Chapter 1—The Changing Face of Business
MATCHING
Complete the following using these terms.
a. outsourcing
b. diversity
c. entrepreneur
d. competitive differentiation
e. strategic alliance
f. capital
g. vision
h. factors of production
i. brand
j. relationship management
k. not-for-profit organizations
l. business ethics
1. To operate effectively, certain inputs called _____ systems are required for all economic systems.
2. _____ refers to technology, tools, information, and physical facilities.
3. A company that contracts with another business to perform functions previously handled by internal
staff is participating in _____.
4. A partnership formed to create a competitive advantage for the businesses involved is known as a(n)
_____.
5. A person who seeks a profitable opportunity and then devises a plan to achieve that profit is called a(n)
_____.
, 6. The ability to perceive future marketplace needs and what an organization can do to satisfy them is
referred to as _____.
7. A(n) _____ is a name, terms, sign, symbol, design, or combination that identifies the products of one
firm.
8. _____ is a collection of activities that build and maintain ongoing, mutually beneficial ties between a
business and its customers and other parties.
9. _____ involves blending different genders, ethnic backgrounds, cultures, religions, ages, and physical
and mental abilities in order to enhance a firm’s chances of success.
10. _____ are businesslike establishments that have primary objectives other than returning profits to their
owners.
11. _____ refers to the standards of conduct and moral values involving decisions made in the work
environment.
12. _____ is the unique combination of organizational abilities, products, and approaches that sets a
company apart from competitors in the minds of consumers.
1. ANS: h DIF: MEDIUM LO: 1.2 Factors of Production
Pg. 7 AACSB: Analytic BT: K
2. ANS: f DIF: MEDIUM LO: 1.2 Factors of Production
Pg. 7 AACSB: Analytic BT: K
3. ANS: a DIF: MEDIUM LO: 1.5 Today’s Business Workforce
Pg. 21 AACSB: Analytic BT: K
4. ANS: e DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 16 AACSB: Analytic BT: K
5. ANS: c DIF: MEDIUM LO: 1.3 The Private Enterprise System
Pg. 11 AACSB: Analytic BT: K
, 6. ANS: g DIF: MEDIUM LO: 1.6 The 21st-Century Manager
Pg. 23 AACSB: Analytic BT: K
7. ANS: i DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 15 AACSB: Analytic BT: K
8. ANS: j DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 16 AACSB: Analytic BT: K
9. ANS: b DIF: MEDIUM LO: 1.5 Today’s Business Workforce
Pg. 21 AACSB: Analytic BT: K
10. ANS: k DIF: MEDIUM LO: 1.1 What Is Business?
Pg. 5 AACSB: Analytic BT: K
11. ANS: l DIF: MEDIUM LO: 1.7 What Makes a Company Admired?
Pg. 25 AACSB: Analytic BT: K
12. ANS: d DIF: MEDIUM LO: 1.3 The Private Enterprise System
Pg. 9 AACSB: Analytic BT: K
ESSAY
13. Define profit. Explain why you agree or disagree with the following statement: “The success of a
business is measured only by the profit it earns.”
ANS:
Profit is the financial reward received by successful businesspeople who take the risks involved in
blending people, technology, and information to create and market want-satisfying goods and services.
In order to be successful in a private enterprise system, a business must earn a satisfactory profit;
otherwise, the owners and investors will turn to more attractive opportunities. However, businesses
today are expected to do more than earn a satisfactory profit—they also have social and ethical
responsibilities. In other words, businesses must behave responsibly in their dealings with employees,
customers, suppliers, the general public, and even with their competitors.
, DIF: HARD LO: 1.1 What Is Business?
Pg. 5 AACSB: Reflective Thinking BT: C
14. List the four factors of production and the corresponding factor payments.
ANS:
The four factors, and the factor payment for each, are natural resources (rent), capital (interest), human
resources (wages), and entrepreneurship (profit).
DIF: MEDIUM LO: 1.2 What Is Business?
Pg. 7 AACSB: Analytic BT: K
15. Explain how consumers benefit from business competition.
ANS:
Competition forces a business that wants to continue to be profitable to constantly find acceptable
ways to satisfy customers’ needs. Customers benefit from new products, more services, and more
economical strategies and operations that are continuously offered by firms as they strive for customer
acceptance. These tactics often bring lower prices, better quality, and more convenience to the
customers. The ability to buy more raises the standard of living, increases demand, and subsequently
creates more jobs.
DIF: HARD LO: 1.3 The Private Enterprise System
Pg. 9 AACSB: Reflective Thinking BT: AP
16. List and describe the four basic rights in the private enterprise system.
ANS:
The right to private property guarantees every participant the right to own, use, buy, sell, and bequeath
most forms of property. The right to profits ensures business owners the right to all profits (after taxes)
they earn through their activities. Freedom of choice means that a private enterprise system relies on
the potential for citizens to choose their own employment, purchases, and investments. Finally, the
private enterprise system permits fair competition by allowing the public to set rules for competitive
activity, including laws that prohibit “cutthroat” competition.
