Business Essentials, 12e (Ebert/Griffin)
Chapter 1 The U.S. Business Environment
1) Which environment is NOT an important dimension of a business organization’s external
environment?
A) The political-legal environment
B) The sociocultural environment
C) The technological environment
D) The corporate cultural environment
E) The global business environment
2) What is profit?
A) Total money taken in by a corporation
B) Increases in income from year to year
C) Increases in a corporation’s stock price
D) Revenue generated by goods and services
E) Difference between revenues and expenses
3) What is the environment where a firm conducts its operations and derives its revenues known
as?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
4) Factors such as international trade agreements, economic conditions, and political unrest will
have the greatest impact on what type of business environment?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
5) Changes in which type of business environment can reduce or replace the need for traditional
working methods, physical equipment, and other platforms needed to conduct business?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
6) The pursuit of profits is how a business differs from organizations such as public universities,
public hospitals, and government agencies.
7) An organization’s external environment consists of everything outside of the organization that
might affect it.
8) Compare a sociocultural environment to an economic environment.
9) How do consumer choice and demand affect a capitalistic system?
10) What are the benefits of business for society?
11) What is the general term for resources used by a business to produce a good or service
referred to as?
A) Labor
B) Human Resources
C) Human capital
D) Factors of production
E) Economic systems
12) What term denotes a nation’s basis for allocating its resources among its citizens?
A) Capital structure
B) Economic system
C) Ownership processes
D) Distribution network
E) National regulations
13) What is the process for converting government enterprises into individually owned firms
known as?
A) Production allocation
B) Privatization
C) Entrepreneurship
D) Demand assessment
E) Profit maximization
14) What is the term for the physical and intellectual contributions of people while engaged in
the production of goods and services?
A) Human resources
B) Working capital
C) Physical resources
D) Planned resources
E) Market resources
15) Who is the person who accepts the risks and opportunities inherent in a new business
opportunity?
A) Capital managers
B) Entrepreneurs
C) Human resources
D) Home country economic systems managers
E) Information technology managers
16) What factor of production is used to generate forecasts based on specialized knowledge and
economic data?
A) Economic resources
B) Labor
C) Information resources
D) Entrepreneurs
E) Physical resources
17) When making decisions about production and allocation, which type of system depends on
individual producers and consumers to create a combination of supply and demand?
A) Planned economy
B) Communism
C) Private economy
D) Market economy
E) Socialism
18) The idea that individuals would contribute according to their abilities and receive benefits
according to their needs supports which type of economy?
A) Market economy
B) Socialist based economy
C) Mixed market economy
D) Capitalist market economy
E) Communist based economy
19) Which of the following best explains the difference between a market economy and a
planned economy?
A) In a planned economy, consumers have little choice in where people work or what they
purchase or pay. In a market economy, there is more choice in where people work or what they
purchase or pay.
B) In a market economy, consumers must pay what the market demands.
C) Capitalism is the root of a planned economy.
D) Market economies are also known as mixed market economies.
E) Planned economies promote the use of privatization to increase market share.
20) What type of economy is the United States reflective of?
A) Planned
B) Mixed
C) Market
D) Private
E) Socialist
21) What does a planned economy rely on a centralized government to do?
A) Support free enterprise in every way possible
B) Determine how to allocate all or most factors of production
C) Encourage citizens to buy shares of stock in small companies
D) Keep its control activities to a minimum
E) Direct workers to start their own small businesses
22) Which economic system emphasizes the private ownership of most factors of production?
A) Socialism
B) Communism
C) Capitalism
D) Marxism
E) Federalism
23) In which type of economy do the individual producer and consumer control production
through supply and demand?
A) Planned
B) Communist
C) Market
D) Socialist
E) Mixed
24) What marks the key difference between economic systems?
A) The way the factors of production are managed
B) The way goods are transported within their borders
C) The way rules and regulations are legislated
D) The way workers are relocated to different regions
E) The way basic necessities are determined
25) The customs, values, and demographic characteristics of the society in which an organization
functions are the principal elements of the political-legal environment.
26) Physical resources include the data and other information used by businesses.
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27) The technological environment includes only electronics and telecommunications used to
perform business activities.
28) In a market system, individuals are limited as to what they can buy and in how they can
spend their money.
29) China functions as a communistic economy and political system.
30) In a market economy, there is a centralized government that controls factors of production
and decision making.
31) Discuss the two forms of planned economies and give examples of each.
