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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment

Chapter 01
Taking Risks and Making Profits within the Dynamic Business
Environment
TEST PLANNING TABLE FOR CHAPTER 1
Learning Goal
LL:1
Knows Basic
Terms and Facts
LL:2
Understands
Concepts and
Principles
LL:3
Alies Principles
1. Describe the relationship
between profit and risk and show
how bsinesses and nonprofit
or!ani"ations can raise the
standard of li#in! for all.
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2. Compare and contrast bein!
an entreprener and workin! for
others.
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on bsinesses.
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&. Demonstrate how bsinesses
can meet and beat competition.
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and what those trends will mean
for tomorrow1s colle!e !radate.
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1-1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
Total n-./er o0 test ite.s1 ((&
Tre2false 3estions are in plain te.t.
4ltiple choice 3estions are in /old te2t3
5estions on bo.ed material are in /old te2t wit4 a tilde+3
6ssa- 3estions are in /old -nderlined te2t3
4inicase 3estions are in /old wit4 an asteris5,3
1-!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment

True !a"se #uestions

1" Businesses proide goods# $o%s# and serices to others"
True &a'se

!" Businesses seek to earn a profit %y proiding goods and serices to others"
True &a'se

(" Reenue is the amount a %usiness earns a%oe and %eyond what it spends for e)penses and
costs"
True &a'se

*" Profit is the amount of money a %usiness earns a%oe and %eyond what it spends for
sa'aries and other e)penses"
True &a'se

+" ,ince a'' %usinesses make a profit# starting a %usiness is not risky"
True &a'se

-" .n entrepreneur risks time and money to start and manage a %usiness"
True &a'se

1-(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/" 0f a %usiness1s costs and e)penses are greater than its reenue# it wi'' suffer a 'oss"
True &a'se

2" Profits of a %usiness inc'ude the sa'aries paid to its emp'oyees"
True &a'se

3" Reenue is the tota' amount of money a %usiness takes in during a gien period %y se''ing
goods and serices"
True &a'se

10" Risk is the chance an entrepreneur takes of 'osing time and money on a %usiness that may
not proe profita%'e"
True &a'se

11" The 4nited ,tates has one of the highest standards of 'iing in the wor'd"
True &a'se

1!" The term 5standard of 'iing5 refers to the amount of de%t peop'e can incur on a gien
income"
True &a'se

1(" 6ea'th care aai'a%i'ity# a c'ean enironment# and good schoo's a'' contri%ute to a high
7ua'ity of 'ife"
True &a'se

1*" Maintaining a high 7ua'ity of 'ife re7uires the com%ined efforts of %usinesses# nonprofit
organi8ations# and goernment agencies"
True &a'se

1-*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+" ,takeho'ders are a'' the peop'e who stand to gain or 'ose %y the po'icies and actiities of a
%usiness"
True &a'se

1-" ,takeho'ders inc'ude customers# emp'oyees# stockho'ders# supp'iers# dea'ers# %ankers#
goernment officia's and enironmenta'ists"
True &a'se

1/" 9ften the needs of a firm1s arious stakeho'ders wi'' conf'ict"
True &a'se

12" 9utsourcing means se''ing goods and serices to peop'e in other countries"
True &a'se

13" 9utsourcing has caused many comp'ications in many states where $o%s hae %een 'ost to
oerseas companies"
True &a'se

!0" 50nsourcing5 refers to the practice of g'o%a' companies setting up design and production
faci'ities in the 4nited ,tates"
True &a'se

!1" The know'edge and ski''s 'earned in %usiness courses are se'dom re'eant to students who
work for nonprofit organi8ations or o'unteer groups"
True &a'se

!!" Businesses and nonprofit organi8ations often strie to accomp'ish the same o%$ecties"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(" :onprofit organi8ations use financia' gains to meet stated socia' or educationa' goa's of
the organi8ation rather than persona' profit"
True &a'se

!*" ,ocia' entrepreneurs are peop'e who start and manage organi8ations that are not-for-profit"
Their mission is to he'p others improe their 7ua'ity of 'ife"
True &a'se

!+" The on'y rea' purpose of a %usiness is to make money for entrepreneurs"
True &a'se

!-" The on'y way a firm can increase its profits is to increase its sa'es reenue"
True &a'se

!/" The amount of profit or 'oss earned %y a %usiness can %e found %y su%tracting the firm1s
e)penses from its reenues"
True &a'se

!2" :onprofit organi8ations are simi'ar to %usinesses in that they often proide goods and
serices that satisfy the needs of society"
True &a'se

!3" 4n'ike %usinesses# emp'oyees of nonprofit organi8ations are not re7uired to 'earn the
%usiness ski''s of information management# marketing# or financia' management"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0" Business decisions shou'd consider the interests of customers# emp'oyees# supp'iers#
goernment 'eaders# and stockho'ders"
True &a'se

(1" By %a'ancing the demands of customers and stockho'ders# %usinesses satisfy the demands
of a'' stakeho'ders"
True &a'se

(!" .n effort to p'ease one group of stakeho'ders eentua''y p'eases a'' stakeho'ders"
True &a'se

((" 0nsourcing creates new $o%s# and he'ps offset the num%er of $o%s %eing outsourced"
True &a'se

(*" Ro%in has started her own 0nternet consu'ting firm" ;hi'e she recogni8es the risks
ino'ed in operating a %usiness# she is sti'' wi''ing to inest her time# effort# and money in
hopes of earning a profit" Ro%in is an e)amp'e of an entrepreneur"
True &a'se

(+" Backstreet Books# an ec'ectic %ookstore on a 'arge co''ege campus generated tota'
reenues of <1+ mi''ion whi'e incurring e)penses of <1! mi''ion" During the year Backstreet
Books earned a profit of <( mi''ion"
True &a'se

(-" ,ince %usinesses strie to earn a profit# their owners %enefit at the e)pense of the rest of
society"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(/" =ohn earned the same amount of money this year as he did 'ast year" Thus# his standard of
'iing must %e the same as it was 'ast year"
True &a'se

(2" ,usan 7uit her $o% in a %ig city to take a 'ess stressfu' position in a sma'' town 'ocated in a
scenic area" ,he earns 'ess money at her new $o% and has had to cut %ack on her purchases of
materia' goods# %ut she has more 'eisure time and rea''y en$oys the c'ean air and scenic %eauty
of her new home" ,usan has accepted a 'ower standard of 'iing in order to en$oy a higher
7ua'ity of 'ife"
True &a'se

(3" Po'itica' freedom# 7ua'ity education# access to hea'th care# and a c'ean enironment are a''
factors that contri%ute to an improed 7ua'ity of 'ife"
True &a'se

*0" Peop'e 'iing in ,an =ose# C. on aerage earn more money than peop'e 'iing in ,t"
>ouis# M9" The citi8ens of ,an =ose en$oy a higher standard of 'iing than the citi8ens of ,t"
>ouis"
True &a'se

*1" The ma$or difference %etween %usinesses and nonprofit organi8ations is that on'y
%usinesses can increase the standard of 'iing# whi'e on'y nonprofit organi8ations can improe
the 7ua'ity of 'ife"
True &a'se

*!" . charita%'e organi8ation# such as the Red Cross or ,a'ation .rmy# is c'assified as a for-
profit organi8ation"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
*(" 0t was reported %y a Bei$ing newspaper that China succeeded in improing its peop'e1s
standard of 'iing and esta%'ishing a re'atie'y aff'uent society in the past seen years" This
report c'ear'y indicates that %oth income 'ee's and the price of goods and serices rose
significant'y during that time period"
True &a'se

**" ,tarting a %usiness is a riskier path toward %usiness success than working your way up the
ranks of a 'arge %usiness"
True &a'se

*+" ;orking as an entrepreneur is the on'y way to succeed in %usiness"
True &a'se

*-" Paid acations and hea'th care insurance are among the %enefits proided %y the
goernment to entrepreneurs"
True &a'se

*/" ;omen current'y own 'ess than ten percent of a'' %usinesses"
True &a'se

*2" The num%er of %usinesses owned %y .sians# 6ispanics# and .merican 0ndians has grown
dramatica''y"
True &a'se

*3" >and# sometimes ca''ed natura' resources# is the most critica' factor of production in
e)p'aining why some countries are poor whi'e others are rich"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+0" Money is one of the fie factors of production that contri%ute to the creation of wea'th"
True &a'se

+1" Too's# machinery# and %ui'dings are e)amp'es of capita' resources"
True &a'se

+!" The ma$or adantage rich nations hae oer poor nations is an a%undance of 'and and
'a%or"
True &a'se

+(" Entrepreneurship is one of the fie factors of production that contri%ute to the creation of
wea'th"
True &a'se

+*" Business consu'tant Peter Drucker said that the most important factor of production is
know'edge"
True &a'se

++" Most %usiness e)perts agree that entrepreneurship and the effectie use of know'edge are
the most important contri%utors to the creation of wea'th"
True &a'se

+-" The %usiness enironment refers to the surrounding factors that either he'p or hinder the
dee'opment of %usinesses"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+/" =ing is a recent 4"," co''ege graduate who is interested in starting an import tea %usiness"
0f she fo''ows through with her p'ans# she wi'' %e a pioneer# %ecause on'y a handfu' of women
choose to start %usinesses in the 4","
True &a'se

+2" Countries with an inade7uate'y trained work force and few entrepreneurs often achiee
the highest 'ee's of income %y re'ying on a 'arge num%er of workers"
True &a'se

+3" 0f they wish to create more wea'th# poor nations shou'd focus on po'icies that increase
entrepreneurship and the effectie use of know'edge"
True &a'se

-0" To rea'i8e his passion# .'e) recent'y opened 9rigina' Tunes# 0nc"# a sma'' state of the art
recording studio in :ashi''e# T:" 6e pro%a%'y cou'd hae set-up shop in seera' ma$or cities#
%ut :ashi''e offered him the two most important factors that he 'earned in %usiness schoo'
wou'd enhance the creation of wea'th? 'a%or and po'itica' freedom"
True &a'se

-1" @reg recent'y comp'eted his co''ege degree in construction management" 6e is heading to
Me)ico City to start a %usiness dee'oping apartment dwe''ings" .fter researching seera'
potentia' areas# he chose Me)ico City due to its high popu'ation" @reg fe't that this factor
wou'd create a 'arge 'a%or poo'# the most important of the fie factors of production"
True &a'se

-!" =ared is supposed to %e cramming for fina's %ut his mind keeps wandering to the Co'orado
s'opes" ,eera' years ago# his 4nc'e Mike made it %ig and now owns a ski 'odge $ust north of
.spen" 6e promised =ared a management trainee position and the opportunity to %uy into the
company %y contri%uting a portion of his paycheck each month %ack into the %usiness" .s he
dreams a%out the opportunity to %e his own %oss# rea'ity %ites as =ared scans his %usiness %ook
and reads# 5freedom to succeed a'so means freedom to fai'"5
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
-(" ;e''-managed %usinesses wi'' grow and prosper regard'ess of the %usiness enironment in
which they operate"
True &a'se

-*" Ta)es and goernment regu'ations are part of the economic and 'ega' enironment in
which %usinesses operate"
True &a'se

-+" 6igh ta)es and goernment restrictions he'p to encourage entrepreneurs %y proiding
greater incenties for peop'e to work hard and create profit"
True &a'se

--" 9ne of the %est things the goernments of dee'oping countries can do to increase wea'th
is to minimi8e interference with the free e)change of goods and serices"
True &a'se

-/" Countries that proide 'itt'e or no goernment ino'ement proide the %est enironment
for competitie %usinesses"
True &a'se

-2" 0n an effort to increase wea'th and their country1s standard of 'iing# many goernments
are taking oer ma$or industries and operating them as nonprofit organi8ations"
True &a'se

-3" Corruption and i''ega' actiities are e)pected in a capita'ist system and can %e %eneficia'"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/0" 9ne way for a goernment to actie'y promote entrepreneurship is to esta%'ish a currency
that1s trada%'e in wor'd markets so that you can %uy and se'' goods anywhere in the wor'd
using that currency"
True &a'se

/1" 6onesty# integrity# and high ethica' standards are essentia' to a capita'ist economic system
'ike the one that operates in the 4nited ,tates"
True &a'se

/!" >aws that a''ow companies to write enforcea%'e contracts decrease the risk of doing
%usiness"
True &a'se

/(" 0n rich countries such as the 4nited ,tates# changes in the 'ee' of ta)ation hae 'itt'e
impact on the incenties of entrepreneurs"
True &a'se

/*" The fai'ure to upho'd high ethica' %usiness standards %y a few companies can negatie'y
impact the entire 4"," %usiness community"
True &a'se

/+" ,eera' years ago# the goernment of the sma'' nation of .''egro owned the nation1s
te'ephone company and 'and'ines" This re'atie'y poor goernment re'ied on ta)es to dee'op
this industry and proide serice to its citi8ens" 0f the goernment desired to rapid'y improe
peop'e1s access to phone serice# its %est course of action wou'd ino'e se''ing the te'ephone
company to priate inestors"
True &a'se

1-1(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/-" The goernment of the nation of Bing'and is trying to achiee a high 7ua'ity of 'ife %y
imposing strict regu'ations to protect the enironment and ensure safe working conditions in
factories and mines" The goernment a'so has esta%'ished am%itious programs to he'p the
poor# financing them %y setting high ta) rates" These efforts %y Bing'and1s goernment shou'd
create an atmosphere that encourages entrepreneurship"
True &a'se

//" Though it has receied a 'ot of attention# the dee'opment of the 0nternet has had 'ess of
an impact on the way %usinesses operate than many other techno'ogica' changes"
True &a'se

/2" .n increase in productiity indicates that more can %e produced in a gien time period
with the same amount of resources"
True &a'se

/3" Techno'ogy can he'p %usinesses %ecome more efficient and productie"
True &a'se

20" Productiity is the amount of output you generate gien the amount of input such as hours
worked"
True &a'se

21" Effectieness means producing goods and serices using the 'east amount of resources"
True &a'se

2!" Effectieness means producing the desired resu't"
True &a'se

1-1*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
2(" Techno'ogy affects peop'e in most# %ut not a'' industries"
True &a'se

2*" Techno'ogy refers to eerything that makes %usiness operations more effectie# efficient#
and productie"
True &a'se

2+" E-commerce is the %uying and se''ing of goods oer the 0nternet"
True &a'se

2-" The B!B 0nternet market consists of se''ing goods and serices to consumers"
True &a'se

2/" The rise of 0nternet marketing has %ecome particu'ar'y important in doing %usiness in the
B!B markets"
True &a'se

22" The %usiness-to-%usiness segment of e-commerce is of 'ess importance than the %usiness-
to-consumer segment of e-commerce"
True &a'se

23" Techno'ogy a''ows firms to %e more responsie to their customers1 wants and needs"
True &a'se

30" Bar codes are a form of techno'ogy that has enhanced a company1s a%i'ity to %e responsie
to consumer needs"
True &a'se

1-1+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
31" .n e'ectronic storage fi'e where information is kept is ca''ed a CP4"
True &a'se

3!" The data%ases of a %usiness often inc'ude a great dea' of information a%out the firm1s
customers"
True &a'se

3(" 0nformation in a data%ase a''ows firms to carry on'y the products that the 'oca' popu'ation
wants"
True &a'se

3*" 0dentity theft is when indiidua's or firms access peop'e1s persona' information and then
use it for i''ega' purposes and actiities"
True &a'se

3+" The main difference %etween B!C and B!B e-commerce is that B!C uses on'y the
0nternet# whi'e B!B com%ines e-commerce with traditiona' A%ricks-and-mortarB out'ets"
True &a'se

3-" There is 'ess risk ino'ed in starting an e-commerce on'y %usiness than there is in trying
to add e-commerce to a traditiona' A%ricks-and-mortarB store"
True &a'se

3/" 9ne of the ma$or adantages to firms ino'ed in e-commerce is that the techno'ogy is
sti'' so new that the 0nternet-%ased firms face ery 'itt'e competition"
True &a'se

1-1-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
32" .'though the 0nternet is e)citing# ery few peop'e hae access to it outside the 4","
True &a'se

33" :iki has $oined with seera' other inestors to form a new company that se''s foot care
products to consumers oer the 0nternet" :iki has inested in a B!C e-commerce company"
True &a'se

100" 9er the past seera' years# workers in the sma'' nation of Rain'and hae en$oyed an
increase in the num%er of ho'idays and a reduction in the aerage 'ength of the workday that
has reduced the tota' num%er of hours they work each year" 6oweer# the output per worker in
Rain'and is higher now than it was %efore the reduction in hours" These facts suggest that
productiity in Rain'and has increased"
True &a'se

101" ,'eek;rap is a company that produces industria' coatings for the stee' industry" 4nti'
recent'y it re'ied on who'esa'ers to distri%ute its products to other %usinesses# %ut now it a'so
se''s direct'y to its %usiness customers through its we%site" This is an e)amp'e of the 'argest
and most important type of e-commerce transaction"
True &a'se

10!" .s emerging techno'ogies %ecome widespread# %usinesses tend to find %etter uses for
them" 6oweer# in the case of the 0nternet# %usinesses that se'' B!B hae not %enefited from
direct'y se''ing to their %usiness customers in the same way that B!C companies hae done"
True &a'se

10(" ;ith the emergence of the 0nternet# =asmine finds it easy to do a'' her gift %uying on'ine"
,he takes comfort in the fact that new techno'ogies if insta''ed proper'y are se'dom used in
unethica' ways"
True &a'se

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
10*" Techno'ogica' innoation has a ripp'e effect" ;ith the adent of the 0nternet# Ty'er
6an'ey# a certified techno-nerd# is %eing courted %y companies to write the ne)t generation of
antiirus software" 6e te''s us its %ig %usinessC
True &a'se

10+" To remain competitie in today1s market# firms must produce a 7ua'ity product and offer
outstanding serice at a reasona%'e price"
True &a'se

