&B& wi(( certain(y affect companies that participate in g(o%a( trade# %ut most (arge .&*&companies do their %usiness domestica((y&

C& has increased the ua(ity of (ife of most peop(e %ecause companies emp(oy moreworkers when the threat is high# and workers he(p companies increase profits&D$ is cost(y to most firms %ecause it is cost(y to goernments who increase ta'es to pay for added protection&

*eed6ack: The threat of terrorism adds great(y to %usiness costs# inc(uding the cost of security personne(# security euipment# and insurance& The goernment has a(so e'perienced hugecosts increases %ecause of home(and security issues& ?hi(e many %usinesses wi(( strugg(e inthis new enironment# others stand to gainparticu(ar(y those in the defense industry&

Answer: %





&0&$ aura and Tim Mc7ash recent(y moed to 7orth Caro(ina on a three-acre home site& They purposefu((y purchased their home within %iking distance to the uniersity where they are %oth emp(oyed# and their %ikes each hae room for two c(oth %ags for groceries if theyneed to purchase food on the way home# a(though they p(an to grow much of their own&aura and Tim are e'amp(es of a growing num%er of young peop(e who

!& hae dee(oped a hea(th conscious attitude&B$ want to change their (ifesty(e to %e more in tune to saing energy&C& dis(ike ur%an centers and wish to (ie in the country&D& stay away from ur%an areas due to increased threats of terrorist attacks in those(oca(ities&

*eed6ack: !n important socia( trend affecting the socia( enironment of a(( %usiness issustaina%i(ity# or going green& !s the student wi(( recogni3e through the te't%ook# the greenmoement is changing the way we run our %usinesses# and the way our customers want us torun our %usinesses& *ustaina%i(ity has g(o%a( imp(ications&

Answer: B

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&0'$ ?hich of the fo((owing statements descri%es a recurring theme a%out today,s eco(ogica(enironmentL!& Most peop(e agree that there is strong eidence that the temperature of the p(anet isgoing down&B& *mart %usinesses know that green %usiness is current(y a trend and they shou(d proceed

with caution %ecause most green initiaties are more cost(y than wars and terrorism&C$ There is a strong push %y customers that %usinesses dee(op products and serices thatc(ear(y sae energy&D& C(ear(y# the greening issue is an !merican trend that has not captured the attention ofthe internationa( %usiness community&

*eed6ack: Eco(ogica((y# customers want %usinesses to se(( products and serices that do not(eae a car%on footprint& The greening moement is a we((-respected moement with g(o%a(imp(ications&

Answer: C





&0($ Ty(er *amue(s recent(y returned from the war in +ra where he was a mem%er of thehigh(y ski((ed specia( operations forces& e is now in the .nited *tates where he co((ectsthe :&+& Bi(( in order to go to schoo(& This is one e'amp(e of!& ow an eent such as a war educates young peop(e a%out conditions a%road&B$ The cost of war&

C& The %enefits of war on education&D& ! suee3e on emp(oyer %enefits&

*eed6ack: ?ars are ery cost(y& The goernment dierts funds from other serices to pay forwars& +n order to proide incenties for young men and women to sere in the mi(itary# thegoernment a(so pays for %enefits for those that return&

Answer: B

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1-110




&0)$ During the past 150 years# the .&*& has eo(ed from!& !n agrarian economy to an information techno(ogy economy&B& ! %usiness to %usiness economy to a %usiness to consumer economy&C$ !n agrarian economy to a manufacturing economy to a serice oriented economy&D& ! manufacturing economy to a serice economy# to a cottage economy# and now we are

trending %ack to an agrarian economy&

Answer: C

Page: 7"





&0*$ Businesses that produce and se(( tangi%(e products such as stee( and machines are part ofthe

-$ manufacturing industry&B& know(edge-%ased industry&C& serice industry&D& production sector&

Answer: A

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Bloom's: Knowledge



&0+$ The serice industry represents JJJJJJJJ of the a(ue of the .&*& economy&!& a%out 0B& under 50C$ a%out 90D& a%out 50

