Deck 1: Taking Risks and Making Profits Within the Dynamic Business Environment

Question 1

Since all businesses make a profit, starting a business is not risky.

Answer 1

False

Question 2

Health care availability, a clean environment, and good schools all contribute to a high quality of life.

Answer 2

True

Question 3

Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.

Answer 3

True

Question 4

Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government officials, and environmentalists.

Question 5

The term "standard of living" refers to the amount of debt people can incur on a given income.

Question 6

Maintaining a high quality of life requires the combined efforts of businesses, nonprofit organizations, and government agencies.

Question 7

Outsourcing means selling goods and services to people in other countries.

Question 8

Businesses seek to earn a profit by providing goods and services to others.

Question 9

Outsourcing has caused complications in many states where jobs have been lost to overseas companies.

Question 10

Businesses provide goods, jobs, and services to others.

Question 11

An entrepreneur risks time and money to start and manage a business.

Question 12

Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

Question 13

The knowledge and skills learned in business courses are seldom relevant to students who work for nonprofit organizations or volunteer groups.

Question 14

Insourcing refers to the practice of global companies setting up design and production facilities in the United States.

Question 15

Profits of a business include the salaries paid to its employees.

Question 16

Revenue is the total amount of money a business takes in during a given period by selling goods and services.

Question 17

Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses.

Question 18

If a business's costs and expenses are greater than its revenue, it will suffer a loss.

Question 19

Revenue is the amount a business earns above and beyond what it spends for expenses and costs.

Question 20

The United States has one of the highest standards of living in the world.

Question 21

Sarah has started her own candy company. While she recognizes the risks involved in operating a business, she is still willing to invest her time, effort, and money in hopes of earning a profit. Sarah is an example of an entrepreneur.

Question 22

The only way a firm can increase its profits is to increase its sales revenue.

Question 23

The major difference between businesses and nonprofit organizations is that only businesses can increase the standard of living, while only nonprofit organizations can improve the quality of life.

Question 24

Insourcing creates new jobs, and helps offset the number of jobs being outsourced.

Question 25

Unlike businesses, employees of nonprofit organizations are not required to learn the business skills of information management, marketing, or financial management.

Question 26

Business decisions should consider the interests of customers, employees, suppliers, government leaders, and stockholders.

Question 27

The amount of profit or loss earned by a business can be found by subtracting the firm's expenses from its revenues.

Question 28

An effort to please one group of stakeholders eventually pleases all stakeholders.

Question 29

Christina quit her job in Chicago to take a less stressful position in a small town located in a scenic area. She now earns less money and has had to cut back on her purchases of material goods, but she has more free time and really enjoys the clean air and scenic beauty of her new home. Christina has accepted a lower standard of living in order to enjoy a higher quality of life.

Question 30

The only real purpose of a business is to make money for entrepreneurs.

Question 31

Political freedom, quality education, access to health care, and a clean environment are all factors that contribute to an improved quality of life.

Question 32

Businesses and nonprofit organizations often strive to accomplish the same objectives.

Question 33

Since businesses strive to earn a profit, their owners benefit at the expense of the rest of society.

Question 34

A charitable organization, such as the American Red Cross or Salvation Army, is classified as a for-profit organization.

Question 35

Brandford Books, an eclectic bookstore in a Phoenix suburb, generated total revenues of $17 million while incurring expenses of $14 million. By the end of the year, Brandford Books earned a profit of $3 million.

Question 36

Jose earned the same amount of money this year as he did last year. Thus, his standard of living must be the same as it was last year.

Question 37

Nonprofit organizations are similar to for-profit businesses in that they often provide goods and services that satisfy the needs of society.

Question 38

Nonprofit organizations use financial gains to meet stated social or educational goals of the organization rather than personal profit.

Question 39

People living in San Francisco, CA, on average earn more money than people living in Kansas City, MO. The citizens of San Francisco enjoy a higher standard of living than the citizens of Kansas City.

Question 40

Businesses satisfy the demands of all stakeholders by balancing the demands of customers and stockholders.

Question 41

Tools, machinery, and buildings are examples of capital resources.

Question 42

Starting a business is a riskier path toward business success than working your way up the ranks of a large business.

Question 43

Countries with an inadequately trained workforce and few entrepreneurs often achieve the highest levels of income by relying on a large number of workers.

Question 44

Taxes and government regulations are part of the economic and legal environment in which businesses operate.