MATCHING
Complete the following using these terms.
a. outsourcing
b. diversity
c. entrepreneur
d. competitive differentiation
e. strategic alliance
f. capital
g. vision
h. factors of production
i. brand
j. relationship management
k. not-for-profit organizations
l. business ethics
1. To operate effectively, certain inputs called _____ systems are required for all economic systems.
2. _____ refers to technology, tools, information, and physical facilities.
3. A company that contracts with another business to perform functions previously handled by internal
staff is participating in _____.
4. A partnership formed to create a competitive advantage for the businesses involved is known as a(n)
_____.
5. A person who seeks a profitable opportunity and then devises a plan to achieve that profit is called a(n)
_____.
, 6. The ability to perceive future marketplace needs and what an organization can do to satisfy them is
referred to as _____.
7. A(n) _____ is a name, terms, sign, symbol, design, or combination that identifies the products of one
firm.
8. _____ is a collection of activities that build and maintain ongoing, mutually beneficial ties between a
business and its customers and other parties.
9. _____ involves blending different genders, ethnic backgrounds, cultures, religions, ages, and physical
and mental abilities in order to enhance a firm’s chances of success.
10. _____ are businesslike establishments that have primary objectives other than returning profits to their
owners.
11. _____ refers to the standards of conduct and moral values involving decisions made in the work
environment.
12. _____ is the unique combination of organizational abilities, products, and approaches that sets a
company apart from competitors in the minds of consumers.
1. ANS: h DIF: MEDIUM LO: 1.2 Factors of Production
Pg. 7 AACSB: Analytic BT: K
2. ANS: f DIF: MEDIUM LO: 1.2 Factors of Production
Pg. 7 AACSB: Analytic BT: K
3. ANS: a DIF: MEDIUM LO: 1.5 Today’s Business Workforce
Pg. 21 AACSB: Analytic BT: K
4. ANS: e DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 16 AACSB: Analytic BT: K
5. ANS: c DIF: MEDIUM LO: 1.3 The Private Enterprise System
Pg. 11 AACSB: Analytic BT: K
, 6. ANS: g DIF: MEDIUM LO: 1.6 The 21st-Century Manager
Pg. 23 AACSB: Analytic BT: K
7. ANS: i DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 15 AACSB: Analytic BT: K
8. ANS: j DIF: MEDIUM LO: 1.4 Six Eras in the History of Business
Pg. 16 AACSB: Analytic BT: K
9. ANS: b DIF: MEDIUM LO: 1.5 Today’s Business Workforce
Pg. 21 AACSB: Analytic BT: K
10. ANS: k DIF: MEDIUM LO: 1.1 What Is Business?
Pg. 5 AACSB: Analytic BT: K
11. ANS: l DIF: MEDIUM LO: 1.7 What Makes a Company Admired?
Pg. 25 AACSB: Analytic BT: K
12. ANS: d DIF: MEDIUM LO: 1.3 The Private Enterprise System
Pg. 9 AACSB: Analytic BT: K
ESSAY
13. Define profit. Explain why you agree or disagree with the following statement: “The success of a
business is measured only by the profit it earns.”
ANS:
Profit is the financial reward received by successful businesspeople who take the risks involved in
blending people, technology, and information to create and market want-satisfying goods and services.
In order to be successful in a private enterprise system, a business must earn a satisfactory profit;
otherwise, the owners and investors will turn to more attractive opportunities. However, businesses
today are expected to do more than earn a satisfactory profit—they also have social and ethical
responsibilities. In other words, businesses must behave responsibly in their dealings with employees,
customers, suppliers, the general public, and even with their competitors.
, DIF: HARD LO: 1.1 What Is Business?
Pg. 5 AACSB: Reflective Thinking BT: C
14. List the four factors of production and the corresponding factor payments.
ANS:
The four factors, and the factor payment for each, are natural resources (rent), capital (interest), human
resources (wages), and entrepreneurship (profit).
DIF: MEDIUM LO: 1.2 What Is Business?
Pg. 7 AACSB: Analytic BT: K
15. Explain how consumers benefit from business competition.
ANS:
Competition forces a business that wants to continue to be profitable to constantly find acceptable
ways to satisfy customers’ needs. Customers benefit from new products, more services, and more
economical strategies and operations that are continuously offered by firms as they strive for customer
acceptance. These tactics often bring lower prices, better quality, and more convenience to the
customers. The ability to buy more raises the standard of living, increases demand, and subsequently
creates more jobs.
DIF: HARD LO: 1.3 The Private Enterprise System
Pg. 9 AACSB: Reflective Thinking BT: AP
16. List and describe the four basic rights in the private enterprise system.
ANS:
The right to private property guarantees every participant the right to own, use, buy, sell, and bequeath
most forms of property. The right to profits ensures business owners the right to all profits (after taxes)
they earn through their activities. Freedom of choice means that a private enterprise system relies on
the potential for citizens to choose their own employment, purchases, and investments. Finally, the
private enterprise system permits fair competition by allowing the public to set rules for competitive
activity, including laws that prohibit “cutthroat” competition.