Answer: C

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&0,$ ea(th care# insurance# recreation and other intangi%(e products are proided %y the!& g(o%a( sector&B$ serice industry&C& industria( sector&D& manufacturing industry&

Answer: B

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Bloom's: Knowledge



&10$ *ince the %eginning of the 1>00s# the agricu(tura( sector of the .nited *tates has!& *een the num%er of fami(y farms more than dou%(e&B& Become (ess and (ess competitie in the g(o%a( economy&

C& Produced a consistent output per farm&D$ E'perienced a significant drop in emp(oyment# main(y %ecause of tremendousimproements in efficiency&

Answer: %

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Bloom's: Knowledge

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&11$ +n recent years# a(most a(( new $o% creation in the .nited *tates has occurred in the JJJJJJJJJJ sector-$ sericeB& manufacturingC& agricu(tura(D& te(ecommunications

Answer: A

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1-11)




&1%$ The new era of %usiness is (ike(y to %e dominated %y the!& serice sector&B$ information-%ased sector&C& manufacturing sector&D& continued dec(ine in productiity&

Answer: B Page: 7#


Bloom's: Knowledge

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evel of %ifficult& #: Knowledge of ke& termsToic: =our *uture in Business

&1&$ !pp(iance repair firms# ta' consu(tants# (aw firms# and insurance companies are a(( %usiness firms that are part of the

!& production sector&B& management sector&C& neo-industria( sector&D$ serice sector&

!(( of these companies proide an intangi%(e product& Thus# they are inc(uded in the sericesector&

Answer: %

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1-11




&1'$ +n recent years# manufacturing firms in the .nited *tates hae (aid off workers& The %este'p(anation of this trend is that!& firms hae %een trying to weaken unions %y reducing their re(iance on (a%or&B& workers in the .&*& hae %ecome (ess productie and are no (onger a%(e to compete in

the g(o%a( economy&C$ firms in many industries hae %ecome so efficient that they need fewer workers&D& the economy has %een in a pro(onged depression that has (asted more than a decade&

*eed6ack: ?hi(e (ayoffs in manufacturing seem to imp(y that !merican firms are %ecoming(ess competitie# the opposite is actua((y the case& The (ayoffs are the resu(t of tremendousimproements in productiity in recent years# which hae ena%(ed .&*& manufacturing firmsto produce more goods with fewer workers&

Answer: C

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evel of %ifficult& 7: 2nderstanding of concets and rincilesToic: Progress in the Agricultural and -anufacturing ;ndustries

&1($ ?hich of the fo((owing %est descri%es recent $o% growth in the serice sectorL-$ The serice sector has generated a(most a(( new $o%s in the !merican economy sincethe mid 1><0s# %ut the rate of $o% growth in serices has s(owed in recent years&B& Ao%s in the serice sector hae increased s(ow(y oer the past decade# %ut most new $o%s are created in the manufacturing industries&C& Emp(oyment in the serice sector has dec(ined in recent years# and this dec(ine is

e'pected to continue&D& There has %een (itt(e change in the num%er of $o%s in the serice sector in recent years#howeer emp(oyment is e'pected to increase rapid(y&

*eed6ack: The serice sector has grown rapid(y oer the past two decades& oweer# thegrowth rate has s(owed in recent years&

Answer: A Page: 7#



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&1)$ ?hich of the fo((owing organi3ations is an e'amp(e of the goods-producing sector of theeconomyL-$ ;ord Motor CompanyB& ;(orida *tate .niersity

C& Chi(dren,s ospita(D& U R B(ock Ta' Consu(ting

*eed6ack: ;irms in the goods-producing sector produce tangi%(e products& 4f theorgani3ations (isted in this uestion# on(y ;ord Motor Company produces a tangi%(e product&

Answer: A Pages: 7"$7#


Bloom's: Alication

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evel of %ifficult& 8: Alication of rincilesToic: Progress in Service ;ndustries

