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Business Essentials 9th Edition by Ebert - Test Bank
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,Business Essentials, 9e (Ebert/Griffin)Chapter 1 The U.S. Business Environment
1) The customs, values, and demographic characteristics of the society in which an organization
functions are the principal elements of the political-legal environment.
Answer: FALSE
Explanation: These are the main considerations of the sociocultural environment. The political-
legal environment reflects the relationship between business and government, usually in the form
of government regulation of business.
Page Ref: 5
Difficulty: Easy
Objective: 1.2
Learning Outcome: Compare and contrast different economic systems
Skill: Concept
2) Physical resources include the data and other information used by businesses.
Answer: FALSE
Explanation: Physical resources are the tangible resources that organizations use to conduct their
business such as natural resources, raw materials, offices, storage and production facilities, parts
and supplies, computers and peripherals, and a variety of other equipment.
Page Ref: 8
Difficulty: Easy
Objective: 1.3
Learning Outcome: Identify the different types of technologies used in business and describe
their uses
Skill: Concept
3) Economic systems differ in how factors of production are used.
Answer: TRUE
Explanation: Different types of economic systems manage the factors of production differently.
In capitalism, for instance, they are managed by private individuals with capital resources, while
in a command economy the government manages the factors of production.
Page Ref: 9
Difficulty: Easy
Objective: 1.3
Learning Outcome: Compare and contrast different economic systems
Skill: Concept
1
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
,4) The point at which the supply curve and the demand curve intersect is the market price.
Answer: TRUE
Explanation: When demand and supply curves are plotted on the same graph, the point at which
they intersect is the point at which demand matches supply, which determines the market price.
Page Ref: 12
Difficulty: Easy
AACSB: Analytic skills
Objective: 1.4
Learning Outcome: Discuss strategies for setting and adjusting prices
Skill: Concept
5) Aggregate output refers to a company's annual production of goods or services.
Answer: FALSE
Explanation: Aggregate output is the total quantity of goods and services produced by an
economic system during a given period.
Page Ref: 17
Difficulty: Moderate
Objective: 1.5
Learning Outcome: Explain how economic performance is monitored
Skill: Concept
6) The United States government manages the collection and spending of its revenues through
monetary policy.
Answer: FALSE
Explanation: The United States government manages the collection and spending of its revenues
through fiscal policy.
Page Ref: 23
Difficulty: Moderate
Objective: 1.5
Learning Outcome: Compare and contrast different economic systems
Skill: Concept
7) The pursuit of profits is how a business differs from organizations such as most universities,
hospitals, and government agencies.
Answer: TRUE
Explanation: The pursuit of profits distinguishes a business from those organizations—such as
most universities, hospitals, and government agencies—that run in much the same way but that
generally don't seek profits.
Page Ref: 4
Difficulty: Easy
Objective: 1.1
Learning Outcome: Explain the entrepreneurship process
Skill: Concept
2
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
, 8) The technological environment includes only electronics and telecommunications used to
perform business activities.
Answer: FALSE
Explanation: Technology includes human knowledge, work methods, physical equipment,
electronics and telecommunications, and various processing systems that are used to perform
business activities.
Page Ref: 6
Difficulty: Moderate
AACSB: Analytic skills
Objective: 1.2
Learning Outcome: Identify the different types of technologies used in business and describe
their uses
Skill: Concept
9) One of the four elements that are necessary for private enterprise to be carried out is
reasonable prices.
Answer: FALSE
Explanation: The four elements that must be present in private enterprise are private property
rights, freedom of choice, profits, and competition.
Page Ref: 14
Difficulty: Moderate
Objective: 1.4
Learning Outcome: Discuss strategies for setting and adjusting prices
Skill: Concept
10) In typical modern oligopolies, the large capital investment necessary to enter the market
discourages new competitors.
Answer: TRUE
Explanation: A major factor discouraging new competitors in current oligopolistic industries
such as automobiles and large commercial aircraft is the huge capital investment that would be
needed to start a new company.
Page Ref: 15
Difficulty: Moderate
Objective: 1.4
Learning Outcome: Compare and contrast different economic systems
Skill: Concept
11) Natural monopolies exist partly because duplication of effort and resources would be
wasteful in some cases.
Answer: TRUE
Explanation: Many electric companies, for example, are natural monopolies because they can
supply all the power needed in a local area.
Page Ref: 16
Difficulty: Moderate
Objective: 1.4
Learning Outcome: Compare and contrast different economic systems
Skill: Concept
3
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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