Question 1

The acceleration principle is used to explain:

Accepted Answer

The acceleration principle explains how small changes in consumer demand can lead to larger changes in demand for business goods, causing fluctuations.

Question 2

The newspapers today are filled with information on the problems facing the United States airline industry. The effect on the aluminum industry has been tremendous. Eighty percent of the metals in an airplane are aluminum and when people stop flying, air lines stop ordering new planes. The demand for aluminum in the airline industry is:

Accepted Answer

The demand for aluminum in the airline industry is derived because it depends on the demand for airplanes, which in turn depends on the demand for air travel.

Question 3

The mining industry has been described as "chronically cyclical." In terms of the business market in which the industry operates that means demands for its products are:

Accepted Answer

The term "chronically cyclical" refers to the regular fluctuations in demand for mining products, making "fluctuating" the correct choice.

Question 4

When Caterpillar sells a $2 million truck directly to a mining company in China for $2.5 million, what is the value added by Caterpillar?

Accepted Answer

The value added by Caterpillar is the difference between the selling price and the cost price, which is $2.5 million - $2 million = $0.5 million.

Question 5

Food processing companies and commercial cooks recently had to decide whether to use pure vanilla or artificial vanilla. A cyclone in Madagascar, the number one producer of vanilla, destroyed most of the vanilla plants. (It takes three years to grow a plant.) Since artificial vanilla is acceptable to anyone who is not a connoisseur, most chose to use artificial vanilla which cost about one-fourth the price of pure. The demand for vanilla is mostly:

Accepted Answer

The demand for vanilla is described as elastic because the significant increase in the price of pure vanilla (due to the cyclone in Madagascar) led many food processing companies and commercial cooks to switch to a cheaper alternative, artificial vanilla. Elastic demand indicates that the quantity demanded of a good or service changes significantly when its price changes.

Question 6

Why would a cable television network lease a new satellite communications system rather than buy one?

Accepted Answer

Leasing a new satellite communications system allows the cable television network to test the system's capabilities and performance before committing to a full purchase, providing flexibility and potentially saving costs if the system does not meet their needs.

Question 7

When Dr. Zane Greene's staff began complaining about how slow his autoclave is when they use it to sterilize dental equipment, he made a couple of phone calls and then ordered the new Vela autoclave because it is the fastest and safest on the market. This purchase is an example of a _____ purchase.

Accepted Answer

This is a modified rebuy because Dr. Greene is replacing an existing product (the old autoclave) with a new one due to dissatisfaction with the performance of the current product, indicating a change in requirements.

Question 8

The _____ (NAICS) system enables a company to identify relatively small segments of its business market.

Accepted Answer

The North American Industry Classification System (NAICS) is designed to classify business establishments into industries based on the similarity of their production processes. It is a standard used by Federal statistical agencies for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

Question 9

Ashley has been a dental office manager for 20 years. When she places an order for dental adhesive, tooth desensitizing gel, cotton sponges, and dental exam gloves, she is most likely making a _____ purchase.

Accepted Answer

Given Ashley's long tenure as a dental office manager and the routine nature of the items ordered (dental adhesive, tooth desensitizing gel, cotton sponges, and dental exam gloves), this scenario most likely represents a straight rebuy. These are standard supplies needed regularly in a dental office, indicating a routine purchase decision without the need for significant research or evaluation of new suppliers.

Question 10

Which of the following products will probably reach a horizontal business market rather than a vertical business market?

Accepted Answer

Protective eyewear is likely to reach a horizontal business market because it can be used across a wide range of industries and professions, not limited to a specific sector.

Question 11

Unlike a buyer in the consumer market, an industrial buyer:

Accepted Answer

Industrial buyers often engage in extensive negotiations before finalizing a sale, unlike typical consumer market transactions which are usually more straightforward and quicker. This is because industrial purchases often involve larger sums of money, more complex products or services, and contracts that may require detailed agreements on specifications, delivery, and post-sale support.

Question 12

A product is said to have a horizontal business market if:

Accepted Answer

A product with a horizontal business market is one that can be used across many different industries, not limited to a specific sector or type of business.

Question 13

Seaboard Inn has leased four limousines for use of its guests who want to attend the Newport Jazz Festival. This approach to the acquisition of limousines:

Accepted Answer

Leasing limousines allows Seaboard Inn to use its capital for other investments or needs instead of spending a large amount upfront to purchase vehicles. This approach conserves cash flow and investment capital.

Question 14

A(n) _____ is a market factor that is related to income generation and expenditures. It is one way to measure the purchasing power of business customers.

Accepted Answer

An activity indicator of buying power is a market factor that directly relates to the generation of income and expenditures, effectively measuring the purchasing power of business customers.

Question 15

United States Surgical manufacturers laparoscopic instruments allow surgeons to perform surgical procedures without having to make large incisions. Since only hospitals that do surgery can use its product, this company has a(n) _____ business market.

Accepted Answer

United States Surgical's products are designed for a specific industry (healthcare, specifically surgical procedures), which is characteristic of a vertical market. A vertical market targets the needs of a specific industry or group rather than appealing to a wide audience across various industries.

Question 16

According to the text, a unique feature of government buying is:

Accepted Answer

The answer of According to the text, a unique feature...

Question 17

Which of the following is one of the roles typically played by individuals in a buying center?

Accepted Answer

Gatekeeper is a role typically played by individuals in a buying center. They control the flow of information to others within the buying center.

Question 18

According to the text, resellers, such as a shoe store, a music store, and a bookstore, create _____ utility.

Accepted Answer

Resellers like a shoe store, a music store, and a bookstore create possession, time, and place utility by making products available when and where customers want them and by providing the means (through purchase) to own them.

Question 19

Which of the following describes a disadvantage inherent in the North American Industry Classification System (NAICS) as a source of markets?

Accepted Answer

Manufacturers of multiple products are listed in only one category in the NAICS, which can limit the system's accuracy and usefulness for market analysis by not fully representing the diversity of a company's operations.

Question 20

Usoa Stone has operated a daycare center since 1989. When she purchases diapers, baby formula, and graham crackers, you can be sure that she is making a _____ purchase.

Accepted Answer

Since Usoa Stone has been operating a daycare center since 1989, it's likely that she regularly purchases diapers, baby formula, and graham crackers. This indicates a routine purchase of items she has bought before, which is known as a straight rebuy.

Quiz 5: Business Markets and Buying Behavior