Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
15. Human resources are a factor of production.
a. True
b. False
Difficulty: 1 Page-Reference: 7
Question ID: 01-2-142 Skill: Comprehension
Objective: 1.2
16. Capital is the reward which the owners of a business receive for taking the risks of investing their
money and time.
a. True
b. False
Difficulty: 2 Page-Reference: 7
Question ID: 01-2-143 Skill: Knowledge
Objective: 1.2
17. There are more command economies in the world now than there were 30 years ago.
a. True
b. False
Difficulty: 2 Page-Reference: 9
Question ID: 01-2-144 Skill: Comprehension
Objective: 1.2
18. A GlobeScan poll of 20 000 people in 20 different countries showed that the highest support for
capitalism was in the U.S. and the lowest level of support was in India.
a. True
b. False
Difficulty: 2 Page-Reference: 9
Question ID: 01-2-145 Skill: Knowledge
Objective: 1.2
19. Business–to-business (B2B) transactions far exceed B2C (business–to-consumer) transactions in
dollar value.
a. True
b. False
Difficulty: 2 Page-Reference: 10
Question ID: 01-2-146 Skill: Knowledge
Objective: 1.2
20. In Canada, government does not own and operate any business firms.
a. True
b. False
Difficulty: 1 Page-Reference: 11
Question ID: 01-2-147 Skill: Knowledge
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
Objective: 1.2
21. The deregulation trend has slowed down in the aftermath of the recession of 2008.
a. True
b. False
Difficulty: 1 Page-Reference: 11
Question ID: 01-2-148 Skill: Comprehension
Objective: 1.2
22. The government plays several different roles in the Canadian economy, including the roles of
customer, competitor, and regulator.
a. True
b. False
Difficulty: 1 Page-Reference: 12–13
Question ID: 01-2-149 Skill: Knowledge
Objective: 1.2
23. Revenue taxes are levied to control certain activities that legislative bodies believe should be
controlled.
a. True
b. False
Difficulty: 1 Page-Reference: 16
Question ID: 01-2-150 Skill: Knowledge
Objective: 1.2
24. If the Canadian Auto Workers (CAW) wanted to bring their interests to government officials, they
could hire a lobbyist.
a. True
b. False
Difficulty: 1 Page-Reference: 16
Question ID: 01-2-151 Skill: Comprehension
Objective: 1.2
25. The Competition Act prohibits resale price maintenance, which is the refusal of companies to sell
their products to discount stores.
a. True
b. False
Difficulty: 2 Page-Reference: 23
Question ID: 01-2-152 Skill: Comprehension
Objective: 1.2
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
26. The Canada Consumer Product Safety Act applies not only to manufacturers, but also to retailers.
a. True
b. False
Difficulty: 2 Page-Reference: 15
Question ID: 01-2-153 Skill: Comprehension
Objective: 1.2
27. The four main reasons government regulates business activity are: to encourage importing and
exporting, to protect consumers, to protect businesses from foreign competition, and to protect the
environment.
a. True
b. False
Difficulty: 3 Page-Reference: 14
Question ID: 01-2-154 Skill: Knowledge
Objective: 1.2
28. A demand and supply schedule is derived from market research and other systematic studies of
the market.
a. True
b. False
Difficulty: 3 Page-Reference: 19
Question ID: 01-2-155 Skill: Knowledge
Objective: 1.3
29. The law of demand states that buyers will purchase more of a product as its price drops.
a. True
b. False
Difficulty: 1 Page-Reference: 18
Question ID: 01-2-156 Skill: Knowledge
Objective: 1.3
30. In economic terms, a “market” refers to a specific place like a supermarket.
a. True
b. False
Difficulty: 2 Page-Reference: 9
Question ID: 01-2-157 Skill: Knowledge
Objective: 1.3
31. The law of supply states that producers will offer more of a product for sale as its price rises.
a. True
b. False
Difficulty: 2 Page-Reference: 18
Question ID: 01-2-158 Skill: Knowledge
Objective: 1.3
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
32. If the market for diamonds were at equilibrium and De Beers increased its prices, people would
still demand the same quantity of diamonds.