&1*$ Certain industries of the .&*& economy such as farming and heay euipmentmanufacturing hae e'perienced a significant dec(ine in emp(oyment& ?hich of thefo((owing %est e'p(ains this $o% (ossL!& The cause is a dec(ine in the productiity of (a%or in these industries&B$ ?orkers (ost these $o%s %ecause techno(ogica( adances increased productiity&C& The .&*& economy cannot compete in these industries any (onger&D& :oernment regu(ations hae e(iminated profit opportunities in these industries&

*eed6ack: istory shows that techno(ogy has a((owed %usiness organi3ations to %e more productie and therefore reuire (ess (a%or& This scenario first was o%sered in agricu(ture as productiity increases resu(ted in fewer farm $o%s& Techno(ogica( improements inmanufacturing hae a(so resu(ted in increased productiity and fewer $o%s&

Answer: B Pages: 7"$7#


Bloom's: Alication

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evel of %ifficult& 8: Alication of rincilesToic: Progress in the Agricultural and -anufacturing ;ndustries

1-115




&1+$ Aenna eigh is an information say# )0-something person who is trying to se(ect %etweentwo marketing $o% offers& *he can either $oin a company that makes sma(( hammers andscrewdriers for the do-it-yourse(f hardware store %usiness# or she can $oin a companydee(oping the fourth generation ce(( phone serice& *he is uite impressed that the

hardware %usiness is growing uite nice(y in China# Me'ico# and +ndia where peop(e arestarting to e'pand their (iing spaces& *he is a(so aware of!& Dec(ines in the te(ecommunications %usiness now that new ce(( phone sericecompanies are springing-up eerywhere&B& ! dec(ine in the domestic hardware market due to o(der !mericans (osing interest inkeeping up their (iing uarters&C$ !n information-%ased g(o%a( reo(ution that might make her career at ate(ecommunications company more (ucratie in the (ong run&D& !n increase in the price of the actua( ce(( phones must indicate that there is sti(( a greatdemand for phones&

*eed6ack: ;uturistic %usiness professiona(s %e(iee we are in the midst of an information- %ased g(o%a( reo(ution that wi(( a(ter a(( sectors of the economy agricu(tura(# industria(# andserice&

Answer: C


Bloom's: Alication

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1-116




&1,$ The ;&B&+& has a D7! data%ase with oer 6&9 mi((ion samp(es& +t is e'pected to increase %yanother 1&) mi((ions samp(es %y the year )01)& +n the past# co((ection was (imited toconicted persons# %ut now they wi(( %egin co((ecting samp(es from persons detained andarrested prior to coniction& This inc(udes immigrants& The ;&B&+& %e(iees that e'pandingtheir co((ection to inc(ude persons presumed innocent wi(( he(p in the so(ing of io(ent

crimes& This new strategy is!& not considered an inasion of priacy %ecause the goernment a(ready has most of ourinformation&B& pointing toward the ;&B&+& %ecoming a priate security company and operating for a profit&C& suspect %ecause D7! is not yet proen to %e a definitie way of catching crimina(s#and it (eads us to %ecoming a genetic surei((ance society&D$ an e'amp(e of an outcome of the information-%ased reo(ution discussed in %usinessc(asses&

*eed6ack: This is an e'amp(e of how the information-%ased reo(ution has changed the

techno(ogica( enironment in a(most eery industry# inc(uding (aw enforcement& Data%asescan now store ast amounts of information a%out peop(e& Aust a%out eery industry has %enefitted %y the a%i(ity to co((ect and store information faster than eer&

Answer: % Page: 7#


Bloom's: Alication

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evel of %ifficult& 8: Alication of rincilesToic: =our *uture in Business

1-119




Essay #uestions

&%0$ Descri%e seera( ways that goernments can foster entrepreneurship and encourage thecreation of wea(th&