10-" Producing a high 7ua'ity product wi'' ensure success in the competitie enironment"
True &a'se

10/" ,uccessfu' firms fo''ow a customer-drien strategy# as opposed to the management-
drien strategy used in the past"
True &a'se

102" Dero defects means that there is a company goa' of no mistakes in making products"
True &a'se

103" Traditiona' %usinesses hae a manageria' focus rather than a customer focus"
True &a'se

110" Competition is fierceC 9ne way to respond 7uick'y to customer needs is to dee'op a
strategy of empowering emp'oyees"
True &a'se

1-12
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
111" . po'icy of empowerment encourages managers to make decisions 7uick'y for their front
'ine emp'oyees"
True &a'se

11!" Empowerment means giing front'ine workers the responsi%i'ity# authority# and freedom
to respond 7uick'y to customer re7uests"
True &a'se

11(" The goa' of empowerment in the work enironment is to preent mistakes" Mistakes can
%e preented %y giing management more contro' oer the actions of 'ower-'ee' workers"
True &a'se

11*" The primary focus of successfu' firms is designing and producing high 7ua'ity goods"
.dertising is then used to conince consumers to %uy their superior products"
True &a'se

11+" 0t1s important that firms are as efficient as possi%'e" This is done %y %ecoming
management-drien for efficiency"
True &a'se

11-" Customer-drien organi8ations re7uire managers to c'ose'y direct and contro' their
emp'oyees"
True &a'se

11/" Bruno and @ino are worthy competitors in the %akery %usiness in a sma'' upsca'e resort
town" @ino recent'y negotiated a contract with a supp'ier for rea''y cheap cooking oi'" 6e
knows that %akery customers want cheap products" 0n this competitie enironment# keeping
the price down is a'' that matters"
True &a'se

1-13
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
112" Brett runs a 'awn care serice" .'though he and his emp'oyees cou'd serice eight
househo'ds in one day# he aerages si) yards per crewmem%er# per day" Brett recent'y
restructured his work crew and proided each cutter with an incentie to ac7uire two new
customers each month through customer referra's" .s a recent %usiness graduate# you te'' him
he1s pro%a%'y on the right track"
True &a'se

113" The statistica' study of the human popu'ation to descri%e its si8e# age# gender# and
income is known as diersity recognition"
True &a'se

1!0" The 4"," popu'ation tends to %uy the same things and spend time in rough'y the same
way as peop'e did a decade ago"
True &a'se

1!1" Demographic changes create new %usiness opportunities"
True &a'se

1!!" Diersity groups identified in the market today inc'ude e)troerts# introerts# atheists#
and the deout"
True &a'se

1!(" Companies hae responded to a dierse customer %ase %y hiring a more dierse
workforce"
True &a'se

1!*" Current'y peop'e %etween the ages of *+ and +* are the richest group in the 4nited
,tates"
True &a'se

1-!0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1!+" :ew we'fare ru'es hae made it easier for sing'e parents to remain at home with their
young chi'dren without %eing re7uired to seek emp'oyment"
True &a'se

1!-" 0n some cities the num%er of 'ega' and i''ega' immigrants has caused goernments to
adapt %y changing signs to other 'anguages"
True &a'se

1!/" The federa' goernment re7uires companies to take diersity ery serious'y# een
recommending esta%'ishing a chief diersity officer in the e)ecutie suite"
True &a'se

1!2" 9ne factor that has had a ma$or effect on %usinesses is the growth of sing'e-parent
fami'ies"
True &a'se

1!3" Businesses that cater to o'der consumers in the future wi'' 'ike'y not %e successfu'"
True &a'se

1(0" ;orkp'ace changes due to the rise of sing'e-parent fami'ies create many $o%
opportunities in day care# counse'ing# and other re'ated fie'ds"
True &a'se

1(1" Businesses use demographic studies to understand where peop'e 'ie# their 'ifesty'es# and
what they are 'ike'y to %uy"
True &a'se

1-!1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(!" Diersity management wou'd not %e an issue if firms wou'd treat a'' of their emp'oyees
the same"
True &a'se

1((" Demographic trends suggest that %usinesses wi'' %enefit from offering f'e)i%'e work
schedu'es# e'dercare# and chi'dcare to he'p emp'oyees %a'ance the demands of $o% and fami'y"
True &a'se

1(*" .''owing today1s young peop'e to inest part of their ,ocia' ,ecurity money in persona'
saings accounts makes sense since in the future 'ess money wi'' %e coming into ,ocia'
,ecurity than wi'' %e going out"
True &a'se

1(+" The 5pay-as-you-go5 ,ocia' ,ecurity system wi'' ensure that the young peop'e of today
wi'' hae ,ocia' ,ecurity %enefits in the future when they retire"
True &a'se

1(-" Eaier# a recent co''ege graduate# is thinking of inesting in a home hea'th care %usiness"
6e %e'iees this wi'' %e a profita%'e enture %ecause of the increasing num%er of peop'e in the
4"," that wi'' %e oer -0 in the near future and more 'ike'y to need this type of serice" This
accurate'y descri%es a demographic trend that wi'' affect his %usiness choice"
True &a'se

1(/" ,ue is a sing'e mother with two sma'' chi'dren" 6er emp'oyer is considering proiding
fami'y 'eae" ,ince ,ue is a sing'e mom with sma'' chi'dren# she is un'ike'y to %enefit from
this program"
True &a'se

1-!!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(2" Ro% is an emergency room nurse at a 'oca' hospita' in Te)as" 9n a week'y %asis# he wi''
sere a num%er of patients who are not 'ega''y 4"," citi8ens" Many of them are giing %irth to
%a%ies" &ortunate'y# Ro% speaks enough ,panish to communicate with the patients" Ro% is
e)periencing the rea'ities of the socia' enironment in some states"
True &a'se

1(3" @'o%a'i8ation has increased among nations"
True &a'se

1*0" .n important enironmenta' change in the g'o%a' enironment is the growth of
internationa' competition"
True &a'se

1*1" 0mproed distri%ution systems hae 'ed to more g'o%a' trade"
True &a'se

1*!" @'o%a' trade has suffered %ecause of increased pro%'ems with the 0nternet"
True &a'se

1*(" @'o%a'i8ation has great'y increased 'iing standards around the wor'd"
True &a'se

1**" China and 0ndia hae %ecome ma$or 4"," competitors"
True &a'se

1*+" Companies from the 4nited ,tates are %ui'ding many of their products oerseas# and
unfortunate'y foreign companies are not %ui'ding products in the 4nited ,tates"
True &a'se

1-!(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1*-" Because of increased trade# there is now an increased interdependence in the wor'd"
True &a'se

1*/" The threat of terrorism increases the costs of operating most %usinesses"
True &a'se

1*2" ;ars are cost'y to a'' companies"
True &a'se

1*3" 4"," e)ports are e)pected to increase under new trade agreements 'eading to more 4","
$o%s"
True &a'se

1+0" The war on terrorism has had a significant effect in drawing many resources from the
4"," economy and 'ed to many additiona' costs for %usinesses"
True &a'se

1+1" 0n most industries# the on'y producers that pose a serious threat to 4"," manufacturers are
those in =apan and ;estern Europe"
True &a'se

1+!" Companies that participate in the defense industry %y making weapons and other
companies that make armored ehic'es and een food companies do we'' when the 4"," is at
war"
True &a'se

1-!*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+(" 9ne of the pro%'ems with g'o%a'i8ation is that distri%ution systems and communication
systems 'ack efficiency"
True &a'se

1+*" The eidence for c'imate change is 7uestiona%'e" ;e''-known 4"," companies are taking
a wait-and-see approach toward addressing c'imate change"
True &a'se

1++" Car'os @on8a'e8 owns a sma'' manufacturing company that makes enti'ation systems
used in the construction of office %ui'dings" .s the 4"," continues to %e ino'ed in wars
around the g'o%e# Car'os may notice that his %usiness wi'' %e growing more s'ow'y in the
future as more money continues to %e put into the war effort"
True &a'se

1+-" >ucy owns a restaurant in >os .nge'es" ,he heard on the radio that the home'and
security threat 'ee' has %een increased due to anticipated terrorist actiities# especia''y in
'arge cities in the 4"," ,he wi'' 'ike'y not %e a%'e to get insurance to coer any 'osses her
%usiness may suffer shou'd an attack occur in >"."
True &a'se

1+/" .fter seera' years of study as a part-time student# .'e) recent'y earned a degree in
marketing at a 'oca' co''ege" The growth in g'o%a' markets may increase .'e)1s $o%
opportunities# %ut it wi'' a'so re7uire him to continua''y update his ski''s or seek further
education"
True &a'se

1+2" Maya is an engineer for ;indy Ridge# 0nc" a maker of wind tur%ines" Recent'y# a 'arge
company has shown interest in inesting in this sma'' operation" This is not surprising since
firms that are creating products for a'ternatie sources of energy are attracting the attention of
goernments and other %usinesses"
True &a'se

1-!+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+3" 9er many years the nature of 4"," %usiness has changed ery 'itt'e from century to
century"
True &a'se

1-0" The num%er of 4"," $o%s in manufacturing has increased in the past fie years"
True &a'se

1-1" Techno'ogy he'ped the manufacturing industry to %ecome more productie"
True &a'se

1-!" ;hi'e the proportion of workers emp'oyed in agricu'ture has remained re'atie'y
constant# the aerage si8e of farms has steadi'y decreased oer the past century"
True &a'se

1-(" 0ncreases in productiity hae a''owed fewer farmers to feed more and more peop'e"
True &a'se

1-*" The adice proided %y a marriage counse'or is an e)amp'e of the serice industry"
True &a'se

1-+" .'most a'' of the growth in emp'oyment opportunities since the mid-1320s has %een
generated %y the serice sector"
True &a'se

1--" .'though emp'oyment in the serice sector has increased rapid'y in recent years# the ast
ma$ority of workers are sti'' emp'oyed in the goods producing sector"
True &a'se

1-!-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1-/" There are more high-paying $o%s in the serice sector than in the goods-producing
sector"
True &a'se

1-2" The %est emp'oyment strategy for today1s co''ege graduates is to search for $o%s that are
c'ose'y re'ated to their co''ege ma$or"
True &a'se

1-3" The growth in the serice sector in the 4nited ,tates appears to %e giing way to an
information-%ased g'o%a' era"
True &a'se

1/0" The transition from an agricu'tura' economy to a manufacturing economy to a serice
%ased economy has resu'ted in a serious increase in 'ong-term unemp'oyment"
True &a'se

1/1" 9ne reason gien for the dec'ine in the num%er of 4"," workers emp'oyed in
manufacturing is that manufacturing firms in the 4"," hae %ecome more efficient"
True &a'se

1/!" The continuing increase in the num%er of 4"," workers in the serice sector means that
more and more workers are emp'oyed in 'ow-wage positions"
True &a'se

1/(" 6istorica''y $o%s 'ost in one sector of the economy hae %een rep'aced %y increased
emp'oyment opportunities in other sectors"
True &a'se

1-!/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/*" Cee Duction is a financia' p'anner who he'ps peop'e find ways to sae for retirement and
'ower their ta)es" Cee is emp'oyed in the serice sector of the economy"
True &a'se

1/+" .fter 'osing her manufacturing $o% in the 4"," automo%i'e industry# =uanita has found
that we'' paid serice sector $o%s re7uire retraining and further education"
True &a'se


Mu"tip"e Choice #uestions

1/-" .n actiity which seeks to earn a profit %y proiding a good or serice is known as aAnB?
." industry"
B" corporation"
C" %usiness"
D" serice"

1//" FFFFFFFFFF is the amount a %usiness earns after deducting what it spends for sa'aries
and other e)penses"
." Profit
B" Reenue
C" 0nterest
D" Diidends

1/2" . %usiness incurs a FFFFFFFFFFF if its costs and e)penses e)ceed its reenues"
." 'oss
B" 'ia%i'ity
C" de%it
D" diidend

1-!2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/3" FFFFFFFFFF is the chance a %usiness owner wi'' 'ose the time and money inested in a
%usiness that proes to %e unprofita%'e"
." Depreciation
B" Risk
C" &a''i%i'ity
D" Redundancy

120" The tota' amount of money that %usinesses take in %y se''ing goods and serices is ca''ed
FFFFFFF"
." profit
B" reenue
C" 'oss
D" retained earnings

121" .AnB FFFFFFFFFFFF is a person who assumes the risk of starting a %usiness"
." manager
B" entrepreneur
C" priate inestor
D" stakeho'der

12!" ,tarting a %usiness a'ways ino'es FFFFFFF"
." profit
B" 'oss
C" reenue
D" risk

12(" 9ften in %usiness the greater the risk# the FFFFFFFFFFF"
." greater the potentia' reward
B" 'ower the e)pected reenues
C" 'ower the a'ue proided to society
D" greater the num%er of stakeho'ders

1-!3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
12*" FFFFFFFFFFF is a measure of the genera' we''-%eing and satisfaction deried from a
ariety of factors inc'uding po'itica' freedom# safety# education# and a c'ean enironment"
." ,tandard of 'iing
B" Gua'ity of 'ife
C" @ross nationa' income
D" ,ocia' satisfaction inde)

12+" The amount of goods and serices peop'e can %uy with the money they hae is ca''ed
their?
." nomina' income"
B" consumer price inde)"
C" profit margin"
D" standard of 'iing"

12-" The customers# emp'oyees# stockho'ders# supp'iers# creditors# and others who stand to
gain or 'ose %y the po'icies and actiities of a %usiness represent the firm1s?
." market makers"
B" economic enironment"
C" stakeho'ders"
D" socia' mentors"

12/" The most important difference %etween for-profit %usinesses and nonprofit organi8ations
is that?
." %usinesses do not %enefit society"
B" nonprofit organi8ations seek to make a profit for its owners and organi8ers"
C" nonprofit organi8ations do not seek a profit for its owners or organi8ers"
D" nonprofit organi8ations do not fi'e ta) returns"

122" >ast year# .denture Enterprises reported reenues of <!* mi''ion whi'e its tota'
e)penses were <10 mi''ion" Based on this information# .denture reported?
." profits of <1* mi''ion"
B" profits of <(* mi''ion"
C" 'osses of <1* mi''ion"
D" 'osses off <(* mi''ion"

1-(0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
123" . common characteristic of most entrepreneurs is that they?
." accept the risks ino'ed in starting and managing a %usiness"
B" hae a high 'ee' of scientific and technica' e)pertise"
C" possess a great dea' of persona' wea'th"
D" hae e)perience in running 'arge# comp'e) organi8ations"

130" ;hich of the fo''owing is the %est e)amp'e of a %usiness whose goa' is to earn a profitH
." . community co''ege
B" The ,a'ation .rmy
C" Boy ,couts of .merica
D" Best Buy# 0nc"

131" 0n order to make an inte''igent inestment decision# entrepreneurs shou'd?
." 'imit their options to those %usiness inestments that are %acked %y the 4"," goernment"
B" inest in %usinesses that hae generated a sta%'e rate of profit for at 'east the past ten years"
C" inest on'y in %usiness opportunities where it is possi%'e to take an actie ro'e in
management"
D" compare the risks of potentia' inestments to their e)pected profits and find the right
%a'ance %etween profit and risk"

13!" Companies that outsource research and dee'opment and design $o%s?
." hae a'ways made a wise decision"
B" wi'' %e more profita%'e in the 'ong run"
C" run the risk of oerseas companies using the information to produce competitie products"
D" a'ways inest in the oerseas companies that take on these $o%s"

13(" 6onda and Toyota hae used insourcing for years to produce cars in the 4nited ,tates"
0nsourcing?
." he'ps offset the num%er of $o%s %eing outsourced"
B" increases the num%er of $o%s %eing outsourced"
C" damages the 4nited ,tates economy"
D" causes $o%s to %e 'ost to oerseas competitors"

1-(1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
13*" Pu%'ic schoo's# charities and goernment agencies genera''y FFFFFFFFFF"
." are incorporated
B" do not seek to earn a profit
C" proide goods rather than serices
D" do not hae any stakeho'ders

13+" &or-profit %usinesses and nonprofit organi8ations are simi'ar in that they %oth?
." contri%ute to the we'fare of society"
B" seek to earn a profit"
C" hae a 'imited 'ife"
D" must %e contro''ed %y a %oard of directors"

13-" The standard of 'iing for a nation1s peop'e depends main'y on?
." the 7ua'ity of the natura' enironment"
B" how much po'itica' freedom they hae"
C" their income and the prices of the goods and serices they %uy"
D" the amount of 'a%or and capita' aai'a%'e emp'oyed in the manufacturing sector"

13/" ;or'd-c'ass %usinesses attempt to meet the needs of?
." their customers# een if it comes at the e)pense of emp'oyees and other stakeho'ders in the
%usiness"
B" their emp'oyees# een if it means shortchanging customers %y charging higher prices"
C" a'' of their stakeho'ders"
D" e)c'usie'y their owners# since they are u'timate'y the ones who pay the %i''s"

132" ,he'%y recent'y started se''ing her inention? . %ed that 'ooks 'ike it f'oats in mid- air"
The %ed is actua''y suspended %y magnetic forces" ,he'%y is aAnB?
." ar%itrageur"
B" entrepreneur"
C" specu'ator"
D" account manager"

1-(!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
133" Ross wants to inest some money that he $ust inherited" 6e found that his %ank offers a
saings account paying a guaranteed (I rate of return" 6oweer# he wou'd 'ike to earn a
higher return" Ross shou'd keep in mind that to earn a higher return on his money he?
." wi'' hae to inest oerseas"
B" shou'd inest in a %usiness that has a ery sta%'e and predicta%'e rate of return"
C" wi'' pro%a%'y hae to accept a higher 'ee' of risk"
D" wi'' pro%a%'y hae to engage in i''ega' actiities"

