,Business in Action, 6e (Bovee/Thill)
Chapter 1 Developing a Business Mindset
1) Business is any profit-seeking organization that provides goods and services designed to
satisfy customers' needs.
Answer: TRUE
Explanation: In a general sense business can be defined as any profit-seeking organization that
provides goods and services designed to satisfy customers' needs.
Page Ref: 3
Difficulty: Easy
Chapter LO: 1
Classification: Concept
2) Profit refers to the money the company brings in through the sale of goods and services.
Answer: FALSE
Explanation: Profit is the amount of money left over after expenses–all the costs involved in
doing business–have been deducted from revenue.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
3) Businesses add value by transforming lower-value inputs (like paper and ink) into higher-
value outputs (like textbooks).
Answer: TRUE
Explanation: Businesses add value by transforming lower-value inputs to higher-value outputs.
In other words, they make goods and services more attractive from the buyer's perspective.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
4) In a free-market economy, companies generally have limited autonomy in deciding which
customers they want to focus on and how they want to compete.
Answer: FALSE
Explanation: In a free-market economy, companies generally have considerable freedom in
deciding which customers they want to focus on and how they want to compete.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
1
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
,5) A company has competitive advantage when its products are more appealing to its chosen
customers.
Answer: TRUE
Explanation: Competitive advantage makes a company's products or the company as a whole
more appealing to its chosen customers.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
6) Assets refer to the tangible economic resources owned by a firm.
Answer: FALSE
Explanation: Assets refer to anything of meaningful value, from patents and brand names to real
estate and company stock.
Page Ref: 4
Difficulty: Moderate
Chapter LO: 1
Classification: Concept
7) A firm uses strategic sourcing techniques to reduce its costs. This is an example of barrier to
entry.
Answer: FALSE
Explanation: Barrier to entry refers to any resource or capability a company must have before it
can start competing in a given market.
Page Ref: 6
Difficulty: Moderate
AACSB: Analytic Skills
Chapter LO: 1
Classification: Application
8) Difficulty in obtaining business permits or licenses to do a particular business would be an
example of a barrier to entry for a firm.
Answer: TRUE
Explanation: Barrier to entry refers to any resource or capability a company must have before it
can start competing in a given market.
Page Ref: 6
Difficulty: Easy
Chapter LO: 1
Classification: Concept
2
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
, 9) Intangible products have a physical presence.
Answer: FALSE
Explanation: Intangible products create value by performing activities that deliver some benefit
to the customer. They do not have physical presence.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
10) The service sector now dominates the U.S. economy.
Answer: TRUE
Explanation: Over the past few decades, the U.S. economy has undergone a profound
transformation from being dominated by manufacturing to being dominated by services.
Page Ref: 5
Difficulty: Easy
Chapter LO: 1
Classification: Concept
11) A business mindset is a view of business that considers the various decisions a business has
to make as well as the challenges that it must overcome in order to be successful.
Answer: TRUE
Explanation: A business mindset is a view of business that considers the various decisions a
business has to make as well as the challenges that it must overcome in order to be successful.
Page Ref: 6
Difficulty: Easy
Chapter LO: 2
Classification: Concept
12) Businesses can have both positive and negative effects on society.
Answer: TRUE
Explanation: The relationship between business and society is complex and far reaching.
Businesses can have both positive and negative effects on society.
Page Ref: 8
Difficulty: Easy
Chapter LO: 2
Classification: Concept
13) Forces resulting from the practical application of science to a company's products and
processes would best describe its social environment.
Answer: FALSE
Explanation: Every business operates within the broad social environment. Social environment
refers to the trends and forces in society at large.
Page Ref: 10
Difficulty: Easy
AACSB: Dynamics of the Global Economy
Chapter LO: 3
Classification: Concept
3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 1 Developing a Business Mindset
1) Business is any profit-seeking organization that provides goods and services designed to
satisfy customers' needs.
Answer: TRUE
Explanation: In a general sense business can be defined as any profit-seeking organization that
provides goods and services designed to satisfy customers' needs.
Page Ref: 3
Difficulty: Easy
Chapter LO: 1
Classification: Concept
2) Profit refers to the money the company brings in through the sale of goods and services.
Answer: FALSE
Explanation: Profit is the amount of money left over after expenses–all the costs involved in
doing business–have been deducted from revenue.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
3) Businesses add value by transforming lower-value inputs (like paper and ink) into higher-
value outputs (like textbooks).
Answer: TRUE
Explanation: Businesses add value by transforming lower-value inputs to higher-value outputs.
In other words, they make goods and services more attractive from the buyer's perspective.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
4) In a free-market economy, companies generally have limited autonomy in deciding which
customers they want to focus on and how they want to compete.
Answer: FALSE
Explanation: In a free-market economy, companies generally have considerable freedom in
deciding which customers they want to focus on and how they want to compete.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
1
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
,5) A company has competitive advantage when its products are more appealing to its chosen
customers.
Answer: TRUE
Explanation: Competitive advantage makes a company's products or the company as a whole
more appealing to its chosen customers.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
6) Assets refer to the tangible economic resources owned by a firm.
Answer: FALSE
Explanation: Assets refer to anything of meaningful value, from patents and brand names to real
estate and company stock.
Page Ref: 4
Difficulty: Moderate
Chapter LO: 1
Classification: Concept
7) A firm uses strategic sourcing techniques to reduce its costs. This is an example of barrier to
entry.
Answer: FALSE
Explanation: Barrier to entry refers to any resource or capability a company must have before it
can start competing in a given market.
Page Ref: 6
Difficulty: Moderate
AACSB: Analytic Skills
Chapter LO: 1
Classification: Application
8) Difficulty in obtaining business permits or licenses to do a particular business would be an
example of a barrier to entry for a firm.
Answer: TRUE
Explanation: Barrier to entry refers to any resource or capability a company must have before it
can start competing in a given market.
Page Ref: 6
Difficulty: Easy
Chapter LO: 1
Classification: Concept
2
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
, 9) Intangible products have a physical presence.
Answer: FALSE
Explanation: Intangible products create value by performing activities that deliver some benefit
to the customer. They do not have physical presence.
Page Ref: 4
Difficulty: Easy
Chapter LO: 1
Classification: Concept
10) The service sector now dominates the U.S. economy.
Answer: TRUE
Explanation: Over the past few decades, the U.S. economy has undergone a profound
transformation from being dominated by manufacturing to being dominated by services.
Page Ref: 5
Difficulty: Easy
Chapter LO: 1
Classification: Concept
11) A business mindset is a view of business that considers the various decisions a business has
to make as well as the challenges that it must overcome in order to be successful.
Answer: TRUE
Explanation: A business mindset is a view of business that considers the various decisions a
business has to make as well as the challenges that it must overcome in order to be successful.
Page Ref: 6
Difficulty: Easy
Chapter LO: 2
Classification: Concept
12) Businesses can have both positive and negative effects on society.
Answer: TRUE
Explanation: The relationship between business and society is complex and far reaching.
Businesses can have both positive and negative effects on society.
Page Ref: 8
Difficulty: Easy
Chapter LO: 2
Classification: Concept
13) Forces resulting from the practical application of science to a company's products and
processes would best describe its social environment.
Answer: FALSE
Explanation: Every business operates within the broad social environment. Social environment
refers to the trends and forces in society at large.
Page Ref: 10
Difficulty: Easy
AACSB: Dynamics of the Global Economy
Chapter LO: 3
Classification: Concept
3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