Answer: 4ne of the %est things goernment can do is he(p decrease the risk of starting %usinesses& This strategy wi(( increase entrepreneurship and su%seuent(y increase wea(th&The goernment can do this %y keeping ta'es and regu(ations to a minimum& igh ta'es and %urdensome regu(ations increase the cost of doing %usiness and undermine incenties to workhard and take risks& aws that encourage entrepreneurship hae %een enacted a(( across the.&*& and the wor(d& Entrepreneurs tend to faor those states and (oca( areas where ta'es are(owest and regu(ations are (east restrictie&!nother way for goernment to actie(y promote entrepreneurship is to a((ow priateownership of %usinesses& This wi(( create profit opportunities for indiidua(s wi((ing to takethe risk of starting their own %usiness& *uccessfu( new %usinesses he(p to create more $o%s and

income in their communities&The goernment can pass (aws that ena%(e %usinesses to write enforcea%(e contracts# thusreducing the risk of operating a %usiness&The goernment can esta%(ish a currency that is trada%(e in wor(d markets# making it possi%(efor firms to compete in wor(d markets&:oernment can pass and enforce (aws that reduce corruption among goernment officia(sand %usinesses& Corrupt practices such as the need to %ri%e goernment officia(s to getcontracts approed not on(y make it more e'pensie to do %usiness# they a(so tend toundermine competition %y giing the corrupt firms an unfair adantage&



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1-11<




&%1$ Descri%e how %usinesses can use techno(ogy to %e more responsie to customers&

Answer: Businesses continua((y search for new techno(ogies that wi(( a((ow them to %e moreresponsie to customer needs& Things such as scanners at checkout counters# inentory

scanners# %ar-code techno(ogy# and data%ases are proing to %e a(ua%(e too(s for most %usinesses& Particu(ar(y# data%ases store customer information& They he(p %usinesses p(an andrep(enish inentory more e'pedient(y# %ecause management can determine e'act(y what was purchased and how often# and %y whom&The +nternet has offered %usinesses a new way to reach customers# and a way to proideinformation to customers that he(p with %uying decisions& Both B)B and B)C %uyers andse((ers conerse ia the +nternet& The B)B market continues to e'pand as uick(y as the B)Cmarket&Businesses are a(so responsie to customer priacy& Due to the increase in identity theft#companies sometimes promise to not share or se(( customer information to other %usinesses or entities&

Pages: #8$#.


Bloom's: Alication



&%%$ Competition among %usinesses has neer %een greater& +dentify and descri%e seera( waysthat %usinesses can %ecome more competitie&

Answer: Businesses can compete %y e'ceeding customer e'pectations and empowering

emp(oyees&Businesses are %ecoming more customer-drien& They are putting the wants and needs ofcustomers first# and ad$usting their products# po(icies and practices to make sure thatcustomers are satisfied& "eeping the customer happy means producing a good ua(ity product# proiding great serice# and keeping prices (ow&Businesses a(so compete %y responding to the needs of their emp(oyees& +n order to %e moref(e'i%(e and more responsie# many %usinesses hae empowered their (ower (ee( emp(oyees#a((owing them to make decisions and respond to the needs of customers without consu(tingmanagement& +n order for empowerment to work# managers must do a %etter $o% training#supporting# and motiating front(ine workers& Managers wi(( hae to gie up some of theirauthority and find ways to encourage workers to accept more responsi%i(ity&

Pages: #.$#1


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1-11>




&%&$ ?hat is demographyL +dentify seera( demographic trends in the .nited *tates anddiscuss how they wi(( impact .&*& %usinesses&