!00" ;hich of the fo''owing is the most accurate statement a%out the impact of %usiness on
societyH
." ;hen %usinesses earn a profit for their owners# they usua''y do so at the e)pense of the rest
of society which proes it is neer a win-win situation"
B" ;hi'e %usinesses often improe the standard of 'iing within a society# they can do 'itt'e to
improe the 7ua'ity of 'ife"
C" Businesses often improe the 7ua'ity of 'ife# %ut can do 'itt'e to improe the standard of
'iing of most peop'e due to inf'ation"
D" Businesses can hae a positie impact on %oth the standard of 'iing and the 7ua'ity of 'ife
within a society"

!01" =ane1s income has remained sta%'e oer the past few years whi'e the prices of things she
%uys hae gone up" :eerthe'ess# =ane fee's %etter off %ecause the enironment is c'eaner# the
crime rate has dec'ined# she has more 'eisure time# and the 7ua'ity of medica' care has
improed" 0f =ane1s e)perience is typica'# we can conc'ude that the standard of 'iing has?
." increased# %ut the 7ua'ity of 'ife has decreased"
B" increased# and so has the 7ua'ity of 'ife"
C" dec'ined# %ut the 7ua'ity of 'ife has increased"
D" dec'ined# and so has the 7ua'ity of 'ife"

1-((
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0!" Ee and her three co''ege friends en$oy perfumes" .s a specia' gift to each of them 'ast
ho'iday season# Ee found a way to make scented cand'es with each friend1s faorite perfume
scent" The three friends 'oed her gift idea and encouraged Ee to create more and se'' them
on the 0nternet" Recent'y# she is fi''ing orders from her we%site# and turning a profit" Ee is
proof that?
." me too %usinesses work"
B" when you successfu''y fi'' a market need# you can make money"
C" the 0nternet is a way to distri%ute $ust a%out anything"
D" the cost of supp'ies to make cand'es is re'atie'y cheap"

!0(" ;hich of the fo''owing statements a%out socia' entrepreneurs Asuch as Muhammad
Junus who won the :o%e' Pri8eB descri%es their cha''engeH
." ,ocia' entrepreneurs may switch socia' causes seera' times %efore finding their niche"
B" ,ocia' entrepreneurs understand that their %usiness enironments are 'ess dynamic than
other %usinesses# especia''y during a recession"
C" ,ocia' entrepreneurs use different %usiness ski''s than entrepreneurs who start other
%usinesses" They shou'd focus on a different educationa' curricu'um than other entrepreneurs"
D" 4sing the same %usiness ski''s as other entrepreneurs# socia' entrepreneurs dee'op
%usinesses to improe the ski''AsB andKor 7ua'ity of 'ife of others"

1-(*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0*" P'anet Earth Dee'opers is a 'arge nation-wide construction company with home offices
in >ansing# M0" The 'oca' media often remarks a%out the pristine 'andscaping that surrounds
the home office that sits on a (0-acre comp'e)" .t the %ack end of the comp'e) are seera'
'arge warehouses and garages that ho'd 'arge e7uipment" The grounds surrounding these
warehouses 'ook 'ike a we''-maintained park" .cross the street from the garages are seera'
shops and %usinesses" The CE9# 5P'anet Pau'5 Aas his emp'oyees ca'' himB# often ta'ks a%out
how thankfu' he is that the town permits him to store the company e7uipment at that site# and
ows to a'ways maintain the premises for his neigh%ors Athe other %usinesses that thrie in
that areaB# not to mention that he asks 100 emp'oyees to come to work there eeryday" ;hich
of the fo''owing statements descri%es P'anet Pau'1s %usiness phi'osophyH
." P'anet Pau' is a nice guy whose company made a 'ot of money# so he is wi''ing to spread it
around"
B" P'anet Pau' understands that een though it may cost a 'itt'e more# stakeho'der
considerations are ery important if you want your %usiness to thrie"
C" P'anet Pau' is more concerned a%out town po'itics than a%out the company profits" 6e
shou'd ask his emp'oyees if they wou'd rather hae that money in their pockets than on the
'awns"
D" P'anet Pau' is taking a %usiness risk that his trucks and e7uipment wi'' not make too much
noise as they enter and e)it the garages"

!0+" The growth of 6ispanic owned %usinesses?
." remained re'atie'y constant during the past decade"
B" s'ow'y increased during the past decade"
C" increased dramatica''y in recent years"
D" decreased s'ight'y compared to other minority groups who hae stared %usinesses"

!0-" The num%er of %usinesses owned %y 6ispanics and .sians has?
." decreased after the 3-11 terrorist attack"
B" s'ow'y increased"
C" significant'y increased"
D" remained re'atie'y constant"

1-(+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0/" ;hich of the fo''owing entai's the greatest amount of riskH
." ;orking for the goernment
B" ;orking for a 'arge %usiness
C" ;orking for a sma'' %usiness
D" ,tarting a %usiness

!02" The resources that contri%ute to the creation of wea'th are known as FFFFFFF"
." production coefficients
B" factors of production
C" production techno'ogies
D" production aggregates

!03" ;hich of the fo''owing is a factor of productionH
." %onds
B" money
C" know'edge
D" serice

!10" .s a factor of production# the term capita' inc'udes?
." stocks and %onds issued %y corporations"
B" natura' resources such as 'and and water"
C" too's# machinery# and %ui'dings"
D" serices proided %y the goernment that ena%'e %usinesses to %e more productie"

!11" Two factors of production that seem to contri%ute the most to a nation1s a%i'ity to create
wea'th are?
." 'and and 'a%or"
B" 'and and capita'"
C" entrepreneurship and 'a%or"
D" entrepreneurship and know'edge"

1-(-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1!" FFFFFFFFFFFFFFF isKare the e)terna' and interna' circumstances that surround the
%usiness"
." The %usiness enironment
B" The factors of production
C" The %usiness corra'
D" The %usiness discip'ines

!1(" Entrepreneurs weigh the differences %etween the %enefits of starting a %usiness and those
things that they are 'ike'y to forego %ecause they choose to work for themse'es" ,uch things
they are 'ike'y to pass-up on are?
." the freedom to make their own decisions"
B" 'oca' goernment %enefits such as enterprise 8one ta) credits"
C" emp'oyer paid %enefits such as paid acation and hea'th insurance"
D" tickets to sporting eents that trading partners may proide"

!1*" ;hich of the fo''owing is a %enefit of owning your own %usinessH
." &reedom to keep the profits from your %usiness
B" @oernment supported hea'th insurance
C" More camaraderie with emp'oyees
D" ,horter work hours

!1+" >eanne owns a nursery %usiness" The trucks# handcarts# and fork'ift she purchased for the
%usiness are ca''ed FFFFFFFFFF inestments"
." natura' resources
B" intangi%'e resources
C" current asset
D" capita'

1-(/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1-" .s you consider the factors of production# which of the fo''owing did management
theorist# Peter Drucker %e'iee to %e one of the most important contri%uting factors to
increasing our nation1s wea'thH
." >and
B" >a%or
C" Lnow'edge
D" Capita'

!1/" ;hen we compare the factors of production in wea'thy and poor nations# we find?
." poor nations hae p'enty of 'and and know'edge# %ut ery 'itt'e 'a%or"
B" poor and wea'thy nations A%othB hae an a%undance of know'edge# it is the 'and that aries#
with rich nations a'ways haing more"
C" wea'thy nations hae know'edge and entrepreneuria' opportunities# whi'e poor nations are
often 'acking in these areas"
D" wea'thy nations hae 'and and 'a%or# whi'e poor nations hae capita' and entrepreneurship"

!12" . nation progresses socia''y when it has good schoo's# c'ean air and water# and more"
;hich of the fo''owing statements addresses conditions for socia' progressH
." ,ocia' progress wi'' eo'e when capita' is apportioned to eeryone in e7ua' amounts"
B" . city# state# or nation1s socia' progress needs the right %usiness enironment"
C" The foundation for socia' progress is a handfu' of wea'thy entrepreneurs wi''ing to spread
the wea'th"
D" ,ocia' progress can on'y improe when there is a strong 'a%or poo' to draw from"

!13" ;hich of the fo''owing statements a%out factors of production is the most accurateH
." The fie factors of production are energy# capita'# 'a%or# 'eadership and money"
B" ;ea'th creation in poor nations is s'owed %y chronic shortages of 'a%or"
C" Each of the factors of production is e7ua''y important in creating wea'th"
D" Entrepreneurship and know'edge are the most important in creating wea'th"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!0" :o'iia is a sma'' and poor nation# %ut its current president has a genuine desire to create
more wea'th for :o'iia citi8ens" The president has receied recommendations from seera'
of her adisors" ;hich of the fo''owing recommendations is 'ike'y to create the most wea'th
for :o'iiaH
." .c7uire more 'and %y inading a neigh%oring country that is een poorer and weaker than
:o'iia"
B" 4se foreign aid from other nations to purchase more too's and machinery"
C" Esta%'ish a %usiness enironment that promotes and rewards entrepreneurship"
D" Esta%'ish %arriers to trade to protect :o'iia %usinesses from foreign competition"

!!1" Ben and Chris com%ined their 'oe of hockey with a %usiness enture" They purchased a
sma'' porta%'e cart and %egan se''ing hockey memora%i'ia outside of the hometown hockey
arena" Their first year went we''# %ut this past year has %een a rea' strugg'e" Due to poor
economic conditions inc'uding a 'oss of $o%s# ticket sa'es at the arena are down# which has
significant'y hurt their sa'es as we''" .s a recent %usiness schoo' graduate# you e)p'ain to Ben
and Chris?
." this type of %usiness is a'ways high risk %ecause it is seasona'"
B" the %usiness does not fi'' a sufficient need for most peop'e"
C" enironmenta' circumstances are dynamic and tough to contro'"
D" socia' entrepreneurs are current'y getting most of the attention"

!!!" :ick is a recent finance graduate who has two passions? music and finance" 4pon
graduation# he was offered an opportunity to $oin a strugg'ing rock %and with a 'ot of
potentia'# or a $o% at a 'arge we''-esta%'ished financia' serices company" By $oining the %and#
he wi'' forego which of the fo''owingH
." .dded %enefits such as hea'th insurance proided to emp'oyees of 'arge corporations"
B" The freedom to contri%ute as an innoator in his work enironment"
C" >ong hours at work# whi'e he 'earns the %usiness and contri%utes to making it successfu'"
D" =o% protection"

1-(3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!(" China is a nation with a ast amount of 'and and a ery 'arge popu'ation" .nother
characteristic of this nation is its peop'e1s affinity for saing money" Referring to the fie
factors of production# the goernment of China has made significant progress in %ui'ding its
%usiness enironment %y focusing on factors that needed improement" 0ts strategy was to?
." increase the supp'y of 'a%or"
B" increase sources for capita'"
C" increase entrepreneurship"
D" encourage neigh%oring nations to proide the necessary 'and for %usiness dee'opment"

!!*" .ccording to the 5$pot"ight on $ma"" Business5 %o) for Chapter 1# >isa Lnoppe Reed
started a uni7ue %usiness ca''ed 5.rt for a Cause5" ;hich of the fo''owing statements
accurate'y coneys the c'imate surrounding women-owned %usinessesH
." .'though it wou'd make an idea' wor'd# it remains difficu't to make a 'iing when you
com%ine socia' causes and %usiness entures"
B" There are sti'' tremendous stigmas a%out women owning %usinesses" The few women who
attempt to run their own %usiness each year is indicatie of these cu'tura' pro%'ems"
C" 0t is difficu't enough for women to %e entrepreneurs" ;hen women com%ine socia' causes
with their %usiness ski''s# the %usiness fai'ure rate intensifies"
D" The num%er of women owned %usinesses has increased significant'y" .s a socia'
entrepreneur# >isa1s %usiness mode' proes that one can %e successfu' and a'so improe the
'ies of others"

!!+" Ta)es and goernment regu'ations are part of the FFFFFFFFFFFFFFFF enironment of
%usiness"
." economic and 'ega'
B" competitie
C" socia'
D" techno'ogica'

!!-" Businesses faor?
." minima' goernment spending %ecause it keeps ta)es to a minimum"
B" more goernment serices %ecause it minimi8es ta) conse7uences"
C" ma)imum goernment spending %ecause it raises %usiness profits"
D" 'ess goernment spending %ecause it 'owers %usiness profits"

1-*0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!/" 0n order to create more wea'th and proide %etter serices# some nations recogni8e that
FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF"
." raising ta)es %enefits a'' %usinesses
B" a good strategy is to minimi8e interference with the free e)change of goods and serices
C" restricting trade with other countries a'ways he'ps domestic %usinesses
D" taking contro' of priate'y owned %usinesses and making them goernment -run wi''
decrease ta)es and improe the 'ies of eeryone

!!2" 0n countries where %usinesses are goernment owned?
." there is 'ess incentie to work hard"
B" the right amount of each good is produced"
C" profits tend to %e higher"
D" the 7ua'ity of goods is high %ut profits are 'ow"

!!3" 6igh ta) rates tend to?
." promote economic dee'opment"
B" make a nation1s currency trada%'e"
C" discourage entrepreneurship"
D" reduce the amount of money created %y the goernment"

!(0" The capita'ist system re'ies heai'y on?
." protectionist po'icies with respect to wor'd markets"
B" minimi8ing goernment interention in corrupt %usiness practices"
C" making sure that currencies are neer under-a'ued"
D" honesty# integrity# and high ethica' %usiness standards"

!(1" Contemporary goernments promote %usiness dee'opment %y?
." increasing %usiness regu'ations"
B" proiding goernment ownership of %usinesses"
C" permitting %usinesspeop'e to conduct %usiness without the use of contracts"
D" esta%'ishing a currency that1s trada%'e in wor'd markets"

1-*1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(!" ;hich of the fo''owing po'icies wou'd tend to foster entrepreneurshipH
." Minimi8e ta)es and regu'ations"
B" Promote more regu'ations to protect the enironment"
C" Dee'op po'icies to reduce corruption %etween indiidua's"
D" Encourage pu%'ic ownership of %usinesses"

!((" ;hen corruption is present in the %usiness enironment?
." company 'eaders can threaten competitors and minimi8e competition"
B" factories are easier to %ui'd without a goernment permit"
C" it promotes fair competition"
D" 'a%orers can make more money"

!(*" Guestiona%'e %usiness practices such as those fo''owed %y many mortgage 'ending
companies in the past few years?
." encouraged inestors to increase their stock market ho'dings"
B" fundamenta''y weakened the entire economic enironment"
C" he'ped retired emp'oyees at the e)pense of current emp'oyees"
D" resu'ted from too much goernment regu'ation"

!(+" ;hich of the fo''owing goernment po'icies wou'd %e "east 'ike'y to encourage
entrepreneurshipH
." Passage of 'aws that ena%'e %usinesspeop'e to write enforcea%'e contracts"
B" Esta%'ishment of a currency that is trada%'e in wor'd markets"
C" Esta%'ishment of strict regu'ations specifying e)act'y how products shou'd %e made to
ensure safety and afforda%i'ity"
D" Passage of 'aws that e'iminate corruption in goernment and %usiness"

1-*!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(-" . recent :ew Jork Times artic'e a%out Bernard Madoff and his i''ega' Pon8i scheme
stated# 5;hen money goes g'o%a'# fraud does too"5 .'though the goa' of inestors who trusted
Madoff1s inestment company was to earn the highest return possi%'e on their inestments#
they turned a %'ind-eye toward the fact that some of those returns were too good to %e true"
0ndiidua' inestors# companies# and een charities 'ost 'arge sums of money %y inesting
with Madoff1s company" ;hich of the fo''owing statements re'ates to this storyH
." The unethica' %ehaior of one company had a wor'dwide ripp'e effect that can impact the
we'' %eing of an economy"
B" Too much regu'ation caused the capita'istic nature of Mr" Madoff1s %usiness mode' to fai'"
C" Peop'e 'ost money %ecause of the f'uctuations in wor'd trading currencies# 7uestioning the
'egitimacy of trading a%road"
D" 0nestors did not sign contracts with Mr" Madoff1s company" The goernment can on'y
protect indiidua's and companies who sign enforcea%'e contracts"

!(/" .dam Rip'ey se''s custom %icyc'es" .dam %uys seera' %ike parts inc'uding whee's and
tires from the @ood Treads Company" .'though seera' goernment-supported regu'ations
he'p .dam in his %usiness# regu'ations that make it easy for .dam1s %usiness to en$oy good
endor re'ationships are?
." 'ower ta)es that %usiness to %usiness customers pay to each other"
B" 'aws that permit minima' corruption in %anking institutions"
C" 'aws that permit sma'' %usinesses to use the goernment as an intermediary when doing
%usiness with other sma'' %usinesses"
D" 'aws that support enforcea%'e contracts %etween firms"

1-*(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(2" =ay and =im ,pears own a 'awn irrigation system %usiness" They perform insta''ations
and maintenance of these systems" ,eera' of their customers are go'f courses# %ut they sere
a 'arge group of residentia' customers as we''" ;hen they started the %usiness ten years ago#
they made a pact to a'ways operate within the 'ega' 'imits of the 'aw# %ut 'ate'y# the
competition is eating them a'ie" >oca' competitors hae hired i''ega' immigrants to perform
the manua' 'a%or" They do not pay ta)es on these emp'oyees - they $ust pay them in cash at the
end of the week" Emp'oyment ta)es are a %urden for sma'' %usinesses" =ay and =im do not
want to hire i''ega' workers" There1s a risk if you permit an i''ega' worker to drie a truckM or#
if heKshe has an accident on the $o%" Jou hae $ust studied %usiness ethics in your c'ass" Jou
inform this partnership that?
." Ta)es on'y need to %e paid for the owners"
B" They are not on'y taking a chance that a %igger pro%'em may occur# they are indirect'y
setting the ethics code for their firm"
C" ,ma'' %usinesses may not %e a%'e to worry a%out ethics codes" These types of documents
are %etter suited for %ig %usiness"
D" 0t is not unethica' to try to %etter the 'ies of others" Eeryone needs $o%s"

