Question 1

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

Accepted Answer

According to data from the Bureau of Economic Analysis, government spending accounted for approximately 20 percent of the annual U.S. gross domestic product in recent years, making it the best choice. The other options are much lower or much higher than the actual percentage.

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 all sizes of businesses, but there can be some red tape involved. It is not true that the government only deals with large businesses or that a small business cannot make a profit from a government contract. However, there may be additional requirements and paperwork involved in the government procurement process. Encouraging your friend to explore government contracting opportunities can potentially expand his client base and lead to new business opportunities.

Question 3

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 4

Individuals and business organizations that purchase products for the purpose of making a profit either by using the products to produce other products or by using them in their operations are classified as ____ markets.

Accepted Answer

The given description fits the definition of producer markets, which are made up of businesses that purchase products to use in production of other products or in their operations. Consumer markets are made up of individuals who purchase products for personal use, reseller markets are businesses that purchase products to resell to others, government markets are made up of government agencies that purchase products, and institutional markets refer to organizations that are not-for-profit, such as schools or hospitals.

Question 5

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

Accepted Answer

Target and Kmart purchase products from producers or wholesalers and resell them to customers, therefore they are considered to be members of the reseller business market.

Question 6

____ 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 then distribute them to retailers or other businesses in the distribution system. This allows for easier access to products for retailers and helps to streamline the supply chain.

Question 7

The government decides to purchase a new fleet of fighter jets for the U.S. Air Force. What type of buying procedure is the government most likely to use?

Accepted Answer

The government is most likely to use a negotiated procurement procedure, where it selects a few companies and enters into negotiations with them until the contract is awarded. This is because fighter jets are highly specialized and complex products that require a level of expertise beyond what most companies can offer. By negotiating with a select few, the government can ensure that they are working with the most qualified and capable firms. Additionally, this method allows for more specific requirements to be considered in the purchasing process, offering greater customization of the fighter jets to the Air Force's unique needs.

Question 8

Institutional markets are

Accepted Answer

The answer of Institutional markets are
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Question 9

Pi Delta Mu sorority purchases food in bulk to feed its members living in the house. This means it is part of a(n) ____ market.

Accepted Answer

An institutional market refers to organizations that buy goods for their own use, such as government agencies, hospitals, and universities. Since Pi Delta Mu sorority is purchasing food in bulk for its own use to feed its members living in the house, it can be categorized as an institutional market.

Question 10

Business markets are typically divided into four categories. These categories are

Accepted Answer

The categories typically used to classify business markets are producer, reseller, government, and institutional. These categories are based on the types of organizations that make up the market, and are used to understand the buying behavior, needs, and preferences of these groups. The other options given do not accurately reflect the usual categorization of business markets.

Question 11

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 from producers and resells the produce to consumers, making them a reseller market.

Question 12

Individuals and business organizations that buy finished goods and resell them to make a profit without changing the physical characteristics of the product are classified as ____ markets.

Accepted Answer

Reseller markets refer to individuals and organizations that buy finished goods and resell them without changing their physical characteristics to earn a profit. Examples of reseller markets include wholesalers, retailers, and distributors. Therefore, option E (reseller) is the correct choice. The other options are incorrect as they refer to different types of markets. Consumer markets are those in which individuals or households purchase goods and services for their personal consumption. Institutional markets involve organizations that buy goods and services for their own use, such as hospitals or schools. Producer markets involve businesses that buy goods and services needed to manufacture other products. Government markets include federal, state, and local governments that purchase goods and services for their operations.

Question 13

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 items from manufacturers and resells them to hardware stores, so it would be considered a reseller in the business market. The other options (producer, consumer, government, and supply) do not fit the description of the company's business model.

Question 14

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 get her firm to

Accepted Answer

Before Citrus Sweet can even consider making a presentation or negotiating with the state, they must first ensure that they are a qualified bidder. Therefore, their first step should be to secure a spot on the list of qualified bidders, which will allow them to compete with other companies for the contract. After being a qualified bidder, they can then proceed to quote prices and make a presentation to the purchasing department.

Question 15

An accountant who purchases software for maintaining clients' books is an example of a buyer in a(n) ____ market.

Accepted Answer

The answer of An accountant who purchases software for maintaining...

Question 16

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

Accepted Answer

Retailers have limited space and need to make the most profit from it. Therefore, they evaluate products based on their sales per square foot of selling area to determine which products will generate the most revenue within a limited space.

Question 17

Which of the following statements about reseller markets is false?

Accepted Answer

Resellers are generally concerned with how much space a product takes up as it affects their inventory management and storage costs. A high price alone may not be sufficient for them to carry a product.

Question 18

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

Accepted Answer

Government markets tend to have the most complex buying procedures due to the involvement of multiple departments and decision-makers, extensive regulations, and lengthy approval processes.

Question 19

When charitable organizations such as the American Cancer Society, Second Harvest Foodbank, 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 are considered to be institutional buyers.

Question 20

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 of iPads by a government entity, in this case the city of Chicago, is considered a government purchase.

Quiz 8: Business Markets and Buying Behavior