Answer: Demography is the statistica( study of popu(ations to (earn a%out their si3e# density

and characteristics& The .nited *tates is e'periencing seera( demographic trends that wi((hae important impacts on how and where we (ie# what we %uy and how we spend our timeRespecting Diversity& Diersity has come to mean much more than recruiting and keepingminorities and women& Many more groups are now inc(uded in diersity efforts& ;or e'amp(e#;ederated Department *tores has identified diersity groups to inc(ude seniors# the disa%(ed#homose'ua(s# atheists# e'troerts# introerts# married peop(e# sing(es# and the deout&Companies hae responded to this dierse customer %ase %y hiring a more dierse workforceto sere them& Businesses wi(( need to %e sensitie to these cu(tura( changes and find ways tooptimi3e the contri%utions of peop(e from different ethnic and cu(tura( %ackgrounds& +fhand(ed correct(y# this diersity can %e a source of strength for !merican %usinesses&! second trend is the (arge increase in the num%er of o(der !mericans that wi(( occur oer the

ne't few decades& This is the resu(t of the aging %a%y-%oom generation& !s !merica ages# themarkets for products that appea( to midd(e-aged and e(der(y consumers wi(( grow& Thus# thereshou(d %e a %oom in the demand for medicine# retirement homes# home hea(th care# and aariety of recreationa( goods&-ging Popu"ation& Retired peop(e wi(( %e draining the economy of wea(th& Paying *ocia(*ecurity to senior citi3ens in the future wi(( draw huge amounts of money from the economy&+n the past# the goernment estimated that there were 2) workers for each retiree& 7ow thereare (ess than workers for each retiree& The num%er continues to dec(ine& Peop(e are (iing(onger and the %a%y-%oom generation the (argest popu(ation of peop(e are retiring&To he(p so(e this pro%(em one option may %e to a((ow young peop(e to inest part of their*ocia( *ecurity money& This wou(d certain(y hae imp(ications for the financia( serices and

%anking industries&.ing"e/Parent !ami"ies& 4ne fina( trend has %een the rapid growth in the num%er of sing(e- parent househo(ds& *ing(e parents hae encouraged %usinesses to offer programs such asf(e'i%(e work schedu(es and fami(y (eae that wi(( a((ow the parent to remain home with sickchi(dren&

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Bloom's: S&nthesis



1-1)0




&%'$ Descri%e what we mean %y greening and thinking green& ist seera( ways that peop(e and %usinesses are participating in the green moement& ist %usiness opportunities that mayemerge from this moement&

Answer: :reening refers to a moement to sae energy and natura( resources# to produce products and serices that cause (ess harm to the enironment&

?ays that peop(e can contri%ute toward sustaining what we hae inc(ude

→ heating or coo(ing their dwe((ings (ess

→ using reusa%(e %ags when shopping

→ using (ight %u(%s and other home app(iances that take (ess energy

→ recyc(ing g(ass# p(astics# papers# a(uminum# iron# stee(# and other recyc(a%(e products&

→ Buying products such as autos and trucks that are fue( efficient or hy%rids&

→ ?a(king and %icyc(ing when possi%(e

→ .sing other sources of energy other than fossi( fue(s to heat and coo( %ui(dings→ ;(ushing-out and recyc(ing water

→ Purchasing (oca((y grown produce and other foods to aoid added shipping&

:reen %usiness opportunities inc(ude %usinesses that hau( away ha3ardous wasteF greenrestaurants that on(y use green materia(s and sere (oca((y grown foodsF green constructioncompanies that se(( and insta(( energy saing products# inc(uding so(ar pane(s and green %ui(ding materia(s that meet EED certification eadership in Energy and Enironmenta(DesignF and# organic farms&

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AACSB: Reflective Thinking Bloom's: Alication earning !oal: "#$1


Toic: The !lo6al (nvironment+ Thinking !reen 6o?

1-1)1




&%($ Trace the eo(ution of !merican %usiness& +dentify the key trends# and discuss theimp(ications these trends hae for the future&