!(3" The 0nternet and the emergence of an information-%ased economy are important parts of
the FFFFFFFFFFF enironment in which %usinesses operate"
." economic and 'ega'
B" techno'ogica'
C" competitie
D" g'o%a'

!*0" Techno'ogy affects peop'e in?
." a'' industries"
B" most industries"
C" information techno'ogy industries with the e)ception of agricu'ture"
D" primari'y high income countries"

!*1" Emp'oyers proide too's and techno'ogy for their emp'oyees in order to?
." increase the cost of production and profita%i'ity"
B" improe their efficiency and productiity"
C" reduce corruption in %usiness and e'iminate scanda's"
D" encourage the priate ownership of %usinesses"

1-**
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*!" Efficiency means?
." producing the desired resu't"
B" producing goods and serices using the 'east amount of resources"
C" the amount of output you generate gien the amount of input"
D" the %uying and se''ing of goods using the most amount of resources"

!*(" FFFFFFFFFFF refers to the amount of output generated with a gien amount of input#
e"g"# the num%er of pi88as produced per worker per hour"
." Efficiency
B" Techno'ogy
C" Te'ecommuting
D" Productiity

!**" FFFFFFFFFFF means producing the desired resu't"
." Effectieness
B" Techno'ogy
C" E-production
D" Productiity

!*+" FFFFFFFFFFF means producing items using the 'east amount of resources"
." Efficiency
B" Techno'ogy
C" E-production
D" Productiity

!*-" The two main types of e-commerce are?
." on'ine and off'ine"
B" ED0 and EDC"
C" who'esa'e and retai'"
D" B!B and B!C"

1-*+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*/" ;hen %usinesses se'' to other %usinesses oer the 0nternet# these transactions are known
as?
." B!C transactions"
B" e-who'esa'e transactions"
C" B!B transactions"
D" intermediate e-commerce transactions"

!*2" Companies that se'' goods to consumers oer the 0nternet are engaging in?
." B!C transactions"
B" 094 transactions"
C" B!B transactions"
D" J!L transactions"

!*3" The series of 'ines on a product packaging that the cashier scans when you check out at a
grocery store or discount store is ca''ed a?
." %ar code"
B" 8ip code"
C" scan code"
D" 'aser code"

!+0" .n e'ectronic storage fi'e where firms keep customer information is known as aAnB
FFFFFFFFF"
." MP( fi'e
B" management information system
C" data%ase
D" e-mai' serer

!+1" FFFFFFFFFF is i''ega''y o%taining and i''ega''y using priate information a%out a person#
such as using someone1s credit card num%er"
." Petty theft
B" 0dentity theft
C" Banking theft
D" 9n'ine theft

1-*-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+!" 9ne adantage of a data%ase is?
." it permits a retai' store to direct'y gather information on the customers who do %usiness
with its competitors# so it can target promotiona' materia's to those peop'e"
B" it creates efficiency in that the store can 7uick'y rep'enish items that are purchased"
C" it preents identity theft"
D" it preents stores from e)changing customer information with each other"

!+(" ;hich of the fo''owing is an adantage of uti'i8ing techno'ogyH
." Techno'ogy increases the cost of production"
B" Techno'ogy reduces the need for a marketing p'an"
C" Productiity increases"
D" Management %ecomes iso'ated from the demands of stakeho'ders"

!+*" ;hich of the fo''owing %est descri%es the main difference %etween B!B and B!C
transactionsH B!B transactions?
." ino'e transactions where the %uyers and se''ers are %oth %usinesses# whi'e B!C ino'es
transactions %etween %usinesses and consumers"
B" focus on financia' transactions whi'e B!C e-commerce focuses on the sa'e of manufactured
goods"
C" refer to %usiness %etween nonprofit organi8ations whi'e B!C e-commerce is carried out %y
%usiness firms seeking to earn a profit"
D" ino'e sa'es in foreign markets whi'e B!C e-commerce is restricted to domestic markets"

!++" 0n recent years# %usinesses in genera' hae e)perienced a 'asting impact due to the
emergence of FFFFFFFFFFFF"
." motor-re'ated techno'ogies
B" techno'ogies re'ated to %rain studies
C" counterfeit techno'ogies
D" information techno'ogies

1-*/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+-" :tercon is an 0nternet-%ased company that proides on'ine support serices for
%usinesses that need he'p in setting up and maintaining their we%sites" :tercon is an e)amp'e
of a company that is engaged in?
." B!C e-commerce"
B" :!J e-commerce"
C" J!L e-commerce"
D" B!B e-commerce"

!+/" >ife of >u)ury# 0nc"# is a mai' order firm that specia'i8es in e)pensie and unusua' gifts
for a'' occasions" The company keeps a 'arge fi'e of information on a'' of its regu'ar
customers# inc'uding names# addresses# type of gifts they hae ordered in the past# and the si8e
and fre7uency of their orders" The e'ectronic fi'e which stores this information is aAnB?
." spreadsheet"
B" MP( fi'e"
C" PERT fi'e"
D" data%ase"

!+2" ;hich of the fo''owing predictions a%out the impact of e-commerce on traditiona'
%usinesses is 'ike'y to %e most accurateH
." E-commerce wi'' hae 'itt'e impact on most traditiona' %usinesses# %ecause on'y a few
types of products can %e so'd effectie'y oer the 0nternet"
B" Traditiona' %rick-and-mortar firms wi'' enter the e-commerce market %y creating their own
we% sites"
C" E-commerce wi'' proe to %e ery successfu' in competing against traditiona' firms in B!C
markets# %ut wi'' hae much 'ess success in B!B markets"
D" Brick-and-mortar %usinesses wi'' cease to e)ist within twenty years"

!+3" Tyre'' recent'y noticed that he was receiing seera' cata'ogs and direct mai'
adertisements than he had in the past een though he had not re7uested any of them" ;hich
of the fo''owing %est e)p'ains why this is happeningH
." Tyre'' was a ictim of on'ine theft"
B" Tyre'' gae his persona' information to a %usiness# which then traded it to other companies
and these companies then %egan sending him cata'ogs"
C" .'' %usinesses routine'y hae a'' customers1 persona' information"
D" Tyre''1s accountant gae his information to the direct mai' marketers"

1-*2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-0" @a%rie''a wants to compare the price of a designer %ag she saw in a 'oca' department
store# with other stores that may hae the same" ,he 'ocates the product on three different
we%sites on the 0nternet# and then stum%'es on a site that does the price shopping for her"
@a%rie''a1s 7uest is an e)amp'e of how customers are using FFFFFFFFFF to so'e pro%'ems"
." price shopping
B" data%ases
C" information techno'ogy
D" socia' networking

!-1" Char'es Ma'one recent'y renewed his card mem%ership at DiscountMania" The card has
an annua' <*0 fee# %ut Char'es %e'iees that it pays for itse'f %ecause he receies good prices
on e'ectronics# contact 'enses# and een tires for his car" ,hort'y after renewing the card#
Char'es %egan receiing ca''s from co''ection agencies c'aiming that he owed money" ;ith the
he'p of others# he 'earned that another Char'es Ma'one a'so owned a DiscountMania card# and
wrote checks with insufficient %ank funds when making purchases" DiscountMania had 'inked
Char'es1 persona' information with the other Char'es Ma'one1s persona' information" Char'es
e)perienced FFFFFFFFFFFFFF"
." Buyer myopia
B" Data%ase fraud
C" 0nformation trafficking
D" 0dentity theft

!-!" Mar'a ,tap'es is concerned with identity theft" 9ne of the ways that she can protect her
information from 'eaking-out to the wrong hands is?
." .oid a'' e-commerce transactions %ecause this is the on'y type of %uying transactions
where we%sites and others hand'e sensitie# persona' information"
B" 0nsta'' antiirus software# firewa''s# and anti-spyware software on her computer"
C" >imit her purchases with endors that she knows do not store her information in a
data%ase"
D" >imit her trae's to the 4nited ,tates %ecause identity theft is an internationa' pro%'em"

1-*3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-(" .ndy B'ake got a ca'' yesterday from P'anet Bank# the company that issued his credit
card in7uiring a%out an <2+"00 charge made in Caracas# Nene8ue'a" 4pon 'earning that .ndy
had not made this purchase# the Bank 7uick'y took steps to cance' the card and issue a new
one" @ien the circumstances that .ndy1s credit card num%er had an i''ega' transaction# .ndy
may a'so want to?
." Check his computer1s firewa'' to make sure its working"
B" Cance' his account with P'anet Bank# a'together and e'iminate credit cards from his 'ife"
C" Check his credit report"
D" Diersify his spending ha%its %y using one of seera' credit cards when making purchases"

!-*" 0n today1s competitie enironment# good a'ue means?
." making products with 8ero defects"
B" superior 7ua'ity that trans'ates into dura%'e products"
C" offering the 'atest trends without seeming 'ike you are oer the top"
D" proiding 7ua'ity products and serices at competitie prices"

!-+" ,uccessfu' %usinesses are keen'y focused on their?
." customers"
B" managers"
C" creditors"
D" %ureaucrats"

!--" Empowerment means?
." giing emp'oyees the authority to make decisions"
B" making certain that emp'oyees a'ways defer to management when making decisions"
C" hiring emp'oyees that do not re7uire training due to the cost'y nature of this actiity"
D" asking emp'oyees to write the po'icies which goern their $o%s"

!-/" Empowerment re7uires that managers focus more on FFFFFFFFFF 'ower-'ee'
emp'oyees"
." direct'y superising
B" training
C" simp'ifying the $o%s of
D" contro''ing and correcting

1-+0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-2" To imp'ement a po'icy of empowerment# the organi8ation wi'' restructure so that?
." managers hae more responsi%i'ity and emp'oyees 'earn to fo''ow directions"
B" emp'oyees assume more responsi%i'ity"
C" workers agree to work oertime without e)tra pay"
D" an entire 'ee' of management is remoed from the organi8ation"

!-3" ;hich of the fo''owing statements a%out the competitie enironment is most accurateH
." &irms that produce a 7ua'ity product wi'' a'most a'ways succeed in the competitie
marketp'ace"
B" Traditiona' firms wi'' %e una%'e to successfu''y compete against the new 0nternet firms
un'ess they immediate'y create a way to reach customers through this techno'ogy"
C" &irms that empower their emp'oyees wi'' continue to perform poor'y in the competitie
enironment"
D" Companies now hae to offer %oth high-7ua'ity products and outstanding serice at
competitie prices"

!/0" 0n order to compete we'' and gain market share# contemporary %usinesses are changing
to %e more FFFFFFFFFFFFFFFF"
." customer-drien
B" cash-drien
C" management-drien
D" production-drien

!/1" >amar is a sa'esperson for Bi-,tate Direct" 6e rea''y appreciates the amount of freedom
and authority Bi-,tate gies its sa'es peop'e in order to %etter meet the needs of customers"
>amar1s e)perience suggests that Bi-,tate practices?
." Centra'i8ed management"
B" &ast response theory"
C" Enfranchisement"
D" Empowerment"

1-+1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/!" @reg is working as a marketing trainee for an on'ine Music CD and ideo retai'er" 6is
%oss ca''ed a meeting for ne)t week with one thing on the agenda? 5Bring with you your ideas
a%out how we can gain a competitie adantage"5 @reg p'ans to proide the fo''owing
response?
." Create a management-drien enironment with 'ots of emp'oyee training"
B" Create a customer-drien enironment where we constant'y try to create customer a'ue"
C" Restructure the organi8ation so that there is a'ways a manager on duty to chat with on'ine
customers who are haing pro%'ems with their orders"
D" .'ways match the promotions of our competitors" Price is the on'y thing customers care
a%out"

!/(" ;hich of the fo''owing statements %est descri%es how firms must treat their front-'ine
workers in order to remain competitieH &ront-'ine workers must %e FFFFFFFFFFF"
." empowered with the authority to respond 7uick'y to the unmet needs of customers
B" c'ose'y superised to reduce the risk of product 'ia%i'ity and discrimination 'aw suits
C" e'iminated and rep'aced with automated e7uipment wheneer possi%'e
D" re'ieed of any %urden to make a customer decision

!/*" Ma) is in charge of production for a fami'y-owned firm that makes and se''s sports
g'oes inc'uding %ase%a'' g'oes# soft%a'' g'oes# go'f g'oes# and more" 6e has stated that
speed of de'iery is the most important factor for success in the competitie enironment"
;hich of the fo''owing wou'd %e the %est response to Ma)H
." Jou are right on target# Ma)" Time is money"
B" Jou are the man# Ma)" .s 'ong as our price is competitie# speedy de'iery wi'' win in
today1s changing marketp'ace"
C" ;e'' Ma)# speed isn1t eerything" ;hat wou'd e)ceed our customers1 e)pectationsH ,ome
consumers may put more importance on high 7ua'ity andKor 'ower prices"
D" Dude# you cou'dn1t %e more wrong" Gua'ity is the name of the game" 6e who has the %est
product wi'' win in the competitie enironment"

!/+" The statistica' study of human popu'ation to 'earn its si8e# density# and characteristics is
ca''ed?
." psychographics"
B" econometrics"
C" demography"
D" geometry"

1-+!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/-" Businesses co''ect FFFFFFFF information on where peop'e 'ie# what they %uy# and how
they spend their time"
." geometric
B" econometric
C" demographic
D" anthropo'ogic

!//" Diersity is more than recruiting and keeping minorities and women" Diersity means
appreciating and understanding other differences in our customers and in our workforce" The
statement that %est descri%es this difference is?
." disa%i'ities# se)ua' orientation# re'igious preferences# and een persona'ity differences such
as e)troerts and introerts"
B" gender ro'es"
C" surface 'ee' things such as green eyes ersus %rown eyes"
D" racia' differences and gender differences"

!/2" Efforts are underway to sere the needs of a dierse popu'ation" Diersity means?
." se''ing products to immigrants"
B" dea'ing sensitie'y with workers and cu'tures around the wor'd"
C" proiding goernment programs such as free hea'th care for i''ega' and 'ega' immigrants"
D" meeting emp'oyment 7uotas so that dierse groups are a'ways represented in your
workforce"

!/3" Due to popu'ation shifts#
." %usinesses that cater to o'der consumers wi'' see e)ceptiona' growth"
B" %usinesses that cater to o'der consumers wi'' see s'ower growth"
C" %usinesses that se'' e'ectronic deices wi'' see a significant dec'ine"
D" hea'thcare wi'' emerge as the on'y %usiness sector that wi'' grow"

!20" ;hich of the fo''owing industries wi'' %enefit from an aging popu'ationH
." &inancia' serices to he'p c'ients p'an for their education
B" 6ome hea'th care %usinesses
C" Chi'dren1s day-care centers
D" .uto industry

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!21" The socia' security system#
." continues to %urden %usinesses due to the fact that %usinesses must proide and pay for this
%enefit for their emp'oyees"
B" met the needs of our nation when it was conceied# %ut needs an oerhau'"
C" wi'' continue to sere the needs of 4"," citi8ens into the distant future# due to the fact that
there are so few retirees p'acing a strain on it"
D" is fai'ing %ecause the 4"," goernment fai'ed to inest the money that emp'oyees
contri%uted"

!2!" Peop'e %etween the ages of -+ and /* represent?
." the unemp'oyed generation
B" the sing'e-parent fami'y generation
C" a 'ucratie market
D" a group that has neer contri%uted to socia' security

!2(" Businesses are supporting sing'e-parent fami'ies with?
." socia' security %enefits"
B" a more 'enient we'fare system"
C" more f'e)i%'e work %enefits such as f'e) time and fami'y 'eae"
D" 'imited %enefits due to the dec'ining num%ers of these fami'ies" &ie-mem%er fami'ies are
steadi'y growing"

!2*" ;hich of the statements a%out demography is most accurateH Demographic studies?
." focus on factors that hae great po'itica' re'eance# %ut 'itt'e re'eance to %usiness firms"
B" suggest that the num%er of sing'e-parent fami'ies wi'' dec'ine in the future"
C" proide %usinesses and indiidua's with insights into %usiness and career opportunities for
the future"
D" are an important source of information a%out changes in hea'th patterns"

!2+" ;hich of the fo''owing %usiness po'icies wou'd most 'ike'y he'p a sing'e-parent fami'yH
." Re7uiring the emp'oyee to work regu'ar'y schedu'ed hours each day"
B" .''owing sick 'eae to %e used on'y if the emp'oyee is i''"
C" Re7uiring education outside of regu'ar %usiness hours to he'p the emp'oyee adance"
D" .''owing fami'y 'eae and f'e)time"

1-+*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!2-" The immigrant popu'ation A%oth 'ega' and i''ega'B is haing a dramatic effect on
." car and truck makers
B" mining and minera's industry
C" schoo's# hospita's and other serices type industries
D" ice cream and confection industry

!2/" Retired peop'e wi'' %e draining the 4"," economy of wea'th" This is due to?
." The fact that most hae smoked a'' their 'ies and now are unwi''ing to pay for hea'thcare
in order to stay a'ie"
B" The fact there are not enough workers in su%se7uent generations to support the ongoing
drain of o'der persons into the socia' security system"
C" Their 'ack of interest in supporting restaurants# resorts# educationa' institutions# and
serice-intensie companies"
D" The fact that they refuse to use current information techno'ogy to improe efficiency"

!22" =i'' is 'ooking into the possi%i'ity of opening up a day care center in her community#
%ecause she is aware of many sing'e-parent fami'ies that need a p'ace for their chi'dren to stay
whi'e the parents work" ,he is concerned a%out the 'ong-term prospects for such a %usiness"
=i'' %e'iees the future of her center wi'' depend on whether %irth rates and the num%er of
sing'e-parent fami'ies remain high" These concerns i''ustrate how %usinesses can %e affected
%y?
." econometric trends"
B" demographic trends"
C" ho'ographic trends"
D" psychometric trends"