a. True
b. False
Difficulty: 2 Page-Reference: 19–20
Question ID: 01-2-159 Skill: Application
Objective: 1.3
33. A demand curve shows the amount of goods and services a producer will create at different
prices.
a. True
b. False
Difficulty: 2 Page-Reference: 19
Question ID: 01-2-160 Skill: Knowledge
Objective: 1.3
34. The point on a demand and supply schedule where supply and demand are equal is known as the
break-even point.
a. True
b. False
Difficulty: 2 Page-Reference: 20
Question ID: 01-2-161 Skill: Knowledge
Objective: 1.3
35. A surplus in the market is good news for the firm selling a product or service because there are
additional customers still trying to purchase the product.
a. True
b. False
Difficulty: 2 Page-Reference: 19
Question ID: 01-2-162 Skill: Application
Objective: 1.3
36. The equilibrium price is the profit-maximizing point at which the quantity demanded equals the
quantity supplied.
a. True
b. False
Difficulty: 1 Page-Reference: 19
Question ID: 01-2-163 Skill: Knowledge
Objective: 1.3
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
37. Private property rights are an essential element of a communist economic system.
a. True
b. False
Difficulty: 1 Page-Reference: 21
Question ID: 01-2-164 Skill: Comprehension
Objective: 1.4
38. The concept of freedom of choice applies only to buyers of goods and services, not to sellers.
a. True
b. False
Difficulty: 2 Page-Reference: 21
Question ID: 01-2-165 Skill: Comprehension
Objective: 1.4
39. The private enterprise system guarantees that competition among business firms will be fair.
a. True
b. False
Difficulty: 2 Page-Reference: 22
Question ID: 01-2-166 Skill: Comprehension
Objective: 1.4
40. In monopolistic competition, sellers try to make their products at least appear to be slightly
different from those of other competitors by tactics such as brand names, design or styling, and
advertising.
a. True
b. False
Difficulty: 2 Page-Reference: 22
Question ID: 01-2-167 Skill: Comprehension
Objective: 1.4
41. Coke and Pepsi are competitors within an oligopoly.
a. True
b. False
Difficulty: 2 Page-Reference: 22
Question ID: 01-2-168 Skill: Comprehension
Objective: 1.4
42. In an oligopoly, only a handful of sellers compete mainly through product differentiation.
a. True
b. False
Difficulty: 2 Page-Reference: 22
Question ID: 01-2-169 Skill: Knowledge
Objective: 1.4
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
43. A natural monopoly exists when a single company can fill the needs of all customers in a specific
area.
a. True
b. False
Difficulty: 2 Page-Reference: 23
Question ID: 01-2-170 Skill: Knowledge
Objective: 1.4
44. The private enterprise system guarantees a profit for each business firm if it provides the right
goods and services to consumers.
a. True
b. False
Difficulty: 3 Page-Reference: 21
Question ID: 01-2-171 Skill: Comprehension
Objective: 1.4
45. People who believe in private enterprise usually argue that a society’s interests are best served
by a command economy.
a. True
b. False
Difficulty: 1 Page-Reference: 21
Question ID: 01-2-172 Skill: Comprehension
Objective: 1.4
46. Private enterprise requires the presence of four elements: (1) private property rights, (2) freedom
of choice, (3) competition, and (4) no government control.
a. True
b. False
Difficulty: 3 Page-Reference: 21
Question ID: 01-2-173 Skill: Knowledge
Objective: 1.4
47. Gasoline stations are an example of a type of business involved in perfect competition.
a. True
b. False
Difficulty: 2 Page-Reference: 22
Question ID: 01-2-174 Skill: Comprehension
Objective: 1.4
48. An oligopoly exists when firms in an industry are so small and numerous that no one is powerful
enough to dominate the market.
a. True
b. False
Difficulty: 1 Page-Reference: 22
Question ID: 01-2-175 Skill: Knowledge
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
Objective: 1.4
49. The earliest business activity in Canada involved trapping.
a. True
b. False
Difficulty: 1 Page-Reference: 24
Question ID: 01-2-176 Skill: Knowledge
Objective: 1.5
50. One of the main advantages of the mass production system in factories was that it avoided costly
duplication of machinery.
