Chapter 01: Exploring the World of Business and Economic

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Indicate whether the statement is true or false.

• Only about half of business firms survive the first five years.
• True
• False

• A factory system of manufacturing involves the separation of a manufacturing process into separate tasks and the

assignment of different tasks to different employees.

• True
• False

• Specialization is meant to increase the efficiency and productivity of industrial workers.
• True
• False

• During the Great Depression, government became deeply involved in business to stimulate the nation’s economy.
• True
• False

• A person must own stock in a corporation to be considered a stakeholder.
• True
• False

• Today, managers and employees are no longer concerned about cultural diversity.
• True
• False

• The four resources that a business must use to operate successfully include material resources, human resources,

financial resources, and operational resources.

• True
• False

• The ultimate goal of every business firm should be to satisfy the needs of its customers.
• True
• False

• If a firm's sales revenue exceeds its expenses, the firm has earned a profit.
• True
• False

• Macroeconomists often study the effect of taxes, government spending, interest rates, and similar factors on a nation's

economy.

• True
• False

• According to Adam Smith, under laissez-faire capitalism, everyone should be allowed to work toward their own 1 / 4

Chapter 01: Exploring the World of Business and Economic

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economic gain without government interference.

• True
• False

• A market economy is sometimes referred to as a command economy.
• True
• False

• The U.S. business system is more accurately referred to as a mixed economy.
• True
• False

• Command economies include capitalism, socialism, and communism.
• True
• False

• Productivity is the total output per worker per year.
• True
• False

• Reducing costs and enabling employees to work more efficiently are at the core of all attempts to improve

productivity.

• True
• False

• Fewer workers producing more goods and services can lead to higher overall employment rates.
• True
• False

• Inflation is a general rise in the level of prices experienced by people in a nation.
• True
• False

• Economists define a recession as two or more consecutive three-month periods of decline in a country's gross

domestic product (GDP).

• True
• False

• A depression is a severe recession that lasts longer than a recession.
• True
• False

• Monetary policies exert the government's influence on the amount of savings and expenditures by altering the tax

structure and changing the levels of government spending.

• True
• False

(Foundations of Business, 7e William Pride, Robert Hughes, Jack Kapoor) (Test Bank all Chapters) 2 / 4

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• The equilibrium or market price exists when the supply of a product exceeds the amount that consumers are willing to

purchase.

• True
• False

• The products available in a monopolistically competitive market are similar in nature and are intended to satisfy the

same basic need.

• True
• False

• An oligopoly is a market situation in which there is one producer and a few large buyers.
• True
• False

• During the peak or prosperity stage of a nation's business cycle, businesses are reluctant to offer new products and

services.

• True
• False

Indicate the answer choice that best completes the statement or answers the question.

• All the following are material resources for Toyota Motor Corporation except _______.
• paint
• steel
• factory
• tires
• money

• Zaila decides to start a residential landscaping business. How would this business most likely be classified?
• Manufacturing business
• Marketing intermediary
• Service business
• Corporation
• Nonprofit organization

• Publix Super Markets would be classified as _______.
• service businesses
• sole proprietorships
• a marketing intermediary
• manufacturing establishments
• perfect competition

• The ultimate objective of every company—from giant Starbucks with thousands of stores to Jo’s Coffee with just two

stores—must be to _______. 3 / 4

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• sell either to other firms or to consumers
• satisfy the needs of its customers
• pay out money to cover the various expenses of doing business
• know that people generally buy a product and store it
• make it impossible to satisfy customers

• Which of the following best expresses the relationship between sales and profits?
• Sales revenues + expenses = profit
• Loss + profit = sales revenue
• Profit − expenses = sales revenue
• Expenses + loss = sales revenue + profit
• Sales revenue − expenses = profit

• An e-business differs from a traditional business only in that _______.
• a traditional business does not require information resources
• an e-business does not require financial resources
• a traditional business distributes through facilities available on the internet
• an e-business distributes through facilities available on the internet
• an e-business does not require human resources

• Gail’s company is on the verge of failing. What is an essential step that many experts believe business owners ignore

that could help her business succeed?

• Copy successful competitors
• Secure venture capital before opening their doors
• Promote her products through social media
• Going public first
• Talk to customers about what they need and want

• Which of the following statements is false?
• Most start-up businesses fail because customers don’t need or want what the business is selling.
• e-Business is the organized effort of individuals to produce and sell, for a profit, the products and services that

satisfy society's needs through the internet.

• For a business to be organized, it must combine material, human, financial, and informational resources.
• Business is the organized effort of individuals to produce and sell, for a profit, the products and services that

satisfy society's needs through the internet.

• A business’s profit is what remains after all its expenses have been deducted from its sales revenue.

• Analysis of an individual's economic choices would be part of _______.
• macroeconomics
• microeconomics
• mesoeconomics
• monetary policy
• fiscal policy

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