!23" ,t" C'aire 6ospita' is considering a program that wou'd a''ow some of its workers to use
f'e)time" 9ne group of workers who wou'd pro%a%'y %enefit from f'e)time is?
." ;orkers who do not hae access to computers at home"
B" ;orkers who hae 'itt'e se'f-motiation to work eight-hour days"
C" &ront-'ine workers who fre7uent'y go out to meet with home furnishing designers"
D" ,ing'e-parent fami'ies"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!30" Preferred Pet Care# 0nc"# a mo%i'e eterinary care company is p'anning for the future" .s
a %usiness student who has studied socia' trends# which of the fo''owing statements ref'ects
the need for Preferred Pet Care1s serice in the futureH
." Mo%i'e pet care wi'' not %e needed %ecause the ma$ority of peop'e are working which
means that no%ody is home"
B" Peop'e wi'' a'ways prefer to take their pets to the eterinary c'inic"
C" The aging popu'ation wi'' %e a si8ea%'e market for this firm"
D" Peop'e who wou'd re7uire this serice wou'd %e higher income indiidua's" Retired peop'e
wou'd not %e a market for this firm %ecause they do not hae money to care for pets"

!31" The g'o%a' enironment#
." is a new frontier"
B" is far reaching and affects a'' the other %usiness enironments"
C" is shrinking"
D" has not affected the 4nited ,tates due to its strong gross domestic product"

!3!" The threat of terrorism more often FFFFFFFFFF the cost of operating a %usiness"
." increases
B" decreases
C" sta%i'i8e
D" desta%i'i8es

!3(" The war on terrorism wi''?
." improe the confidence 'ee' of most consumers"
B" hurt the profita%i'ity of eery %usiness operating in the 4","
C" he'p some %usinesses and hurt others"
D" sta%i'i8e the %usiness sector"

!3*" .n increase in g'o%a' trade wi''?
." increase prices"
B" decrease $o%s"
C" increase po'itica' insta%i'ity"
D" increase g'o%a' competition"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!3+" @'o%a'i8ation?
." has great'y improed 'iing standards around the wor'd"
B" has significant'y reduced 'iing standards around the wor'd"
C" has opened doors to on'y a handfu' of markets"
D" has great'y changed companies that hire peop'e to se'' products# %ut not for companies that
hire peop'e to proide serices"

!3-" @reening refers to?
." the need for more car%on dio)ide in our air"
B" firms ac7uiring more green %acks A4"," do''arsB from wor'd trade"
C" finding ways to 'essen the harm on our enironment"
D" the agricu'tura' industry1s push to dee'op and produce new green egeta%'es to feed the
wor'd"

!3/" Efficiency in distri%ution systems around the wor'd has 'ed to?
." increased wor'd trade"
B" decreased wor'd trade"
C" decreased internationa' competition"
D" reduced standards of 'iing around the wor'd"

!32" .ir'ine companies around the wor'd are e)periencing increased costs in part due to
FFFFFFFFFF"
." decreases in the cost of fue'
B" decreasing wor'd trade
C" the threat of terrorism
D" 'ack of interest in f'ying

!33" The war on terrorism in many parts of the wor'd shou'd 'ead to FFFFF"
." a decrease in warring nations
B" consumers spending more %ecause they fee' more patriotic
C" an increase in prosperity and peace throughout the wor'd
D" consumer and economic hardship due to increased mi'itary spending

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(00" The green moement is?
." a trend that started with the 4"," goernment"
B" concerned with dep'etion of natura' resources and 'eaing a 'arge car%on footprint"
C" dee'oping more green food products to feed the wor'd1s poor"
D" our concern with the fact that eerywhere we 'ook# things are remaining green for 'onger
periods of time"

(01" Mark recent'y graduated with honors from his co''ege" 6e has %ragged to his friends that
his academic performance has prepared him so we'' for a successfu' career that he can forget
schoo' or training in his future" 0n ea'uating the future of the workp'ace# Mark is?
." e)act'y right" 6is past performance shou'd carry him to success"
B" comp'ete'y wrong" ,tudies show that a co''ege education has 'itt'e to do with success"
C" oer confident" @'o%a' competition means that continuous 'earning wi'' %e needed in the
future to adapt to rapid changes"
D" pro%a%'y right" ,pecia'i8ed training today is a key to continued success in the future"

(0!" The threat of terrorism#
." %enefits most %usinesses %ecause $ust a%out a'' companies contri%ute toward aerting these
threats"
B" wi'' certain'y affect companies that participate in g'o%a' trade# %ut most 'arge 4","
companies do their %usiness domestica''y"
C" has increased the 7ua'ity of 'ife of most peop'e %ecause companies emp'oy more workers
when the threat is high# and workers he'p companies increase profits"
D" is cost'y to most firms %ecause it is cost'y to goernments who increase ta)es to pay for
added protection"

(0(" >aura and Tim Mc:ash recent'y moed to :orth Caro'ina on a three-acre home site"
They purposefu''y purchased their home within %iking distance to the uniersity where they
are %oth emp'oyed# and their %ikes each hae room for two c'oth %ags for groceries if they
need to purchase food on the way home# a'though they p'an to grow much of their own" >aura
and Tim are e)amp'es of a growing num%er of young peop'e who?
." hae dee'oped a hea'th conscious attitude"
B" want to change their 'ifesty'e to %e more in tune to saing energy"
C" dis'ike ur%an centers and wish to 'ie in the country"
D" stay away from ur%an areas due to increased threats of terrorist attacks in those 'oca'ities"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0*" ;hich of the fo''owing statements descri%es a recurring theme a%out today1s eco'ogica'
enironmentH
." Most peop'e agree that there is strong eidence that the temperature of the p'anet is going
down"
B" ,mart %usinesses know that green %usiness is current'y a trend and they shou'd proceed
with caution %ecause most green initiaties are more cost'y than wars and terrorism"
C" There is a strong push %y customers that %usinesses dee'op products and serices that
c'ear'y sae energy"
D" C'ear'y# the greening issue is an .merican trend that has not captured the attention of the
internationa' %usiness community"

(0+" Ty'er ,amue's recent'y returned from the war in 0ra7 where he was a mem%er of the
high'y ski''ed specia' operations forces" 6e is now in the 4nited ,tates where he co''ects the
@"0" Bi'' in order to go to schoo'" This is one e)amp'e of?
." 6ow an eent such as a war educates young peop'e a%out conditions a%road"
B" The cost of war"
C" The %enefits of war on education"
D" . s7uee8e on emp'oyer %enefits"

(0-" During the past 1+0 years# the 4"," has eo'ed from?
." .n agrarian economy to an information techno'ogy economy"
B" . %usiness to %usiness economy to a %usiness to consumer economy"
C" .n agrarian economy to a manufacturing economy to a serice oriented economy"
D" . manufacturing economy to a serice economy# to a cottage economy# and now we are
trending %ack to an agrarian economy"

(0/" Businesses that produce and se'' tangi%'e products such as stee' and machines are part of
the?
." manufacturing industry"
B" know'edge-%ased industry"
C" serice industry"
D" production sector"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(02" The serice industry represents FFFFFFFF of the a'ue of the 4"," economy"
." a%out (0I
B" under +0I
C" a%out /0I
D" a%out +0I

(03" 6ea'th care# insurance# recreation and other intangi%'e products are proided %y the?
." g'o%a' sector"
B" serice industry"
C" industria' sector"
D" manufacturing industry"

(10" ,ince the %eginning of the 1300s# the agricu'tura' sector of the 4nited ,tates has?
." ,een the num%er of fami'y farms more than dou%'e"
B" Become 'ess and 'ess competitie in the g'o%a' economy"
C" Produced a consistent output per farm"
D" E)perienced a significant drop in emp'oyment# main'y %ecause of tremendous
improements in efficiency"

(11" 0n recent years# a'most a'' new $o% creation in the 4nited ,tates has occurred in the
FFFFFFFFFF sector?
." serice
B" manufacturing
C" agricu'tura'
D" te'ecommunications

(1!" The new era of %usiness is 'ike'y to %e dominated %y the?
." serice sector"
B" information-%ased sector"
C" manufacturing sector"
D" continued dec'ine in productiity"

1--0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(1(" .pp'iance repair firms# ta) consu'tants# 'aw firms# and insurance companies are a''
%usiness firms that are part of the?
." production sector"
B" management sector"
C" neo-industria' sector"
D" serice sector"

(1*" 0n recent years# manufacturing firms in the 4nited ,tates hae 'aid off workers" The %est
e)p'anation of this trend is that?
." firms hae %een trying to weaken unions %y reducing their re'iance on 'a%or"
B" workers in the 4"," hae %ecome 'ess productie and are no 'onger a%'e to compete in the
g'o%a' economy"
C" firms in many industries hae %ecome so efficient that they need fewer workers"
D" the economy has %een in a pro'onged depression that has 'asted more than a decade"

(1+" ;hich of the fo''owing %est descri%es recent $o% growth in the serice sectorH
." The serice sector has generated a'most a'' new $o%s in the .merican economy since the
mid 1320s# %ut the rate of $o% growth in serices has s'owed in recent years"
B" =o%s in the serice sector hae increased s'ow'y oer the past decade# %ut most new $o%s
are created in the manufacturing industries"
C" Emp'oyment in the serice sector has dec'ined in recent years# and this dec'ine is e)pected
to continue"
D" There has %een 'itt'e change in the num%er of $o%s in the serice sector in recent years#
howeer emp'oyment is e)pected to increase rapid'y"

(1-" ;hich of the fo''owing organi8ations is an e)amp'e of the goods-producing sector of the
economyH
." &ord Motor Company
B" &'orida ,tate 4niersity
C" Chi'dren1s 6ospita'
D" 6 O R B'ock Ta) Consu'ting

1--1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(1/" Certain industries of the 4"," economy such as farming and heay e7uipment
manufacturing hae e)perienced a significant dec'ine in emp'oyment" ;hich of the fo''owing
%est e)p'ains this $o% 'ossH
." The cause is a dec'ine in the productiity of 'a%or in these industries"
B" ;orkers 'ost these $o%s %ecause techno'ogica' adances increased productiity"
C" The 4"," economy cannot compete in these industries any 'onger"
D" @oernment regu'ations hae e'iminated profit opportunities in these industries"

(12" =enna >eigh is an information say# !0-something person who is trying to se'ect
%etween two marketing $o% offers" ,he can either $oin a company that makes sma'' hammers
and screwdriers for the do-it-yourse'f hardware store %usiness# or she can $oin a company
dee'oping the fourth generation ce'' phone serice" ,he is 7uite impressed that the hardware
%usiness is growing 7uite nice'y in China# Me)ico# and 0ndia where peop'e are starting to
e)pand their 'iing spaces" ,he is a'so aware of?
." Dec'ines in the te'ecommunications %usiness now that new ce'' phone serice companies
are springing-up eerywhere"
B" . dec'ine in the domestic hardware market due to o'der .mericans 'osing interest in
keeping up their 'iing 7uarters"
C" .n information-%ased g'o%a' reo'ution that might make her career at a
te'ecommunications company more 'ucratie in the 'ong run"
D" .n increase in the price of the actua' ce'' phones must indicate that there is sti'' a great
demand for phones"

(13" The &"B"0" has a D:. data%ase with oer -"/ mi''ion samp'es" 0t is e)pected to increase
%y another 1"! mi''ions samp'es %y the year !01!" 0n the past# co''ection was 'imited to
conicted persons# %ut now they wi'' %egin co''ecting samp'es from persons detained and
arrested prior to coniction" This inc'udes immigrants" The &"B"0" %e'iees that e)panding their
co''ection to inc'ude persons presumed innocent wi'' he'p in the so'ing of io'ent crimes"
This new strategy is?
." not considered an inasion of priacy %ecause the goernment a'ready has most of our
information"
B" pointing toward the &"B"0" %ecoming a priate security company and operating for a profit"
C" suspect %ecause D:. is not yet proen to %e a definitie way of catching crimina's# and it
'eads us to %ecoming a genetic surei''ance society"
D" an e)amp'e of an outcome of the information-%ased reo'ution discussed in %usiness
c'asses"


1--!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
Essay #uestions

(!0" Descri%e seera' ways that goernments can foster entrepreneurship and encourage the
creation of wea'th"




(!1" Descri%e how %usinesses can use techno'ogy to %e more responsie to customers"




(!!" Competition among %usinesses has neer %een greater" 0dentify and descri%e seera'
ways that %usinesses can %ecome more competitie"




(!(" ;hat is demographyH 0dentify seera' demographic trends in the 4nited ,tates and
discuss how they wi'' impact 4"," %usinesses"




1--(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!*" Descri%e what we mean %y greening and thinking green" >ist seera' ways that peop'e
and %usinesses are participating in the green moement" >ist %usiness opportunities that may
emerge from this moement"




(!+" Trace the eo'ution of .merican %usiness" 0dentify the key trends# and discuss the
imp'ications these trends hae for the future"





Mu"tip"e Choice #uestions

Mini%Case
,ergio @on8a'es is emp'oyed %y Big%u) :ationa' Bank# one of the 'argest %anks in the
Midwest" 6e is a 'oan officer# specia'i8ing in home e7uity 'oans" Tio Rau'# ,ergio1s faorite
Aand wea'thiestB unc'e# passed away 'ast month and 'eft ,ergio a si8a%'e amount of money"
,ergio is 'ooking at the %est way to inest his new'y ac7uired wea'th" 6e is considering many
options# ranging from simp'y putting the money into a saings account to the possi%i'ity of
starting his own %usiness" .'though his %ank $o% pays we'' and offers p'easant working
conditions# ,ergio is frustrated %ecause he has 'itt'e freedom or f'e)i%i'ity to dea' with
customers since eery decision he makes must %e approed %y his superisor" Besides# he1s a
%it %ored and 'ooking for a cha''enge" 6e thinks he might get a 'ot of satisfaction from owning
his own %usiness" ,ergio has not made a definite decision yet# %ut has ta'ked to a 'ot of peop'e
searching for a good idea for a new %usiness" 0f he can come up with an idea he 'ikes# he
might $ust 7uit his current $o% and use his inheritance to go into %usiness for himse'fC

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!-" .s he e)p'ores his options# ,ergio notices that some opportunities appear to %e riskier
than others" ;hen considering arious opportunities# ,ergio shou'd keep in mind that?
." he wi'' %e %etter off picking a 'ow risk %usiness opportunity# since the safest ones are
usua''y the most profita%'e as we''"
B" een though some opportunities appear riskier than others# the 'ee' of risk actua''y aries
'itt'e from one opportunity to another"
C" high risk %usiness opportunities often hae the potentia' for high returns as we''"
D" goernment regu'ations are in p'ace to protect inestors and entrepreneurs from fai'ure# so
there is no need to worry a%out risk"

(!/" ,ergio1s frustration with his 'ack of freedom and f'e)i%i'ity at work indicates that
Big%u)?
." prefers the use of cross-functiona' teams rather than indiidua' initiatie"
B" has not adopted a strategy of empowerment"
C" knows that the %est way to ensure good customer serice is to c'ose'y monitor its 'ower-
'ee' emp'oyees"
D" is trying to p'ease customers as we'' as other stakeho'ders"

(!2" Two of his friends approached ,ergio with a proposa' to start a 'anguage schoo'" ,ergio
is f'uent in Eng'ish and ,panish# and a'so has an education degree" ,ergio is strong'y
considering the idea %ut a'so wants to know if there is a growing demand for his serices" 6e
'earns that an important demographic trend is?
." the serice sector is 'ike'y to dec'ine in significance in the ne)t few years"
B" the num%er of young chi'dren in the 4"," wi'' decrease significant'y oer the ne)t few
years as the popu'ation of the country 'ee's off"
C" the num%er of immigrants from ,outh and Centra' .merica is increasing steadi'y in his
area# and across the nation" Professiona's in hospita's and schoo's need to know how to speak
,panish" 0mmigrants need to know how to speak Eng'ish"
D" the num%er of retirees is decreasing# making way for a younger generation"

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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!3" .s he e)p'ores his options for starting a new %usiness# ,ergio has 'ooked into the ta)
imp'ications and goernment regu'ations that he wou'd encounter" 6e wants to maintain an
office in a different 'ocation from his home" 6e has discoered that some near%y communities
offer ta) credits and 'ower ta)es than his town" ,ergio1s decision wi'' %e inf'uenced %y the?
." demographic enironment"
B" techno'ogica' enironment"
C" socio-re'igious enironment"
D" economic and 'ega' enironment"

((0" 0f ,ergio starts his own %usiness# his firm1s actiities and po'icies wi'' impact many
different groups and indiidua's# inc'uding emp'oyees# customers# creditors# supp'iers# and
peop'e 'iing in the community where his %usiness is 'ocated" ;hich of the fo''owing
statements represents how ,ergio shou'd dea' with these arious groupsH ,ergio shou'd?
." take the needs of a'' of these groups into account# and try to satisfy each group as much as
possi%'e"
B" concentrate on meeting the needs of his customers# since they are crucia' to the success of
his %usiness# %ut ignore the needs of other groups in order to keep costs 'ow"
C" satisfy whicheer group comp'ains the 'oudest# using the 5s7ueaky whee' gets the grease5
phi'osophy"
D" concentrate on ma)imi8ing his own profits and 'et eeryone e'se 'ook out for themse'es"

1---
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
Chapter 01 Taking Risks and Making Profits within the Dynamic Business
Enironment .nswer Ley

True !a"se #uestions

1" (p. 4) Businesses proide goods# $o%s# and serices to others"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship #n! .e#lth Buil!ing

!" (p. 4) Businesses seek to earn a profit %y proiding goods and serices to others"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship #n! .e#lth Buil!ing

(" (p. /) Reenue is the amount a %usiness earns a%oe and %eyond what it spends for e)penses
and costs"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

1--/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
*" (p. /) Profit is the amount of money a %usiness earns a%oe and %eyond what it spends for
sa'aries and other e)penses"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

+" (p. /) ,ince a'' %usinesses make a profit# starting a %usiness is not risky"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