Question 45

Working as an entrepreneur is the only way to succeed in business.

Question 46

Business consultant Peter Drucker said that the most important factor of production is knowledge.

Question 47

Gary recently completed his degree in management and is planning to start a business rehabilitating apartment buildings. After researching several potential areas, he chose Los Angeles due to its high population. Greg felt that this factor would create a large labor pool, the most important of the five factors of production.

Question 48

One of the best things the governments of developing countries can do to increase wealth is to minimize interference with the free exchange of goods and services.

Question 49

Jackson is supposed to be studying for finals but his mind keeps wandering to the beach. Several years ago, his Uncle Mitch made it big and now owns a small resort near Fort Lauderdale. He promised Jackson a management trainee position and the opportunity to buy into the company by contributing a portion of his paycheck each month back into the business. As he daydreams about being his own boss, he should realize that freedom to succeed also means freedom to fail.

Question 50

Land, sometimes called a natural resource, is the most critical factor of production in explaining why some countries are poor while others are rich.

Question 51

It was recently reported that Japan succeeded in improving its people's standard of living and establishing a relatively affluent society. This report clearly indicates that both income levels and the price of goods and services rose significantly during that time period.

Question 52

Aaron recently opened Twangy Tunes, a small recording studio in Nashville, TN. He probably could have set up shop in several major cities, but Nashville offered him the two most important factors, according to Peter Drucker, that would enhance the creation of wealth: labor and political freedom.

Question 53

Most business experts agree that entrepreneurship and the effective use of knowledge are the most important contributors to the creation of wealth.

Question 54

Entrepreneurship is one of the five factors of production that contribute to the creation of wealth.

Question 55

The major advantage rich nations have over poor nations is an abundance of land and labor.

Question 56

Paid vacations and health care insurance are among the benefits provided by the government to entrepreneurs.

Question 57

The business environment refers to the surrounding factors that either help or hinder the development of businesses.

Question 58

High taxes and government restrictions help to encourage entrepreneurs by providing greater incentives for people to work hard and create profit.

Question 59

Money is one of the five factors of production that contribute to the creation of wealth.

Question 60

If they wish to create more wealth, poor nations should focus on policies that increase entrepreneurship and the effective use of knowledge.

Question 61

Laws that allow companies to write enforceable contracts decrease the risk of doing business.

Question 62

The failure to uphold high ethical business standards by a few companies can negatively impact the entire U.S. business community.

Question 63

E-commerce is the buying and selling of goods online.

Question 64

An increase in productivity indicates that more can be produced in a given time period with the same amount of resources.

Question 65

Technology can help businesses become more efficient and productive.

Question 66

The government of the small nation of Gordonia owned the nation's telephone company and landlines. This relatively poor government relied on taxes to develop this industry and provide service to its citizens. If the government wanted to improve people's access to phone service, its best course of action would involve selling the telephone company to private investors.

Question 67

In rich countries such as the United States, changes in the level of taxation have little impact on the incentives of entrepreneurs.

Question 68

The government of Willopolis is trying to attain a higher quality of life by imposing strict regulations to protect the environment and ensure safe working conditions in its industries. The government also has established programs to help the poor, financing them by raising tax rates. These efforts by Willopolis's government should create an atmosphere that encourages entrepreneurship.

Question 69

The rise of online marketing has become particularly important in doing business in the B2B markets.

Question 70

In an effort to increase wealth and their country's standard of living, many governments are taking over major industries and operating them as nonprofit organizations.

Question 71

Corruption and illegal activities are expected in a capitalist system and can be beneficial.

Question 72

Technology refers to everything that makes business operations more effective, efficient, and productive.

Question 73

Productivity is the amount of output you generate given the amount of input such as hours worked.

Question 74

Effectiveness means producing goods and services using the least amount of resources.

Question 75

In countries where businesses cannot enter into binding contracts, business owners assume additional risk.

Question 76

The online B2B market consists of selling goods and services to consumers.

Question 77

Effectiveness means producing the desired result.

Question 78

One way for a government to actively promote entrepreneurship is to establish a currency that's tradable in world markets so that you can buy and sell goods anywhere in the world using that currency.

Question 79

Honesty, integrity, and high ethical standards are essential to a capitalist economic system like the one that operates in the United States.

Question 80

Though it has received a lot of attention, the development of information technology (IT) has had less of an impact on the way businesses operate than many other changes.