a. True
b. False
Difficulty: 2 Page-Reference: 25
Question ID: 01-2-177 Skill: Comprehension
Objective: 1.5
51. In 1800, Canadian exports of manufactured goods were more important than exports of fur.
a. True
b. False
Difficulty: 2 Page-Reference: 25
Question ID: 01-2-178 Skill: Knowledge
Objective: 1.5
52. In effect, the assembly line increased the supply of labour.
a. True
b. False
Difficulty: 2 Page-Reference: 26
Question ID: 01-2-179 Skill: Comprehension
Objective: 1.5
1. What is a business?
Difficulty: 1 Page-Reference: 6
Question ID: 01-3-180 Skill: Knowledge
Objective: 1.1
2. What are profits and why are they important to the economic system in Canada?
Difficulty: 2 Page-Reference: 6-7
Question ID: 01-3-181 Skill: Comprehension
Objective: 1.1
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
3. Explain the terms “command economy” and “market economy”. Give an illustration of each.
Difficulty: 2 Page-Reference: 9-10
Question ID: 01-3-182 Skill: Comprehension
Objective: 1.2
4. What are the factors of production? Explain each briefly.
Difficulty: 2 Page-Reference: 7-9
Question ID: 01-3-183 Skill: Knowledge
Objective: 1.2
5. How does a command economy differ from a market economy?
Difficulty: 1 Page-Reference: 9-11
Question ID: 01-3-184 Skill: Comprehension
Objective: 1.2
6. What is an entrepreneur?
Difficulty: 2 Page-Reference: 8
Question ID: 01-3-185 Skill: Knowledge
Objective: 1.2
7. There are three major types of economic systems in existence. Identify and briefly describe them.
Difficulty: 2 Page-Reference: 9-11
Question ID: 01-3-186 Skill: Knowledge
Objective: 1.2
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
8. What is the difference between capitalism and socialism?
Difficulty: 2 Page-Reference: 9-11
Question ID: 01-3-187 Skill: Comprehension
Objective: 1.2
9. What is socialism?
Difficulty: 1 Page-Reference: 9
Question ID: 01-3-188 Skill: Knowledge
Objective: 1.2
10. Explain the effects of monopolies on consumers and the economy.
Difficulty: 3 Page-Reference: 14, 23
Question ID: 01-3-189 Skill: Comprehension
Objective: 1.3
11. Describe the law of demand.
Difficulty: 1 Page-Reference: 18
Question ID: 01-3-190 Skill: Knowledge
Objective: 1.3
12. Explain what happens when the demand curve intersects with the supply curve.
Difficulty: 1 Page-Reference: 19
Question ID: 01-3-191 Skill: Application
Objective: 1.3
13. What does the supply curve reflect?
Difficulty: 2 Page-Reference: 19–20
Question ID: 01-3-192 Skill: Comprehension
Objective: 1.3
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
14. List the four elements required in a private enterprise system.
Difficulty: 2 Page-Reference: 21
Question ID: 01-3-193 Skill: Knowledge
Objective: 1.4
15. Describe the four degrees of competition that can exist in a private enterprise system.
Difficulty: 2 Page-Reference: 22
Question ID: 01-3-194 Skill: Knowledge
Objective: 1.4
16. Briefly describe the concept of laissez-faire.
Difficulty: 2 Page-Reference: 25
Question ID: 01-3-195 Skill: Knowledge
Objective: 1.5
1. Explain the role of both profit-seeking businesses and non-profit organizations in the overall
“meaning of business.”
Difficulty: 3 Page-Reference: 6-7
Question ID: 01-4-196 Skill: Application
Objective: 1.1
2. Consider the following statement: “A nation’s economic system is its system for allocating its
resources among its citizens, both individuals and organizations.” What are a nation’s “resources”, and
what important role do they play in a nation’s economic system?