-" (p. /) .n entrepreneur risks time and money to start and manage a %usiness"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

/" (p. /) 0f a %usiness1s costs and e)penses are greater than its reenue# it wi'' suffer a 'oss"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

1--2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
2" (p. /) Profits of a %usiness inc'ude the sa'aries paid to its emp'oyees"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

3" (p. /) Reenue is the tota' amount of money a %usiness takes in during a gien period %y
se''ing goods and serices"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

10" (p. /) Risk is the chance an entrepreneur takes of 'osing time and money on a %usiness that
may not proe profita%'e"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

11" (p. 3) The 4nited ,tates has one of the highest standards of 'iing in the wor'd"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1--3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1!" (p. 3) The term 5standard of 'iing5 refers to the amount of de%t peop'e can incur on a gien
income"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1(" (p. 3) 6ea'th care aai'a%i'ity# a c'ean enironment# and good schoo's a'' contri%ute to a high
7ua'ity of 'ife"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1*" (p. 3) Maintaining a high 7ua'ity of 'ife re7uires the com%ined efforts of %usinesses#
nonprofit organi8ations# and goernment agencies"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-/0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+" (p. 3) ,takeho'ders are a'' the peop'e who stand to gain or 'ose %y the po'icies and actiities
of a %usiness"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

1-" (p. 3) ,takeho'ders inc'ude customers# emp'oyees# stockho'ders# supp'iers# dea'ers# %ankers#
goernment officia's and enironmenta'ists"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

1-/1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/" (p. 3) 9ften the needs of a firm1s arious stakeho'ders wi'' conf'ict"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

12" (p. 3) 9utsourcing means se''ing goods and serices to peop'e in other countries"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

13" (p. 3) 9utsourcing has caused many comp'ications in many states where $o%s hae %een 'ost
to oerseas companies"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

!0" (p. 6) 50nsourcing5 refers to the practice of g'o%a' companies setting up design and
production faci'ities in the 4nited ,tates"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

1-/!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1" (p. 6) The know'edge and ski''s 'earned in %usiness courses are se'dom re'eant to students
who work for nonprofit organi8ations or o'unteer groups"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

!!" (p. 6) Businesses and nonprofit organi8ations often strie to accomp'ish the same
o%$ecties"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

!(" (p. 6) :onprofit organi8ations use financia' gains to meet stated socia' or educationa' goa's
of the organi8ation rather than persona' profit"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

!*" (p. 6) ,ocia' entrepreneurs are peop'e who start and manage organi8ations that are not-for-
profit" Their mission is to he'p others improe their 7ua'ity of 'ife"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-/(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+" (p. 4) The on'y rea' purpose of a %usiness is to make money for entrepreneurs"
!'($E
Businesses don1t $ust make money for entrepreneurs" Businesses proide a'' of us with
necessities such as food# c'othing# housing# medica' care# and transportation# as we'' as other
goods and serices that make our 'ies easier and %etter"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: -ntrepreneurship #n! .e#lth Buil!ing

!-" (p. /) The on'y way a firm can increase its profits is to increase its sa'es reenue"
!'($E
Reenues minus e)penses P profits" . firm with sta%'e or een dec'ining sa'es might %e a%'e
to improe profits %y reducing e)penses"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Revenues0 1rofits0 #n! "osses

!/" (p. /) The amount of profit or 'oss earned %y a %usiness can %e found %y su%tracting the
firm1s e)penses from its reenues"
TR&E
Reenues minus e)penses P profits"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Revenues0 1rofits0 #n! "osses

1-/*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!2" (p. 6) :onprofit organi8ations are simi'ar to %usinesses in that they often proide goods and
serices that satisfy the needs of society"
TR&E
Businesses are not the on'y organi8ations that produce goods and serices" @oernment
agencies# pu%'ic schoo's# and charities such as the ,a'ation .rmy proide goods or serices#
%ut are c'assified as nonprofit organi8ations since there is no profit motie"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

!3" (p. 6) 4n'ike %usinesses# emp'oyees of nonprofit organi8ations are not re7uired to 'earn the
%usiness ski''s of information management# marketing# or financia' management"
!'($E
0n order to achiee their goa's# nonprofit organi8ations need peop'e with many of the same
ski''s re7uired %y for profit %usinesses" &or e)amp'e# een though nonprofit organi8ations do
not seek a profit# they sti'' may dea' with 'arge sums of money and must keep financia'
records" :onprofit organi8ations a'so need peop'e with 'eadership# marketing# and information
management ski''s"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-/+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0" (p. 3) Business decisions shou'd consider the interests of customers# emp'oyees# supp'iers#
goernment 'eaders# and stockho'ders"
TR&E
.'' stakeho'ders stand to gain or 'ose %y the po'icies and actiities of a %usiness" . ma$or
cha''enge of %usinesses is to improe profits whi'e trying to accommodate the interests of a''
stakeho'ders"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

(1" (p. 3) By %a'ancing the demands of customers and stockho'ders# %usinesses satisfy the
demands of a'' stakeho'ders"
!'($E
Customers are interested in %enefiting from the products andKor serices produced %y
%usinesses" ,tockho'ders are usua''y profit oriented" ,takeho'ders encompass customers#
supp'iers# emp'oyees# stockho'ders# goernment organi8ations# enironmenta' groups# and
other organi8ations that are somehow affected %y the %usiness in 7uestion"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-/-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!" (p. 3) .n effort to p'ease one group of stakeho'ders eentua''y p'eases a'' stakeho'ders"
!'($E
Ba'ancing the demands of a'' stakeho'ders is a tremendous cha''enge for organi8ations"
Tradeoffs are common" Benefiting one group may hae a negatie impact on another group of
stakeho'ders" &or e)amp'e# the need to stay competitie may ca'' for outsourcing $o%s to other
countries# %ut that might do great harm to the community %ecause many $o%s wou'd %e 'ost"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

((" (p. 6) 0nsourcing creates new $o%s# and he'ps offset the num%er of $o%s %eing outsourced"
TR&E
Many companies are setting up design and production faci'ities here in the 4nited ,tates" &or
e)amp'e# 6yundai is doing design and engineering work in Detroit and producing cars in
Montgomery# .'a%ama" ,uch insourcing creates many new $o%s# and he'ps offset the num%er
of $o%s %eing outsourced"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

(*" (p. 4) Ro%in has started her own 0nternet consu'ting firm" ;hi'e she recogni8es the risks
ino'ed in operating a %usiness# she is sti'' wi''ing to inest her time# effort# and money in
hopes of earning a profit" Ro%in is an e)amp'e of an entrepreneur"
TR&E
.n entrepreneur is someone who risks time and money to start and manage a %usiness"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: -ntrepreneurship #n! .e#lth Buil!ing

1-//
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(+" (p. /) Backstreet Books# an ec'ectic %ookstore on a 'arge co''ege campus generated tota'
reenues of <1+ mi''ion whi'e incurring e)penses of <1! mi''ion" During the year Backstreet
Books earned a profit of <( mi''ion"
TR&E
The profit a firm earns is found %y su%tracting tota' costs from tota' reenue"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: Revenues0 1rofits0 #n! "osses

(-" (p. 3) ,ince %usinesses strie to earn a profit# their owners %enefit at the e)pense of the rest
of society"
!'($E
0n the pursuit of profit# %usinesses create $o%s# produce goods and serices that contri%ute to a
higher standard of 'iing# and pay ta)es that support important goernment programs" Thus#
%usinesses %enefit others in society as we'' as their owners"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-/2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(/" (p. 3) =ohn earned the same amount of money this year as he did 'ast year" Thus# his standard
of 'iing must %e the same as it was 'ast year"
!'($E
The standard of 'iing refers to the amount of goods peop'e can %uy with the money they
hae" There are two factors that determine the standard of 'iing? a person1s earnings and the
price of goods and serices" 0f the prices of goods and serices hae increased or decreased
oer the past year# =ohn1s standard of 'iing wi'' change een if the amount of money he earns
is the same"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

(2" (p. 3) ,usan 7uit her $o% in a %ig city to take a 'ess stressfu' position in a sma'' town 'ocated
in a scenic area" ,he earns 'ess money at her new $o% and has had to cut %ack on her purchases
of materia' goods# %ut she has more 'eisure time and rea''y en$oys the c'ean air and scenic
%eauty of her new home" ,usan has accepted a 'ower standard of 'iing in order to en$oy a
higher 7ua'ity of 'ife"
TR&E
The standard of 'iing is the amount of goods and serices peop'e can %uy with the money
they hae" The 7ua'ity of 'ife is a %roader measure of socia' we'fare that refers to the genera'
we'' %eing of a nation1s citi8ens" 0f citi8ens %enefit from a c'eaner enironment# more po'itica'
freedom# or more 'eisure time# their oera'' we'fare A7ua'ity of 'ifeB may improe een if they
are not a%'e to purchase more goods and serices with their incomes"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-/3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(3" (p. 3) Po'itica' freedom# 7ua'ity education# access to hea'th care# and a c'ean enironment
are a'' factors that contri%ute to an improed 7ua'ity of 'ife"
TR&E
The 7ua'ity of 'ife focuses on the genera' we''-%eing of a society# and inc'udes factors such as
freedom# security# 'eisure time# and other factors %eyond the goods and serices peop'e can
%uy with their incomes"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

*0" (p. 3) Peop'e 'iing in ,an =ose# C. on aerage earn more money than peop'e 'iing in ,t"
>ouis# M9" The citi8ens of ,an =ose en$oy a higher standard of 'iing than the citi8ens of ,t"
>ouis"
!'($E
The standard of 'iing depends on the price 'ee' as we'' as the income peop'e earn" &or
e)amp'e# as our te)t indicates# peop'e in @ermany and =apan may earn more money than
.mericans# %ut they hae a 'ower standard of 'iing %ecause the prices they pay for goods and
serices are higher"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-20
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
*1" (p. 6) The ma$or difference %etween %usinesses and nonprofit organi8ations is that on'y
%usinesses can increase the standard of 'iing# whi'e on'y nonprofit organi8ations can improe
the 7ua'ity of 'ife"
!'($E
The standard of 'iing refers to the amount of goods peop'e can %uy with their money" Both
%usinesses and nonprofit organi8ations can produce and distri%ute goods and serices# so they
%oth affect the standard of 'iing" ,imi'ar'y# %oth %usinesses and nonprofit organi8ations can
hae an impact on the physica' enironment# hea'th care# and other determinants of the 7ua'ity
of 'ife"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

*!" (p. 6) . charita%'e organi8ation# such as the Red Cross or ,a'ation .rmy# is c'assified as a
for-profit organi8ation"
!'($E
. charita%'e organi8ation is not c'assified as a for-profit organi8ation since it does not seek a
profit" Charities are c'assified as nonprofit organi8ations"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-21
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
*(" (p. 3) 0t was reported %y a Bei$ing newspaper that China succeeded in improing its peop'e1s
standard of 'iing and esta%'ishing a re'atie'y aff'uent society in the past seen years" This
report c'ear'y indicates that %oth income 'ee's and the price of goods and serices rose
significant'y during that time period"
!'($E
0f the peop'e of China improed their standard of 'iing# this means that they can purchase
more with their current income than they were a%'e to do in the past" 0n order to purchase the
same or more goods than they were a%'e to purchase in the past# the price of goods and
serices either stayed the same or decreasedM or the price of goods and serices stayed the
same# %ut income 'ee's rose"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

**" (p. <) ,tarting a %usiness is a riskier path toward %usiness success than working your way up
the ranks of a 'arge %usiness"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship 5ersus .orking =or 9thers

*+" (p. <) ;orking as an entrepreneur is the on'y way to succeed in %usiness"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship 5ersus .orking =or 9thers

1-2!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
*-" (p. <) Paid acations and hea'th care insurance are among the %enefits proided %y the
goernment to entrepreneurs"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship 5ersus .orking =or 9thers

*/" (p. <) ;omen current'y own 'ess than ten percent of a'' %usinesses"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 9pportunities for -ntrepreneurs

*2" (p. <) The num%er of %usinesses owned %y .sians# 6ispanics# and .merican 0ndians has
grown dramatica''y"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 9pportunities for -ntrepreneurs

*3" (p. &%) >and# sometimes ca''ed natura' resources# is the most critica' factor of production in
e)p'aining why some countries are poor whi'e others are rich"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-2(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+0" (p. <) Money is one of the fie factors of production that contri%ute to the creation of
wea'th"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

+1" (p. <) Too's# machinery# and %ui'dings are e)amp'es of capita' resources"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

+!" (p. &&) The ma$or adantage rich nations hae oer poor nations is an a%undance of 'and and
'a%or"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

+(" (p. <) Entrepreneurship is one of the fie factors of production that contri%ute to the creation
of wea'th"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-2*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+*" (p. <) Business consu'tant Peter Drucker said that the most important factor of production is
know'edge"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

++" (p. &&) Most %usiness e)perts agree that entrepreneurship and the effectie use of know'edge
are the most important contri%utors to the creation of wea'th"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

+-" (p. &&) The %usiness enironment refers to the surrounding factors that either he'p or hinder
the dee'opment of %usinesses"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-2+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+/" (p. <) =ing is a recent 4"," co''ege graduate who is interested in starting an import tea
%usiness" 0f she fo''ows through with her p'ans# she wi'' %e a pioneer# %ecause on'y a handfu'
of women choose to start %usinesses in the 4","
!'($E
During the past two decades there has %een a rapid increase in the num%er of women-owned
%usinesses# increasing from a%out ( mi''ion firms in 1320 to oer 10"- mi''ion women-owned
firms today" ;omen current'y own oer a third of a'' %usinesses"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 9pportunities for -ntrepreneurs

+2" (p. &&) Countries with an inade7uate'y trained work force and few entrepreneurs often
achiee the highest 'ee's of income %y re'ying on a 'arge num%er of workers"
!'($E
Poor countries often hae p'enty of 'a%or and access to ade7uate capita'" 6oweer# the two
factors of production that are most critica' in generating nationa' wea'th are entrepreneurship
and know'edge" . country found 'acking in these wi'' e)perience re'atie'y 'ow 'ee's of
income"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-2-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
+3" (p. &&) 0f they wish to create more wea'th# poor nations shou'd focus on po'icies that increase
entrepreneurship and the effectie use of know'edge"
TR&E
Poor nations often hae p'enty of 'a%or and 'and# as we'' as access to capita'" 6oweer# the
a%sence of entrepreneurship and know'edgea%'e workers seems to %e the reason that most
poor countries remain poor"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

-0" (p. &&) To rea'i8e his passion# .'e) recent'y opened 9rigina' Tunes# 0nc"# a sma'' state of the
art recording studio in :ashi''e# T:" 6e pro%a%'y cou'd hae set-up shop in seera' ma$or
cities# %ut :ashi''e offered him the two most important factors that he 'earned in %usiness
schoo' wou'd enhance the creation of wea'th? 'a%or and po'itica' freedom"
!'($E
.ccording to 'eading economists and %usiness ana'ysts 'ike Peter Drucker# Entrepreneurship
and know'edge are the two key factors that enhance the creation of wea'th"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-2/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
-1" (p. <'&&) @reg recent'y comp'eted his co''ege degree in construction management" 6e is
heading to Me)ico City to start a %usiness dee'oping apartment dwe''ings" .fter researching
seera' potentia' areas# he chose Me)ico City due to its high popu'ation" @reg fe't that this
factor wou'd create a 'arge 'a%or poo'# the most important of the fie factors of production"
!'($E
;hi'e 'a%or is inc'uded in the factors of production# entrepreneurship and know'edge are
considered the most important factors in the creation of wea'th"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

-!" (p. <) =ared is supposed to %e cramming for fina's %ut his mind keeps wandering to the
Co'orado s'opes" ,eera' years ago# his 4nc'e Mike made it %ig and now owns a ski 'odge $ust
north of .spen" 6e promised =ared a management trainee position and the opportunity to %uy
into the company %y contri%uting a portion of his paycheck each month %ack into the
%usiness" .s he dreams a%out the opportunity to %e his own %oss# rea'ity %ites as =ared scans
his %usiness %ook and reads# 5freedom to succeed a'so means freedom to fai'"5
TR&E
Entrepreneurship promises its participants the opportunity for great successM howeer the
potentia' of fai'ure a'so 'ooms in the process"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: -ntrepreneurship 5ersus .orking =or 9thers

-(" (p. &:) ;e''-managed %usinesses wi'' grow and prosper regard'ess of the %usiness
enironment in which they operate"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-22
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
-*" (p. &:) Ta)es and goernment regu'ations are part of the economic and 'ega' enironment in
which %usinesses operate"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

-+" (p. &:) 6igh ta)es and goernment restrictions he'p to encourage entrepreneurs %y proiding
greater incenties for peop'e to work hard and create profit"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

--" (p. &;) 9ne of the %est things the goernments of dee'oping countries can do to increase
wea'th is to minimi8e interference with the free e)change of goods and serices"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

-/" (p. &:) Countries that proide 'itt'e or no goernment ino'ement proide the %est
enironment for competitie %usinesses"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-23
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
-2" (p. &:) 0n an effort to increase wea'th and their country1s standard of 'iing# many
goernments are taking oer ma$or industries and operating them as nonprofit organi8ations"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

-3" (p. &;) Corruption and i''ega' actiities are e)pected in a capita'ist system and can %e
%eneficia'"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

/0" (p. &;) 9ne way for a goernment to actie'y promote entrepreneurship is to esta%'ish a
currency that1s trada%'e in wor'd markets so that you can %uy and se'' goods anywhere in the
wor'd using that currency"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

/1" (p. &;) 6onesty# integrity# and high ethica' standards are essentia' to a capita'ist economic
system 'ike the one that operates in the 4nited ,tates"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-30
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/!" (p. &;) >aws that a''ow companies to write enforcea%'e contracts decrease the risk of doing
%usiness"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

