Question 1

____ buy products from manufacturers and then resell the products to other firms in the distribution system.

Accepted Answer

Wholesalers buy products in bulk from manufacturers and sell them to retailers or other businesses in the distribution system.

Question 2

A friend of yours starts his own business. He would like to expand his client base to include the government, but he believes his small business would be ignored. Based on your knowledge from the text, you tell him

Accepted Answer

The government buys products from businesses of all sizes, including small businesses. However, there may be some bureaucracy and regulations to navigate in order to secure a government contract. It is important for your friend to research and understand the procurement process for government contracts, but it is possible for his small business to be considered and successful in winning a government contract.

Question 3

Which of the following statements about reseller markets is false?

Accepted Answer

This statement is false because resellers are concerned with how much space the product takes up as it affects their inventory management and storage costs. They want products that are easy to store and do not take up too much space.

Question 4

Jason owns a small landscaping business called GreenScapes. When buying a new pickup truck for his landscaping business, Jason negotiated with Palmetto Dodge, a dealer, with the agreement that GreenScapes would be the service company Palmetto Dodge used for all of its landscaping needs. This is an example of

Accepted Answer

This is an example of reciprocity because Jason negotiated with Palmetto Dodge, a supplier, for his own benefit, in exchange for agreeing to purchase from them. This kind of deal is known as mutual back-scratching or quid pro quo.

Question 5

When the city of Chicago buys iPads for its restaurant inspectors to use during their visits, the purchase from Apple would be considered

Accepted Answer

The purchase would be considered a government purchase since it is being made by a municipal agency for official use.

Question 6

Which type of business market tends to have the most complex buying procedures?

Accepted Answer

Government organizations tend to have the most complex buying procedures compared to other business markets. This is due to their strict regulations, policies, and budgetary constraints that make it difficult for suppliers to navigate the procurement process. Additionally, government organizations often require suppliers to meet specific criteria before they can participate in the bidding process, which can add further complexity to buying procedures.

Question 7

Which of the following would be considered an institutional buyer?

Accepted Answer

The answer of Which of the following would be considered...

Question 8

Institutional markets are

Accepted Answer

Institutional markets consist of organizations such as schools, hospitals, and non-profit organizations that purchase goods and services to fulfill nonbusiness goals, rather than for resale or personal use.

Question 9

Retailers like Target and Kmart are considered to be members of which business market?

Accepted Answer

Retailers like Target and Kmart are resellers, meaning they purchase products or services from producers or distributors and sell them to the end customer.

Question 10

Motorola buys silicone, which is used in its chip-making process. Motorola produces microchips for use within a wide variety of products for other firms, such as Ford, GM, and Samsung. Motorola is a buyer in a(n) ____ market.

Accepted Answer

Motorola is purchasing silicone to produce microchips, which are components used in the manufacturing of products for other companies. This activity places Motorola in the producer market, as it is buying raw materials (silicone) to produce goods (microchips) for other businesses.

Question 11

What are the two ways governments make purchases?

Accepted Answer

Governments typically make purchases through either bidding or negotiated contracts. This helps ensure that the government is getting the best possible value for the goods or services being purchased and that vendors are competing fairly for government business. Cash or credit, contacting previous suppliers, lottery systems, and recurring orders are not typically used by governments to make purchases.

Question 12

Mike's Roadside Market buys produce from area farmers, marks the merchandise at a price that includes some profit, and then sells the fruit and vegetables to the people in and around Centerville. Mike's would be classified as part of a ____ market.

Accepted Answer

Mike's Roadside Market buys produce from farmers and sells it to consumers after marking up the merchandise. This classifies them as a reseller market.

Question 13

What is a primary difference between business and consumer buyers?

Accepted Answer

Business buyers typically make larger orders than consumer buyers. This is because businesses are buying products to fulfill their production or service needs, whereas consumers are only buying products for personal use.

Question 14

Which of the following statements about business buying is false?

Accepted Answer

Business markets typically involve larger order sizes compared to consumer markets, as businesses often buy in bulk for production or operational needs. This contradicts the statement in option E, making it false.

Question 15

Because retailers have to be concerned with product selection, price, and space, they often evaluate products on the basis of

Accepted Answer

Sales per square foot of selling area is a crucial metric that helps retailers determine the performance of a particular product in terms of generating revenue within the given space. This metric helps retailers optimize their product selection and design effective merchandising strategies. Other factors, such as markup and profit per dollar of selling price are important too, but sales per square foot is a primary metric used by retailers to evaluate product performance.

Question 16

About what percentage of the annual U.S. gross domestic product is government spending?

Accepted Answer

Government spending typically accounts for around 35-40% of the U.S. gross domestic product (GDP) when combining federal, state, and local government expenditures. This percentage can fluctuate based on various factors, including economic conditions and policy changes.

Question 17

When charitable organizations such as the American Cancer Society, Second Harvest Food Bank, and the Red Cross make purchases for goods and services to use in their daily operations, they would be considered to be _______ buyers.

Accepted Answer

Charitable organizations such as the American Cancer Society, Second Harvest Food Bank, and the Red Cross are nonprofit institutions and thus would be considered institutional buyers when making purchases for goods and services to use in their daily operations.

Question 18

The state of Montana is preparing to buy a large quantity of frozen orange juice for use in a large school district. Citrus Sweet, Inc. is in the citrus juice business but has never sold to the government market. To have a chance at getting this order, Citrus Sweet's first step must be to

Accepted Answer

Citrus Sweet, Inc. needs to secure a slot on the list of qualified bidders to have a chance at getting the order from the state. This will allow them to participate in the bidding process when the state requests proposals for the purchase of frozen orange juice. Once they are on the list of qualified bidders, they can then proceed with quoting prices and negotiating with the state.

Question 19

Snappy Tools, Inc., purchases hammers, bolts, and other hardware items from a variety of manufacturers and sells them to hardware stores at a price that includes a profit for Snappy Tools, Inc. The company would be part of what type of business market?

Accepted Answer

Snappy Tools, Inc. purchases products from manufacturers and sells them at a profit to hardware stores, making them a reseller in the business market.

Question 20

Bob Denton of Denton Pest Control buys equipment from Allied Tools because Allied hires him to spray its warehouse for insects periodically. This practice is an example of

Accepted Answer

The practice of Allied hiring Denton Pest Control to spray its warehouse for insects periodically in exchange for Denton purchasing equipment from Allied is an example of reciprocity. Reciprocity refers to the practice of two parties agreeing to do business with each other in exchange for mutual benefit. In this case, Denton Pest Control benefits from access to equipment from Allied Tools, while Allied Tools benefits from having a reliable pest control service.

Quiz 8: Business Markets and Buying Behavior