Difficulty: 3 Page-Reference: 7-11
Question ID: 01-4-197 Skill: Application
Objective: 1.2
3. Discuss the benefits and drawback of each type of economic system. In which economic system
would you prefer to work, and why?
Difficulty: 2 Page-Reference: 9-11
Question ID: 01-4-198 Skill: Application
Objective: 1.2
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
4. “All the different economic systems of the world are moving toward a mixed economy with
elements of a planned economy and of a market economy.” Agree or disagree and support your position.
Difficulty: 2 Page-Reference: 11
Question ID: 01-4-199 Skill: Analysis
Objective: 1.2
5. Discuss the government’s role as: (a) a competitor, (b) a regulator, (c) a taxation agent, and (d) a
provider of incentive programs.
Difficulty: 2 Page-Reference: 12–16
Question ID: 01-4-200 Skill: Comprehension
Objective: 1.2
6. Discuss the two reasons that the government uses to justify regulation of business activities. Do you
believe regulation of business is justified as an owner or manager? As a consumer?
Difficulty: 2 Page-Reference: 13–15
Question ID: 01-4-201 Skill: Application
Objective: 1.2
7. Explain how demand and supply work in a capitalist economy.
Difficulty: 2 Page-Reference: 17–20
Question ID: 01-4-202 Skill: Application
Objective: 1.3
8. Inaccuracies in forecasting an exact supply-demand schedule create surpluses and shortages.
Describe what surpluses and shortages are, using the concepts of supply and demand, and indicate the
probable impact of each upon price.
Difficulty: 2 Page-Reference: 19-20
Question ID: 01-4-203 Skill: Application
Objective: 1.3
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
9. Describe the potential impact if a company underestimates demand.
Difficulty: 2 Page-Reference: 19–20
Question ID: 01-4-204 Skill: Application
Objective: 1.3
10. Explain the four essential elements of private enterprise.
Difficulty: 2 Page-Reference: 21–22
Question ID: 01-4-205 Skill: Knowledge
Objective: 1.4
11. Identify and explain the four basic degrees of competition. Provide an example of each.
Difficulty: 2 Page-Reference: 22–23
Question ID: 01-4-206 Skill: Comprehension
Objective: 1.4
12. Discuss the reasons why the Canadian government permits certain “natural” monopolies while
forbidding attempts by business firms to create a monopoly in other parts of the economy.
Difficulty: 2 Page-Reference: 23
Question ID: 01-4-207 Skill: Application
Objective: 1.4
13. Describe perfect competition in terms of the number of competitors, ease of entry into the market,
similarity of goods/services offered by competing firms, and level of control over price by individual firms.
Give an example of a purely competitive market or industry.
Difficulty: 3 Page-Reference: 22
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
Question ID: 01-4-208 Skill: Comprehension
Objective: 1.4
14. Describe monopolistic competition in terms of the number of competitors, ease of entry into the
market, similarity of goods/services offered by competing firms, and level of control over price by
individual firms. Give an example of a market or industry characterized by monopolistic competition.
Difficulty: 3 Page-Reference: 22
Question ID: 01-4-209 Skill: Comprehension
Objective: 1.4
15. Describe oligopoly in terms of the number of competitors, ease of entry into the market, similarity
of goods/services offered by competing firms, and level of control over price by individual firms. Give an
example of a market or industry that is an oligopoly.
Difficulty: 3 Page-Reference: 22
Question ID: 01-4-210 Skill: Comprehension
Objective: 1.4
16. Describe monopoly in terms of the number of competitors, ease of entry into the market, and
level of control over price by individual firms. Give an example of a market or industry that is a monopoly.
Difficulty: 3 Page-Reference: 22–23
Question ID: 01-4-211 Skill: Comprehension
Objective: 1.4
17. Briefly trace the development of business in Canada from the early colonial years to the present
day.
Difficulty: 2 Page-Reference: 24–28
Question ID: 01-4-212 Skill: Knowledge
Objective: 1.5
Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang
Chapter 1—Understanding the Canadian Business System
18. What was the Industrial Revolution?
Difficulty: 2 Page-Reference: 25
Question ID: 01-4-213 Skill: Comprehension
Objective: 1.5