/(" (p. &:'&;) 0n rich countries such as the 4nited ,tates# changes in the 'ee' of ta)ation hae
'itt'e impact on the incenties of entrepreneurs"
!'($E
6igh ta)es and e)cessie regu'ation tend to discourage entrepreneurship een in wea'thy
nations" 0n the 4nited ,tates# those states with the highest ta)es and most %urdensome
regu'ations tend to drie out entrepreneurs whi'e states with 'ower ta)es and fewer regu'ations
tend to attract them"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

/*" (p. &;'&4) The fai'ure to upho'd high ethica' %usiness standards %y a few companies can
negatie'y impact the entire 4"," %usiness community"
TR&E
The te)t%ook proided the e)amp'e of the fai'ure of mortgage %rokers to perform due
di'igence on their customers" 0n their 7uest to capture a 'arge home %uying market# they fai'ed
to check the credit worthiness of their customers" .s interest rates on ad$usta%'e rate
mortgages increased# some homeowners were una%'e to pay their mortgages" The ripp'e effect
of these fai'ures 'ed to $o% 'oss# which sent many homes into forec'osure"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

1-31
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/+" (p. &:) ,eera' years ago# the goernment of the sma'' nation of .''egro owned the nation1s
te'ephone company and 'and'ines" This re'atie'y poor goernment re'ied on ta)es to dee'op
this industry and proide serice to its citi8ens" 0f the goernment desired to rapid'y improe
peop'e1s access to phone serice# its %est course of action wou'd ino'e se''ing the te'ephone
company to priate inestors"
TR&E
@oernment can actie'y promote entrepreneurship %y encouraging priate ownership of
%usinesses" 0f the goernment owns the %usinesses there is 'itt'e incentie for peop'e to work
hard to create profits"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

/-" (p. &:) The goernment of the nation of Bing'and is trying to achiee a high 7ua'ity of 'ife
%y imposing strict regu'ations to protect the enironment and ensure safe working conditions
in factories and mines" The goernment a'so has esta%'ished am%itious programs to he'p the
poor# financing them %y setting high ta) rates" These efforts %y Bing'and1s goernment shou'd
create an atmosphere that encourages entrepreneurship"
!'($E
9ne of the things a goernment can do to encourage entrepreneurship and the formation of
wea'th is to keep regu'ations and ta)es to a minimum"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

//" (p. &4) Though it has receied a 'ot of attention# the dee'opment of the 0nternet has had 'ess
of an impact on the way %usinesses operate than many other techno'ogica' changes"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-3!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
/2" (p. &4) .n increase in productiity indicates that more can %e produced in a gien time
period with the same amount of resources"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

/3" (p. &4) Techno'ogy can he'p %usinesses %ecome more efficient and productie"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

20" (p. &4) Productiity is the amount of output you generate gien the amount of input such as
hours worked"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

21" (p. &4) Effectieness means producing goods and serices using the 'east amount of
resources"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-3(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
2!" (p. &4) Effectieness means producing the desired resu't"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

2(" (p. &4) Techno'ogy affects peop'e in most# %ut not a'' industries"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

2*" (p. &4) Techno'ogy refers to eerything that makes %usiness operations more effectie#
efficient# and productie"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

2+" (p. &4'&/) E-commerce is the %uying and se''ing of goods oer the 0nternet"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-3*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
2-" (p. &4'&/) The B!B 0nternet market consists of se''ing goods and serices to consumers"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

2/" (p. &/) The rise of 0nternet marketing has %ecome particu'ar'y important in doing %usiness in
the B!B markets"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

22" (p. &/) The %usiness-to-%usiness segment of e-commerce is of 'ess importance than the
%usiness-to-consumer segment of e-commerce"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

23" (p. &/) Techno'ogy a''ows firms to %e more responsie to their customers1 wants and needs"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-3+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
30" (p. &/) Bar codes are a form of techno'ogy that has enhanced a company1s a%i'ity to %e
responsie to consumer needs"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

31" (p. &/) .n e'ectronic storage fi'e where information is kept is ca''ed a CP4"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

3!" (p. &/) The data%ases of a %usiness often inc'ude a great dea' of information a%out the firm1s
customers"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

3(" (p. &/) 0nformation in a data%ase a''ows firms to carry on'y the products that the 'oca'
popu'ation wants"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-3-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
3*" (p. &/) 0dentity theft is when indiidua's or firms access peop'e1s persona' information and
then use it for i''ega' purposes and actiities"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

3+" (p. &/) The main difference %etween B!C and B!B e-commerce is that B!C uses on'y the
0nternet# whi'e B!B com%ines e-commerce with traditiona' A%ricks-and-mortarB out'ets"
!'($E
The ma$or difference %etween B!C and B!B is the customer" B!C stands for %usiness-to-
consumer" Businesses ino'ed in B!C se'' main'y to househo'ds" B!B stands for %usiness-to-
%usiness" Businesses ino'ed in B!B se'' main'y to other %usinesses"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

3-" (p. &4'&/) There is 'ess risk ino'ed in starting an e-commerce on'y %usiness than there is in
trying to add e-commerce to a traditiona' A%ricks-and-mortarB store"
!'($E
.'though there is no 7uestion that some 0nternet %usinesses wi'' grow and prosper# it is a'so
eident that many e-commerce firms wi'' fai'" 9n the other hand# many traditiona' %usinesses
hae successfu''y e)panded %y incorporating e-commerce into their p'ans"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

1-3/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
3/" (p. &4) 9ne of the ma$or adantages to firms ino'ed in e-commerce is that the techno'ogy
is sti'' so new that the 0nternet-%ased firms face ery 'itt'e competition"
!'($E
The rise of e-commerce has 'ed to intense competition" The rise of 0nternet marketing drew
hundreds of competitors into the fray"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

32" (p. &/) .'though the 0nternet is e)citing# ery few peop'e hae access to it outside the 4","
!'($E
.ccording to the te)t%ook# a'most !!0 mi''ion Chinese were using the 0nternet in !002"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

33" (p. &4) :iki has $oined with seera' other inestors to form a new company that se''s foot
care products to consumers oer the 0nternet" :iki has inested in a B!C e-commerce
company"
TR&E
B!C companies specia'i8e in se''ing goods to consumers oer the 0nternet"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-32
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
100" (p. &4) 9er the past seera' years# workers in the sma'' nation of Rain'and hae en$oyed an
increase in the num%er of ho'idays and a reduction in the aerage 'ength of the workday that
has reduced the tota' num%er of hours they work each year" 6oweer# the output per worker in
Rain'and is higher now than it was %efore the reduction in hours" These facts suggest that
productiity in Rain'and has increased"
TR&E
Productiity is measured %y diiding tota' output %y work hours" ,ince output is higher whi'e
work hours hae dropped# productiity must %e higher"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

101" (p. &4'&/) ,'eek;rap is a company that produces industria' coatings for the stee' industry"
4nti' recent'y it re'ied on who'esa'ers to distri%ute its products to other %usinesses# %ut now it
a'so se''s direct'y to its %usiness customers through its we%site" This is an e)amp'e of the
'argest and most important type of e-commerce transaction"
TR&E
.s important as the 0nternet has %een in the consumer market AB!CB# it has %ecome een more
important in the %usiness-to-%usiness AB!BB market"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-33
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
10!" (p. &/) .s emerging techno'ogies %ecome widespread# %usinesses tend to find %etter uses
for them" 6oweer# in the case of the 0nternet# %usinesses that se'' B!B hae not %enefited
from direct'y se''ing to their %usiness customers in the same way that B!C companies hae
done"
!'($E
The 0nternet has %ecome an important %usiness too' in %oth the B!B market and the B!C
market"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

10(" (p. &/) ;ith the emergence of the 0nternet# =asmine finds it easy to do a'' her gift %uying
on'ine" ,he takes comfort in the fact that new techno'ogies if insta''ed proper'y are se'dom
used in unethica' ways"
!'($E
.'though techno'ogica' wonders such as the 0nternet hae improed the way we communicate
with customers and friends# pro%'ems such as identity theft hae surfaced"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

10*" (p. &/) Techno'ogica' innoation has a ripp'e effect" ;ith the adent of the 0nternet# Ty'er
6an'ey# a certified techno-nerd# is %eing courted %y companies to write the ne)t generation of
antiirus software" 6e te''s us its %ig %usinessC
TR&E
Ty'er is rightM the 0nternet has created tremendous $o% opportunities for specia'ists 'ike him"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-100
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
10+" (p. &3) To remain competitie in today1s market# firms must produce a 7ua'ity product and
offer outstanding serice at a reasona%'e price"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

10-" (p. &3) Producing a high 7ua'ity product wi'' ensure success in the competitie
enironment"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

10/" (p. &3) ,uccessfu' firms fo''ow a customer-drien strategy# as opposed to the management-
drien strategy used in the past"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

102" (p. &3) Dero defects means that there is a company goa' of no mistakes in making products"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

1-101
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
103" (p. &3'&6) Traditiona' %usinesses hae a manageria' focus rather than a customer focus"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

110" (p. &3'&6) Competition is fierceC 9ne way to respond 7uick'y to customer needs is to
dee'op a strategy of empowering emp'oyees"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

111" (p. &6) . po'icy of empowerment encourages managers to make decisions 7uick'y for their
front 'ine emp'oyees"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

11!" (p. &6) Empowerment means giing front'ine workers the responsi%i'ity# authority# and
freedom to respond 7uick'y to customer re7uests"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

1-10!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
11(" (p. &6) The goa' of empowerment in the work enironment is to preent mistakes" Mistakes
can %e preented %y giing management more contro' oer the actions of 'ower-'ee'
workers"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

11*" (p. &3) The primary focus of successfu' firms is designing and producing high 7ua'ity
goods" .dertising is then used to conince consumers to %uy their superior products"
!'($E
,uccessfu' %usinesses are customer-drien# meaning that they 'isten to the wants and needs of
customers and ad$ust their products# po'icies and practices to %etter meet customer demands"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

11+" (p. &3) 0t1s important that firms are as efficient as possi%'e" This is done %y %ecoming
management-drien for efficiency"
!'($E
Business is %ecoming customer-drien# not management-drien as in the past" This means that
customers1 wants and needs must come first"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

1-10(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
11-" (p. &3'&6) Customer-drien organi8ations re7uire managers to c'ose'y direct and contro'
their emp'oyees"
!'($E
Customer-drien organi8ations wi'' e)ceed their customers1 e)pectations %y empowering their
front 'ine emp'oyees" The moement toward empowerment suggests that 'ower 'ee' workers
are 'ike'y to assume more responsi%i'ity in the future# whi'e managers wi'' gie up some of
their authority" Managers must train front'ine peop'e to make decisions without the need to
consu't managers"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

11/" (p. &3) Bruno and @ino are worthy competitors in the %akery %usiness in a sma'' upsca'e
resort town" @ino recent'y negotiated a contract with a supp'ier for rea''y cheap cooking oi'"
6e knows that %akery customers want cheap products" 0n this competitie enironment#
keeping the price down is a'' that matters"
!'($E
0n the current competitie enironment of eery industry# customers are 'ooking for high
7ua'ity and good a'ue# at competitie prices"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

1-10*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
112" (p. &6) Brett runs a 'awn care serice" .'though he and his emp'oyees cou'd serice eight
househo'ds in one day# he aerages si) yards per crewmem%er# per day" Brett recent'y
restructured his work crew and proided each cutter with an incentie to ac7uire two new
customers each month through customer referra's" .s a recent %usiness graduate# you te'' him
he1s pro%a%'y on the right track"
TR&E
Companies now hae to offer %oth high-7ua'ity products and good a'ue# %ut a'so outstanding
serice at competitie prices" Through restructuring# ownersKmanagers often gie-up some of
their authority and empower emp'oyees to make decisions that e)ceed customer1s
e)pectations"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

113" (p. &6) The statistica' study of the human popu'ation to descri%e its si8e# age# gender# and
income is known as diersity recognition"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!0" (p. &6) The 4"," popu'ation tends to %uy the same things and spend time in rough'y the
same way as peop'e did a decade ago"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-10+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1!1" (p. &6) Demographic changes create new %usiness opportunities"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!!" (p. &6) Diersity groups identified in the market today inc'ude e)troerts# introerts#
atheists# and the deout"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!(" (p. &6) Companies hae responded to a dierse customer %ase %y hiring a more dierse
workforce"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!*" (p. &6) Current'y peop'e %etween the ages of *+ and +* are the richest group in the 4nited
,tates"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-10-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1!+" (p. &@) :ew we'fare ru'es hae made it easier for sing'e parents to remain at home with
their young chi'dren without %eing re7uired to seek emp'oyment"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!-" (p. &6) 0n some cities the num%er of 'ega' and i''ega' immigrants has caused goernments to
adapt %y changing signs to other 'anguages"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!/" (p. &@) The federa' goernment re7uires companies to take diersity ery serious'y# een
recommending esta%'ishing a chief diersity officer in the e)ecutie suite"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1!2" (p. &@) 9ne factor that has had a ma$or effect on %usinesses is the growth of sing'e-parent
fami'ies"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-10/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1!3" (p. &@) Businesses that cater to o'der consumers in the future wi'' 'ike'y not %e successfu'"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1(0" (p. &@) ;orkp'ace changes due to the rise of sing'e-parent fami'ies create many $o%
opportunities in day care# counse'ing# and other re'ated fie'ds"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1(1" (p. &6) Businesses use demographic studies to understand where peop'e 'ie# their
'ifesty'es# and what they are 'ike'y to %uy"
TR&E
Demography is the statistica' study of the human popu'ation to 'earn its si8e# density and
characteristics" ,ince many goods and serices appea' to customers with specific demographic
characteristics Asuch as age or incomeB# studying demographic trends can he'p %usinesses
determine whether the demand for a good is 'ike'y to rise or fa''"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-102
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(!" (p. &6) Diersity management wou'd not %e an issue if firms wou'd treat a'' of their
emp'oyees the same"
!'($E
. dierse workforce can consist of minorities# women# the disa%'ed# homose)ua's# atheists#
and the deout" These differences can %e a strength on'y if management works to meet the
needs of each group whi'e achieing the organi8ationa' goa's" The interaction of these
different iews can encourage new perspecties and creatie approaches to so'ing pro%'ems"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1((" (p. &6) Demographic trends suggest that %usinesses wi'' %enefit from offering f'e)i%'e work
schedu'es# e'dercare# and chi'dcare to he'p emp'oyees %a'ance the demands of $o% and fami'y"
TR&E
The increase in the num%er of sing'e parent fami'ies is a powerfu' demographic trend"
,uccessfu' organi8ations wi'' ad$ust and accommodate these changes in their socia'
enironment"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-103
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(*" (p. &@) .''owing today1s young peop'e to inest part of their ,ocia' ,ecurity money in
persona' saings accounts makes sense since in the future 'ess money wi'' %e coming into
,ocia' ,ecurity than wi'' %e going out"
TR&E
Paying ,ocia' ,ecurity to senior citi8ens in the future wi'' draw huge amounts of money from
the economy" 9ne option to dea' with this is to a''ow young peop'e to inest part of their
,ocia' ,ecurity money in persona' saings accounts"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1(+" (p. &@) The 5pay-as-you-go5 ,ocia' ,ecurity system wi'' ensure that the young peop'e of
today wi'' hae ,ocia' ,ecurity %enefits in the future when they retire"
!'($E
The pay-as-you-go ,ocia' ,ecurity system means that today1s workers pay for today1s retirees"
To date this has worked since there are more workers supporting each retiree" 6oweer in
!012# 'ess money wi'' %e coming into ,ocia' ,ecurity than wi'' %e going out and there wi'' %e
a shortfa''# suggesting that today1s young peop'e wi'' not hae ,ocia' ,ecurity %enefits in the
future"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-110
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(-" (p. &6'&@) Eaier# a recent co''ege graduate# is thinking of inesting in a home hea'th care
%usiness" 6e %e'iees this wi'' %e a profita%'e enture %ecause of the increasing num%er of
peop'e in the 4"," that wi'' %e oer -0 in the near future and more 'ike'y to need this type of
serice" This accurate'y descri%es a demographic trend that wi'' affect his %usiness choice"
TR&E
;hen scanning the socia' enironment for opportunities and threats# %usiness professiona's
study demographic changes in their respectie markets" Demographic changes can hae a
significant impact on %usiness choices and career opportunities"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

1(/" (p. &@) ,ue is a sing'e mother with two sma'' chi'dren" 6er emp'oyer is considering
proiding fami'y 'eae" ,ince ,ue is a sing'e mom with sma'' chi'dren# she is un'ike'y to
%enefit from this program"
!'($E
&ami'y 'eae a''ows workers to take time off to attend to a sick chi'd and shou'd %e 7uite
%eneficia' to ,ue since she has two sma'' chi'dren"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-111
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1(2" (p. &6) Ro% is an emergency room nurse at a 'oca' hospita' in Te)as" 9n a week'y %asis# he
wi'' sere a num%er of patients who are not 'ega''y 4"," citi8ens" Many of them are giing
%irth to %a%ies" &ortunate'y# Ro% speaks enough ,panish to communicate with the patients"
Ro% is e)periencing the rea'ities of the socia' enironment in some states"
TR&E
There is a si8ea%'e ,panish speaking popu'ation that 'ies in this state" The socia' enironment
in many states and many countries can differ" Both for profit and non-profit companies must
ad$ust to accommodate for changes in the socia' enironment"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

