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47
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iu
en
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tu
, Business in Action, 10e (Bovee/Thill)
Chapter 1 Developing a Business Mindset
tu
1) ________ is money that an organization brings in through the sale of its goods and services.
A) Competitive advantage
B) Revenue
C) Sales
d
D) Capital investment
Answer: B
Explanation: Revenue is the money a company brings in through the sale of goods and services.
yg
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
en
2) Why is the link between risk and reward critical for a business?
A) It is a key aspect of social responsibility
B) It provides opportunities for not-for-profit organizations to stay in business
C) It is essential to the counter-cyclical business model
iu
D) It provides incentive to take on the risk
Answer: D
Explanation: Without the promise of rewards, businesses would have no incentive to take on
the risks. And without entrepreneurs and companies willing to accept risk, little would get done
s2
in the economy.
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
47
categorize businesses.
3) A(n) ________ is a framework of how a business intends to generate revenue.
A) business model
B) strategic management tool
??
C) profitability analysis
D) competitive advantage
Answer: A
Explanation: A company's business model is a clear, simple outline of how the business intends
??
to generate revenue.
Difficulty: 1: Easy
AACSB: Analytical thinking
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
1
Copyright © 2024 Pearson Education, Inc.
, 4) ________ is the term used to describe the difference between revenue and expenses.
A) Profit
B) Interest
tu
C) Sales
D) Owner's equity
Answer: A
Explanation: Profit is the amount of money left over after all the costs involved in doing
d
business, have been deducted from revenue.
Difficulty: 1: Easy
AACSB: Application of knowledge
yg
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
5) ________ refers to some aspect of a product or company that makes it more appealing to
en
target customers.
A) Competitive advantage
B) Economies of scale
C) Horizontal integration
D) Vertical integration
iu
Answer: A
Explanation: Competitive advantage refers to some aspect of a product or company that makes
it more appealing to target customers.
Difficulty: 2: Moderate
s2
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
47
6) Which type of organization seeks to operate efficiently and effectively to achieve its goals
without focusing on profit as a motive?
A) Business intermediary
B) Nonprofit organization
C) Service business
??
D) Goods-producing business
Answer: B
Explanation: Not-for-profit organizations (also known as nonprofit organizations) such as
museums, most universities, and charities do not have a profit motive.
??
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
2
Copyright © 2024 Pearson Education, Inc.
, 7) If individuals and companies believe they can pursue rewards without facing the risks that
should be attached to those pursuits, they are more likely to engage in irresponsible and even
unethical behavior. This situation is known as a(n) ________.
tu
A) moral hazard
B) professional dilemma
C) barrier to entry
D) competitive advantage
d
Answer: A
Explanation: If individuals and companies believe they can pursue rewards without facing the
risks that should be attached to those pursuits, they are more likely to engage in irresponsible and
yg
even unethical behavior–a situation known as moral hazard.
Difficulty: 2: Moderate
AACSB: Ethical understanding and reasoning
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
en
categorize businesses.
8) How do businesses generate revenue and satisfy the needs of the customers?
A) By continuously adding value during product creation
B) By expanding geographic reach as often as possible
iu
C) By limiting the flow of goods in the free-market economy
D) By offering products at the lowest prices possible
Answer: A
Explanation: A good way to understand what any business does is to view it as a system for
s2
satisfying customers by transforming lower-value inputs into higher-value outputs. At every
stage, a company adds value to create the product in a way that makes it appealing to the next
customer in the chain.
Difficulty: 2: Moderate
47
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
9) A 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.
??
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
3
Copyright © 2024 Pearson Education, Inc.
??
??
??
47
s2
iu
en
dyg
tu
, Business in Action, 10e (Bovee/Thill)
Chapter 1 Developing a Business Mindset
tu
1) ________ is money that an organization brings in through the sale of its goods and services.
A) Competitive advantage
B) Revenue
C) Sales
d
D) Capital investment
Answer: B
Explanation: Revenue is the money a company brings in through the sale of goods and services.
yg
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
en
2) Why is the link between risk and reward critical for a business?
A) It is a key aspect of social responsibility
B) It provides opportunities for not-for-profit organizations to stay in business
C) It is essential to the counter-cyclical business model
iu
D) It provides incentive to take on the risk
Answer: D
Explanation: Without the promise of rewards, businesses would have no incentive to take on
the risks. And without entrepreneurs and companies willing to accept risk, little would get done
s2
in the economy.
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
47
categorize businesses.
3) A(n) ________ is a framework of how a business intends to generate revenue.
A) business model
B) strategic management tool
??
C) profitability analysis
D) competitive advantage
Answer: A
Explanation: A company's business model is a clear, simple outline of how the business intends
??
to generate revenue.
Difficulty: 1: Easy
AACSB: Analytical thinking
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
1
Copyright © 2024 Pearson Education, Inc.
, 4) ________ is the term used to describe the difference between revenue and expenses.
A) Profit
B) Interest
tu
C) Sales
D) Owner's equity
Answer: A
Explanation: Profit is the amount of money left over after all the costs involved in doing
d
business, have been deducted from revenue.
Difficulty: 1: Easy
AACSB: Application of knowledge
yg
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
5) ________ refers to some aspect of a product or company that makes it more appealing to
en
target customers.
A) Competitive advantage
B) Economies of scale
C) Horizontal integration
D) Vertical integration
iu
Answer: A
Explanation: Competitive advantage refers to some aspect of a product or company that makes
it more appealing to target customers.
Difficulty: 2: Moderate
s2
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
47
6) Which type of organization seeks to operate efficiently and effectively to achieve its goals
without focusing on profit as a motive?
A) Business intermediary
B) Nonprofit organization
C) Service business
??
D) Goods-producing business
Answer: B
Explanation: Not-for-profit organizations (also known as nonprofit organizations) such as
museums, most universities, and charities do not have a profit motive.
??
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
2
Copyright © 2024 Pearson Education, Inc.
, 7) If individuals and companies believe they can pursue rewards without facing the risks that
should be attached to those pursuits, they are more likely to engage in irresponsible and even
unethical behavior. This situation is known as a(n) ________.
tu
A) moral hazard
B) professional dilemma
C) barrier to entry
D) competitive advantage
d
Answer: A
Explanation: If individuals and companies believe they can pursue rewards without facing the
risks that should be attached to those pursuits, they are more likely to engage in irresponsible and
yg
even unethical behavior–a situation known as moral hazard.
Difficulty: 2: Moderate
AACSB: Ethical understanding and reasoning
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
en
categorize businesses.
8) How do businesses generate revenue and satisfy the needs of the customers?
A) By continuously adding value during product creation
B) By expanding geographic reach as often as possible
iu
C) By limiting the flow of goods in the free-market economy
D) By offering products at the lowest prices possible
Answer: A
Explanation: A good way to understand what any business does is to view it as a system for
s2
satisfying customers by transforming lower-value inputs into higher-value outputs. At every
stage, a company adds value to create the product in a way that makes it appealing to the next
customer in the chain.
Difficulty: 2: Moderate
47
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
9) A 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.
??
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
??
??
3
Copyright © 2024 Pearson Education, Inc.