Answer: ;or most of our nation,s history# the agricu(tura( sector (ed the way& !t the %eginning

of the 1>00s there were a%out 5&9 mi((ion farms& oweer# at the %eginning of the )1 st centurythe num%er of farms had dropped to (ess than ) mi((ion# and the num%er of farm workers haddropped to a sma(( fraction of the num%er a century ear(ier& This (oss of farm workers was nota sign that farming was a dec(ining industry& Rather# it ref(ected tremendous improements inefficiency and productiity& Today !merican agricu(tura( workers are so productie that morefood can %e produced with a sma(( fraction of the workers emp(oyed a century ear(ier&Many of the workers disp(aced %y the rising productiity in agricu(ture found emp(oyment inthe manufacturing sector# which e'panded rapid(y during the ear(y 1>00s& oweer#techno(ogica( %reakthroughs in manufacturing (ed to higher productiity& Eentua((ymanufacturing firms were a%(e to produce more output with fewer workers# and emp(oymentin manufacturing %egan to fa((# $ust as in farming& !gain# this was a sign of strength rather

than dec(ine&Many workers who (ost $o%s in manufacturing found emp(oyment in the serice sector& *incethe mid-1><0s this sector has generated a(most a(( of the new $o% growth in the !mericaneconomy& This is a ery %road sector# and many %ut certain(y not a(( $o%s pay uite we((& +nfact# there are more high paying $o%s in serice industries than in manufacturing&!(though the serice sector is (ike(y to continue to grow# the rate of growth is (ike(y to s(ow&The .&*& economy now seems to %e (eaing the serice era and moing into an era that can %echaracteri3ed as an information-%ased g(o%a( reo(ution that wi(( a(ter a(( sectors of theeconomy agricu(tura(# industria(# and serice&These trends suggest seera( (essons to keep in mind& ;irst# dec(ines in emp(oyment are oftena sign of increased efficiency and improed productiity rather than dec(ining

competitieness& *econd# dec(ines in emp(oyment in one sector do not necessari(y mean theeconomy as a who(e wi(( suffer from higher unemp(oyment or a (oss of wea(th& istorica((y#as emp(oyment in one sector dec(ines# workers are a%(e to moe into other sectors whereemp(oyment is growing& This transition can %e painfu(# %ut it may %enefit society as a who(eand create more wea(th in the (ong run& ;ina((y# the eo(ution of the !merican %usiness sectoris not oer& ?orkers today must %e aware of the possi%i(ity of changes in the $o% market& The %est strategy is to remain f(e'i%(e# watch trends# and %e ready and wi((ing to moe to wherethe $o%s are&The current consensus is that we are in the midst of an information-%ased reo(ution# wherethe g(o%a( economy wi(( set wor(d ua(ity standards for products and serices& Businesses andgoernments wi(( continue to support techno(ogies that proide the necessary information to

make %etter %usiness decisions&

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Bloom's: Alication


Toic: The (volution of 2<S< Business

1-1))




Mini/Case

*ergio :on3a(es is emp(oyed %y Big%u' 7ationa( Bank# one of the (argest %anks in theMidwest& e is a (oan officer# specia(i3ing in home euity (oans& Tio Rau(# *ergio,s faorite

and wea(thiest unc(e# passed away (ast month and (eft *ergio a si3a%(e amount of money&*ergio is (ooking at the %est way to inest his new(y acuired wea(th& e is considering manyoptions# ranging from simp(y putting the money into a saings account to the possi%i(ity ofstarting his own %usiness& !(though his %ank $o% pays we(( and offers p(easant workingconditions# *ergio is frustrated %ecause he has (itt(e freedom or f(e'i%i(ity to dea( withcustomers since eery decision he makes must %e approed %y his superisor& Besides# he,s a %it %ored and (ooking for a cha((enge& e thinks he might get a (ot of satisfaction from owninghis own %usiness& *ergio has not made a definite decision yet# %ut has ta(ked to a (ot of peop(esearching for a good idea for a new %usiness& +f he can come up with an idea he (ikes# hemight $ust uit his current $o% and use his inheritance to go into %usiness for himse(fG

&%)$ !s he e'p(ores his options# *ergio notices that some opportunities appear to %e riskier thanothers& ?hen considering arious opportunities# *ergio shou(d keep in mind that!& he wi(( %e %etter off picking a (ow risk %usiness opportunity# since the safest ones areusua((y the most profita%(e as we((&B& een though some opportunities appear riskier than others# the (ee( of risk actua((yaries (itt(e from one opportunity to another&C$ high risk %usiness opportunities often hae the potentia( for high returns as we((&D& goernment regu(ations are in p(ace to protect inestors and entrepreneurs from fai(ure#so there is no need to worry a%out risk&

