Chapter 01: Exploring the World of Business and Economics

Chapter 01: Exploring the World of Business and Economics

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Indicate whether the statement is true or false.

• As the founder of an American business firm, Peter Jenkins can, within certain limits, produce and/or sell any product

he chooses and sell it at any price it sets.

• True
• False

• After getting her bachelor's degree in business, Brit Jackson realized she was much more productive at her job than she

had been before. Brit's degree helped her to become a better employee.

• True
• False

• Sony is most correctly classified as a marketing intermediary type of business.
• True
• False

• How the price of homes affects the number of homes built and sold would be an economic issue studied in a

Macroeconomics course.

• True
• False

• When a business distributes profits to business owners, these profits become household income and are removed from

the circular flow of the economy.

• True
• False

• Real gross domestic product is an economic measure that has been adjusted for price increases of goods and services

during a given period of time.

• True
• False

• The consumer price index (CPI) and the producer price index (PPI) actually measure the same economic factors.
• True
• False

• As the price of a product increases, the amount of the product that a producer is willing to supply increases.
• True
• False

• As the price of a product increases, the amount of the product that consumers purchase increases.
• True
• False

• A copyright for printed materials in a book exists indefinitely.
• True
• False

(Foundations of Business, 6e William Pride, Robert Hughes, Jack Kapoor) (Test Bank all Chapters) 1 / 4

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Class:

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Chapter 01: Exploring the World of Business and Economics

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• 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

• In our free-enterprise system, federal and state governments decide what products and services to provide.
• True
• False

• A working knowledge of our business system combined with technical skills can give an applicant an advantage in

looking for a job.

• True
• False

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

• Because e-businesses use the Internet, there is no need to meet the needs of their customers.
• True
• False

• In order for a business to be successful, it must be organized, it must satisfy needs, and it must make a profit.
• 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

• Generally there are three types of businesses: manufacturing businesses, service businesses, and marketing

intermediaries.

• True 2 / 4

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• False

• People buy goods and services simply to own them.
• 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

• Profit is the payment business owners receive for assuming the risks of ownership.
• True
• False

• The term stakeholders refers only to the people who have invested money in a business.
• True
• False

• Economics is the study of how wealth is created and distributed.
• True
• False

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

economy.

• True
• False

• The factors of production include natural resources, labor, government assistance, and entrepreneurship.
• True
• False

• The four basic questions in a capitalist economy are what to produce, how to produce, who should produce, and when

to produce.

• True
• False

• Adam Smith is the person who actually organized American business as we know it today.
• True
• False

• According to Adam Smith, under laissez-faire capitalism, each person should be allowed to work toward his or her

own economic gain without government interference. 3 / 4

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• True
• False

• Adam Smith argued that the creation of wealth is a proper concern of government.
• True
• False

• Adam Smith developed the concept of the invisible hand to explain how all economic activity should be based on a

nation's needs and not the individual's needs.

• True
• False

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

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

• Goods and services purchased by consumers make up 90 percent of the nation’s total production.
• True
• False

• A business provides goods and services in exchange for sales revenues.
• True
• False

• The services that government provides would not be produced by private business firms or would be produced only

for those who could afford them.

• True
• False

• The government uses taxes to purchase resources and products required to provide services.
• True
• False

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

• In a socialist economy, the key industries are owned and controlled by the government.
• True
• False

• Karl Marx is known as the father of communism.
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