32) Describe the role of information resources in business.
33) Identify the five factors of production and their role in economic systems.
34) What is the point at which the supply curve and the demand curve intersect on a graph?
A) Equilibrium price
B) Decision point
C) Surplus price
D) Perfect price
E) Parity point
35) What is the price at which the quantity of goods demanded and the quantity of goods
supplied are equal?
A) The going rate
B) The margin rate
C) The market price
D) The optimum price
E) The cost price
36) What occurs when the quantity demanded exceeds the quantity supplied?
A) Demand deficit
B) Surplus
C) Equilibrium point
D) Shortage
E) Price drop
37) What is the primary force that determines what a firm buys and sells?
A) Laws of supply and demand
B) The demand and supply schedule
C) Economic resources
D) Equilibrium price
E) The private enterprise system
38) What is the willingness and ability of producers to offer a good for sale referred to as?
A) Private enterprise
B) Supply
C) Free market economy
D) Law of supply
E) Degrees of competition
39) Which of the following is proven when buyers purchase more of a product when the price
drops and less when the price increases?
A) Demand
B) Laws of supply
C) Laws of demand
D) Degree of competition
E) Free market economy
40) What can be used to determine relationships among different levels of demand and supply,
based on price?
A) Market economies
B) Degrees of competition
C) Surplus to shortage relationships
D) Demand and supply curves
E) Private enterprise competition
41) Graphically, what has been achieved when price of goods demanded is equal to the quantity
of goods supplied?
A) Supply curve optimization
B) Potential for surplus
C) Price reductions
D) Freedom of choice opportunities
E) Equilibrium price
42) What is the basis for a market economy?
A) The ability to pursue an interest with minimal government restriction
B) The ability to limit profits on competitors based on government restriction
C) The ability to offer a good or service at a variety of price points
D) A limitation on the number of competitors the government will allow within a specific
geographic region
E) The ability of a large number of smaller firms in an industry will limit influence
43) Which of the following represents the ownership of resources used in a private enterprise
system?
A) Freedom of choice
B) Private property rights
C) Increased profits
D) Limited competition
E) Perfect competition
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44) Which of the following would lead some to become an entrepreneur and influence the choice
of goods or services to produce?
A) Competition
B) Profit
C) Degrees of competition
D) Government regulation
E) Monopolistic competition
45) What is needed to gain a competitive advantage over competitors?
A) The ability to produce goods and services and sell those at a fixed profit
B) The ability to produce goods and services and sell those at a small profit
C) The ability to produce goods or services efficiently and at a reasonable profit
D) The ability to leverage the internet to sell in a global marketplace
E) The ability to have a good or service that can be easily duplicated by competitors
46) Which of the following does NOT fall into the degrees of competition continuum?
A) Perfect competition
B) Monopolistic competition
C) Competitive advantage
D) Oligopoly
E) Monopoly
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47) When there are many small firms in a specific industry, what is likely to occur?
A) Competitive advantage
B) An oligopoly
C) Private enterprise
D) Perfect competition
E) Market force reliability
48) What is created when one company is able to supply all the goods or services needed by the
marketplace?
A) Communism
B) Natural monopolies
C) Marketplace shifts
D) Monopolistic competition
E) Oligopolies
49) Which of the following is one of the elements required in private enterprise?
A) Adequate representation in the government
B) Freedom from foreign competition
C) The opportunity for market leadership
D) The right to ownership of property
E) Numerous regulatory agencies
50) In perfect competition, which of the following conditions must prevail?
A) All firms must adhere to cost and pricing standards.
B) The number of firms in the industry must be limited.
C) A single firm is able to influence the price of its product.
D) It is relatively difficult to enter the industry.
E) All firms in a given industry must be small.
51) How does monopolistic competition differ from perfect competition?
A) There are more sellers in a market characterized by monopolistic competition.
B) It is easier for sellers to enter a market or industry characterized by monopolistic competition.
C) In a perfectly competitive market, products are more dissimilar.
D) In a market characterized by monopolistic competition, individual firms have some control
over price.
E) In a perfectly competitive market, the size of the firms must be large.
52) In an oligopoly, when one firm reduces its prices, how do other sellers react?
A) There is no reaction from other firms to change their prices.
B) Other firms reduce their prices also, usually quite quickly.
C) Other firms may reduce their prices, but usually gradually.
D) Other firms are not usually aware that price has changed.
E) There is a combined response from other firms to stabilize prices.