*eed6ack: +n many cases# %usiness opportunities that hae the potentia( for earning high profits a(so carry a high (ee( of risk& +nestors must weigh profit and risk and chooseopportunities that offer an accepta%(e trade-off %etween the two&

Answer: C

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earning !oal: "#$#



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&%*$ *ergio,s frustration with his (ack of freedom and f(e'i%i(ity at work indicates that Big%u'!& prefers the use of cross-functiona( teams rather than indiidua( initiatie&B$ has not adopted a strategy of empowerment&C& knows that the %est way to ensure good customer serice is to c(ose(y monitor its

(ower-(ee( emp(oyees&D& is trying to p(ease customers as we(( as other stakeho(ders&

*eed6ack: Empowerment means giing (ower-(ee( workers the freedom and f(e'i%i(ity torespond uick(y to customers without consu(ting with managers&

Answer: B Page: #1


Bloom's: Alication

earning !oal: "#$,

evel of %ifficult& 8: Alication of rincilesToic: The Cometitive (nvironment

&%+$ Two of his friends approached *ergio with a proposa( to start a (anguage schoo(& *ergio isf(uent in Eng(ish and *panish# and a(so has an education degree& *ergio is strong(yconsidering the idea %ut a(so wants to know if there is a growing demand for his serices&e (earns that an important demographic trend is!& the serice sector is (ike(y to dec(ine in significance in the ne't few years&B& the num%er of young chi(dren in the .&*& wi(( decrease significant(y oer the ne't fewyears as the popu(ation of the country (ee(s off&C$ the num%er of immigrants from *outh and Centra( !merica is increasing steadi(y in hisarea# and across the nation& Professiona(s in hospita(s and schoo(s need to know how to

speak *panish& +mmigrants need to know how to speak Eng(ish&D& the num%er of retirees is decreasing# making way for a younger generation&

*eed6ack: ega( and i((ega( immigrants hae had a dramatic effect on many cities& Theschoo(s and hospita(s# and other serices hae %een affected& *ome (oca( goernments aremaking eery effort to adapt# inc(uding changing signs# %rochures# we%sites# and forms toinc(ude other (anguages&

Answer: C

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Bloom's: Alication earning !oal: "#$. evel of %ifficult& 8: Alication of rinciles


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&%,$ !s he e'p(ores his options for starting a new %usiness# *ergio has (ooked into the ta'imp(ications and goernment regu(ations that he wou(d encounter& e wants to maintainan office in a different (ocation from his home& e has discoered that some near%ycommunities offer ta' credits and (ower ta'es than his town& *ergio,s decision wi(( %e

inf(uenced %y the!& demographic enironment&B& techno(ogica( enironment&C& socio-re(igious enironment&D$ economic and (ega( enironment&

*eed6ack: The economic enironment inc(udes ta'es and goernment regu(ations& !s thete't%ook notes Entrepreneuria( decisions a%out where to (ocate a %usiness can %e strong(yinf(uenced %y differences in ta'es and goernment regu(ations&

Answer: %


Bloom's: Alication

earning !oal: "#$8



&&0$ +f *ergio starts his own %usiness# his firm,s actiities and po(icies wi(( impact manydifferent groups and indiidua(s# inc(uding emp(oyees# customers# creditors# supp(iers# and peop(e (iing in the community where his %usiness is (ocated& ?hich of the fo((owingstatements represents how *ergio shou(d dea( with these arious groupsL *ergio shou(d-$ take the needs of a(( of these groups into account# and try to satisfy each group as muchas possi%(e&B& concentrate on meeting the needs of his customers# since they are crucia( to the successof his %usiness# %ut ignore the needs of other groups in order to keep costs (ow&

understanding business nickels 10th edition

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