1(3" (p. &@) @'o%a'i8ation has increased among nations"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*0" (p. &@) .n important enironmenta' change in the g'o%a' enironment is the growth of
internationa' competition"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1-11!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1*1" (p. &@) 0mproed distri%ution systems hae 'ed to more g'o%a' trade"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*!" (p. &@'&<) @'o%a' trade has suffered %ecause of increased pro%'ems with the 0nternet"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*(" (p. &@) @'o%a'i8ation has great'y increased 'iing standards around the wor'd"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1**" (p. &@) China and 0ndia hae %ecome ma$or 4"," competitors"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1-11(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1*+" (p. &@) Companies from the 4nited ,tates are %ui'ding many of their products oerseas# and
unfortunate'y foreign companies are not %ui'ding products in the 4nited ,tates"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*-" (p. &<) Because of increased trade# there is now an increased interdependence in the wor'd"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*/" (p. &<) The threat of terrorism increases the costs of operating most %usinesses"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1*2" (p. &<) ;ars are cost'y to a'' companies"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1-11*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1*3" (p. &<) 4"," e)ports are e)pected to increase under new trade agreements 'eading to more
4"," $o%s"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1+0" (p. &<) The war on terrorism has had a significant effect in drawing many resources from
the 4"," economy and 'ed to many additiona' costs for %usinesses"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1+1" (p. &<) 0n most industries# the on'y producers that pose a serious threat to 4","
manufacturers are those in =apan and ;estern Europe"
!'($E
Producers in countries 'ike China and 0ndia hae %ecome ma$or 4"," competitors" &or
e)amp'e# >enoo# a Chinese firm# recent'y %ought 0BM1s PC unit"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1-11+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+!" (p. &<) Companies that participate in the defense industry %y making weapons and other
companies that make armored ehic'es and een food companies do we'' when the 4"," is at
war"
TR&E
.'though wars are 7uite cost'y for most companies# there are some whose reenues and
profits grow" These are usua''y companies with goernment contracts that support the war
effort"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1+(" (p. &@'&<) 9ne of the pro%'ems with g'o%a'i8ation is that distri%ution systems and
communication systems 'ack efficiency"
!'($E
Distri%ution systems and Communication systems hae improed dramatica''y# and hae
contri%uted toward wor'd trade"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1+*" (p. &<) The eidence for c'imate change is 7uestiona%'e" ;e''-known 4"," companies are
taking a wait-and-see approach toward addressing c'imate change"
!'($E
C'imate change is a key 7uestion on the minds of most companies"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1-11-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1++" (p. &<) Car'os @on8a'e8 owns a sma'' manufacturing company that makes enti'ation
systems used in the construction of office %ui'dings" .s the 4"," continues to %e ino'ed in
wars around the g'o%e# Car'os may notice that his %usiness wi'' %e growing more s'ow'y in the
future as more money continues to %e put into the war effort"
TR&E
The war in 0ra7 has drawn %i''ions of do''ars from the .merican economy" Most companies
hae 'ost workers to the armed forces and hae grown more s'ow'y as money has %een
dierted to the war effort"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1+-" (p. &<) >ucy owns a restaurant in >os .nge'es" ,he heard on the radio that the home'and
security threat 'ee' has %een increased due to anticipated terrorist actiities# especia''y in
'arge cities in the 4"," ,he wi'' 'ike'y not %e a%'e to get insurance to coer any 'osses her
%usiness may suffer shou'd an attack occur in >"."
TR&E
>ucy1s restaurant is 'ocated in a ery 'arge 4"," city" &irms hae found it difficu't to get
insurance against terrorist attacks"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1-11/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1+/" (p. &<) .fter seera' years of study as a part-time student# .'e) recent'y earned a degree in
marketing at a 'oca' co''ege" The growth in g'o%a' markets may increase .'e)1s $o%
opportunities# %ut it wi'' a'so re7uire him to continua''y update his ski''s or seek further
education"
TR&E
.s %usinesses e)pand to sere g'o%a' markets# new $o%s wi'' %e created" But g'o%a' markets
wi'' a'so create more competition" 0n order to remain competitie# 4"," workers wi'' hae to
continua''y update their know'edge and ski''s"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1+2" (p. &<) Maya is an engineer for ;indy Ridge# 0nc" a maker of wind tur%ines" Recent'y# a
'arge company has shown interest in inesting in this sma'' operation" This is not surprising
since firms that are creating products for a'ternatie sources of energy are attracting the
attention of goernments and other %usinesses"
TR&E
Energy and sources of energy promise to %e key considerations that wi'' attract the attention
of goernment and other %usinesses"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1+3" (p. :%) 9er many years the nature of 4"," %usiness has changed ery 'itt'e from century to
century"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -volution of 7.S. Business

1-112
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1-0" (p. :&) The num%er of 4"," $o%s in manufacturing has increased in the past fie years"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-1" (p. :&) Techno'ogy he'ped the manufacturing industry to %ecome more productie"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-!" (p. :&) ;hi'e the proportion of workers emp'oyed in agricu'ture has remained re'atie'y
constant# the aerage si8e of farms has steadi'y decreased oer the past century"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-(" (p. :&) 0ncreases in productiity hae a''owed fewer farmers to feed more and more
peop'e"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-113
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1-*" (p. :&) The adice proided %y a marriage counse'or is an e)amp'e of the serice industry"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1-+" (p. :&) .'most a'' of the growth in emp'oyment opportunities since the mid-1320s has %een
generated %y the serice sector"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1--" (p. :&) .'though emp'oyment in the serice sector has increased rapid'y in recent years# the
ast ma$ority of workers are sti'' emp'oyed in the goods producing sector"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1-/" (p. :&) There are more high-paying $o%s in the serice sector than in the goods-producing
sector"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1-1!0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1-2" (p. :&'::) The %est emp'oyment strategy for today1s co''ege graduates is to search for $o%s
that are c'ose'y re'ated to their co''ege ma$or"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Aour =uture in Business

1-3" (p. :&) The growth in the serice sector in the 4nited ,tates appears to %e giing way to an
information-%ased g'o%a' era"
TR&E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Aour =uture in Business

1/0" (p. :&) The transition from an agricu'tura' economy to a manufacturing economy to a
serice %ased economy has resu'ted in a serious increase in 'ong-term unemp'oyment"
!'($E

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-1!1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/1" (p. :&) 9ne reason gien for the dec'ine in the num%er of 4"," workers emp'oyed in
manufacturing is that manufacturing firms in the 4"," hae %ecome more efficient"
TR&E
Techno'ogy has a''owed 4"," workers to %e more productie# resu'ting in the need for fewer
workers" Many .merican manufacturing firms hae downsi8ed %ecause of this increased
efficiency"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1/!" (p. :&) The continuing increase in the num%er of 4"," workers in the serice sector means
that more and more workers are emp'oyed in 'ow-wage positions"
!'($E
,ome $o%s in the serice sector do pay 'ow wages# %ut there are actua''y more high-paying
$o%s in the serice sector than in the goods-producing sector" ,erice $o%s inc'ude high wage
positions in such industries as hea'th care# accounting# architecture# 'aw# and
te'ecommunications"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 1rogress in Service >n!ustries

1-1!!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/(" (p. :%':&) 6istorica''y $o%s 'ost in one sector of the economy hae %een rep'aced %y
increased emp'oyment opportunities in other sectors"
TR&E
The history of our nation1s economy shows that as $o%s were 'ost in agricu'ture ear'ier in the
'ast centuryM disp'aced farm workers were often a%'e to find emp'oyment in the growing
manufacturing sector" More recent'y# dec'ines in manufacturing emp'oyment hae %een offset
%y rapid growth in the serice sector" The 'atest growth area for new $o%s is in information
techno'ogy"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -volution of 7.S. Business

1/*" (p. :&) Cee Duction is a financia' p'anner who he'ps peop'e find ways to sae for
retirement and 'ower their ta)es" Cee is emp'oyed in the serice sector of the economy"
TR&E
The serice sector produces intangi%'e goods" &inancia' p'anning is one type of serice"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: 1rogress in Service >n!ustries

1-1!(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1/+" (p. :&) .fter 'osing her manufacturing $o% in the 4"," automo%i'e industry# =uanita has
found that we'' paid serice sector $o%s re7uire retraining and further education"
TR&E
6igh-paying serice sector $o%s can %e found in hea'th care# accounting# finance#
entertainment# te'ecommunications# architecture# 'aw# and software engineering" 6oweer#
these $o%s re7uire specia'i8ed training and education"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: 1rogress in Service >n!ustries


Mu"tip"e Choice #uestions

1/-" (p. 4) .n actiity which seeks to earn a profit %y proiding a good or serice is known as
aAnB?
." industry"
B" corporation"
C) %usiness"
D" serice"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship #n! .e#lth Buil!ing

1-1!*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
1//" (p. /) FFFFFFFFFF is the amount a %usiness earns after deducting what it spends for
sa'aries and other e)penses"
') Profit
B" Reenue
C" 0nterest
D" Diidends

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

1/2" (p. /) . %usiness incurs a FFFFFFFFFFF if its costs and e)penses e)ceed its reenues"
') 'oss
B" 'ia%i'ity
C" de%it
D" diidend

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

1/3" (p. /) FFFFFFFFFF is the chance a %usiness owner wi'' 'ose the time and money inested in
a %usiness that proes to %e unprofita%'e"
." Depreciation
B) Risk
C" &a''i%i'ity
D" Redundancy

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

1-1!+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
120" (p. /) The tota' amount of money that %usinesses take in %y se''ing goods and serices is
ca''ed FFFFFFF"
." profit
B) reenue
C" 'oss
D" retained earnings

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Revenues0 1rofits0 #n! "osses

121" (p. 4) .AnB FFFFFFFFFFFF is a person who assumes the risk of starting a %usiness"
." manager
B) entrepreneur
C" priate inestor
D" stakeho'der

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship #n! .e#lth Buil!ing

12!" (p. /) ,tarting a %usiness a'ways ino'es FFFFFFF"
." profit
B" 'oss
C" reenue
D) risk

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

1-1!-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
12(" (p. /) 9ften in %usiness the greater the risk# the FFFFFFFFFFF"
') greater the potentia' reward
B" 'ower the e)pected reenues
C" 'ower the a'ue proided to society
D" greater the num%er of stakeho'ders

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 2#tching Risk ith 1rofit

12*" (p. /) FFFFFFFFFFF is a measure of the genera' we''-%eing and satisfaction deried from a
ariety of factors inc'uding po'itica' freedom# safety# education# and a c'ean enironment"
." ,tandard of 'iing
B) Gua'ity of 'ife
C" @ross nationa' income
D" ,ocia' satisfaction inde)

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

12+" (p. 3) The amount of goods and serices peop'e can %uy with the money they hae is ca''ed
their?
." nomina' income"
B" consumer price inde)"
C" profit margin"
D) standard of 'iing"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-1!/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
12-" (p. 3) The customers# emp'oyees# stockho'ders# supp'iers# creditors# and others who stand
to gain or 'ose %y the po'icies and actiities of a %usiness represent the firm1s?
." market makers"
B" economic enironment"
C) stakeho'ders"
D" socia' mentors"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Respon!ing to the 5#rious Business St#kehol!ers

12/" (p. 6) The most important difference %etween for-profit %usinesses and nonprofit
organi8ations is that?
." %usinesses do not %enefit society"
B" nonprofit organi8ations seek to make a profit for its owners and organi8ers"
C) nonprofit organi8ations do not seek a profit for its owners or organi8ers"
D" nonprofit organi8ations do not fi'e ta) returns"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-1!2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
122" (p. /) >ast year# .denture Enterprises reported reenues of <!* mi''ion whi'e its tota'
e)penses were <10 mi''ion" Based on this information# .denture reported?
') profits of <1* mi''ion"
B" profits of <(* mi''ion"
C" 'osses of <1* mi''ion"
D" 'osses off <(* mi''ion"
Profits are found %y su%tracting costs and e)penses from reenues# so .denture Enterprises
profits are <!* mi''ion - <10 mi''ion P <1* mi''ion"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Revenues0 1rofits0 #n! "osses

123" (p. 4) . common characteristic of most entrepreneurs is that they?
') accept the risks ino'ed in starting and managing a %usiness"
B" hae a high 'ee' of scientific and technica' e)pertise"
C" possess a great dea' of persona' wea'th"
D" hae e)perience in running 'arge# comp'e) organi8ations"
.n entrepreneur is a person who risks time and money to start and manage a %usiness"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: -ntrepreneurship #n! .e#lth Buil!ing

1-1!3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
130" (p. 6) ;hich of the fo''owing is the %est e)amp'e of a %usiness whose goa' is to earn a
profitH
." . community co''ege
B" The ,a'ation .rmy
C" Boy ,couts of .merica
D) Best Buy# 0nc"
Best Buy is the on'y one of the organi8ations 'isted which seeks to earn a profit" .'' of the
others are nonprofit organi8ations"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

131" (p. /) 0n order to make an inte''igent inestment decision# entrepreneurs shou'd?
." 'imit their options to those %usiness inestments that are %acked %y the 4"," goernment"
B" inest in %usinesses that hae generated a sta%'e rate of profit for at 'east the past ten years"
C" inest on'y in %usiness opportunities where it is possi%'e to take an actie ro'e in
management"
D) compare the risks of potentia' inestments to their e)pected profits and find the right
%a'ance %etween profit and risk"
Those companies with high risk a'so often possess the potentia' for high profits"
Entrepreneurs must weigh risk and profit and find the right %a'ance"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 2#tching Risk ith 1rofit

1-1(0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
13!" (p. 3'6) Companies that outsource research and dee'opment and design $o%s?
." hae a'ways made a wise decision"
B" wi'' %e more profita%'e in the 'ong run"
C) run the risk of oerseas companies using the information to produce competitie products"
D" a'ways inest in the oerseas companies that take on these $o%s"
Companies hae gone from outsourcing production $o%s to outsourcing research and
dee'opment and design functions" ,uch outsourcing may proe disastrous to those firms# in
that oerseas companies may use the information to produce their own# competitie products"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

13(" (p. 6) 6onda and Toyota hae used insourcing for years to produce cars in the 4nited
,tates" 0nsourcing?
') he'ps offset the num%er of $o%s %eing outsourced"
B" increases the num%er of $o%s %eing outsourced"
C" damages the 4nited ,tates economy"
D" causes $o%s to %e 'ost to oerseas competitors"
Companies inc'uding 6onda and Toyota hae set up design and production faci'ities in the
4nited ,tates# ca''ed insourcing" 0nsourcing creates many new $o%s# and he'ps offset the
num%er of $o%s %eing outsourced" Because insourcing creates $o%s it actua''y he'ps the 4","
economy"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

1-1(1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
13*" (p. 6) Pu%'ic schoo's# charities and goernment agencies genera''y FFFFFFFFFF"
." are incorporated
B) do not seek to earn a profit
C" proide goods rather than serices
D" do not hae any stakeho'ders
.'though schoo's# charities# and goernment agencies often proide goods and serices# they
do not seek a profit" Therefore# they are nonprofit organi8ations rather than %usinesses"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

13+" (p. 3) &or-profit %usinesses and nonprofit organi8ations are simi'ar in that they %oth?
') contri%ute to the we'fare of society"
B" seek to earn a profit"
C" hae a 'imited 'ife"
D" must %e contro''ed %y a %oard of directors"
. %usiness is an actiity that seeks to profit %y proiding goods and serices to others"
:onprofit organi8ations# such as charities and goernment agencies# a'so proide goods and
serices in order to satisfy the needs of peop'e within a society# %ut they do not seek a profit"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-1(!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
13-" (p. 3) The standard of 'iing for a nation1s peop'e depends main'y on?
." the 7ua'ity of the natura' enironment"
B" how much po'itica' freedom they hae"
C) their income and the prices of the goods and serices they %uy"
D" the amount of 'a%or and capita' aai'a%'e emp'oyed in the manufacturing sector"
The standard of 'iing of a country refers to the amount of goods and serices peop'e can %uy
with the money they hae"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

13/" (p. 3) ;or'd-c'ass %usinesses attempt to meet the needs of?
." their customers# een if it comes at the e)pense of emp'oyees and other stakeho'ders in the
%usiness"
B" their emp'oyees# een if it means shortchanging customers %y charging higher prices"
C) a'' of their stakeho'ders"
D" e)c'usie'y their owners# since they are u'timate'y the ones who pay the %i''s"
,takeho'ders are a'' of the peop'e affected %y a %usiness" ;or'd-c'ass firms of the future wi''
attempt to meet the needs of a'' of their stakeho'ders"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

1-1((
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
132" (p. 4) ,he'%y recent'y started se''ing her inention? . %ed that 'ooks 'ike it f'oats in mid-
air" The %ed is actua''y suspended %y magnetic forces" ,he'%y is aAnB?
." ar%itrageur"
B) entrepreneur"
C" specu'ator"
D" account manager"
.n entrepreneur is a person who assumes the risk of starting a %usiness"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: -ntrepreneurship #n! .e#lth Buil!ing

133" (p. /) Ross wants to inest some money that he $ust inherited" 6e found that his %ank offers
a saings account paying a guaranteed (I rate of return" 6oweer# he wou'd 'ike to earn a
higher return" Ross shou'd keep in mind that to earn a higher return on his money he?
." wi'' hae to inest oerseas"
B" shou'd inest in a %usiness that has a ery sta%'e and predicta%'e rate of return"
C) wi'' pro%a%'y hae to accept a higher 'ee' of risk"
D" wi'' pro%a%'y hae to engage in i''ega' actiities"
0nesting in a saings account Acertificate of depositB at a %ank entai's ery 'itt'e risk# %ut
earns a re'atie'y sma'' return" Business opportunities that offer the potentia' for high profits
are often associated with a high 'ee' of risk" .n inestor must weigh the potentia' profit of an
inestment with its risk"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: 2#tching Risk ith 1rofit

1-1(*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!00" (p. 3) ;hich of the fo''owing is the most accurate statement a%out the impact of %usiness
on societyH
." ;hen %usinesses earn a profit for their owners# they usua''y do so at the e)pense of the rest
of society which proes it is neer a win-win situation"
B" ;hi'e %usinesses often improe the standard of 'iing within a society# they can do 'itt'e to
improe the 7ua'ity of 'ife"
C" Businesses often improe the 7ua'ity of 'ife# %ut can do 'itt'e to improe the standard of
'iing of most peop'e due to inf'ation"
D) Businesses can hae a positie impact on %oth the standard of 'iing and the 7ua'ity of 'ife
within a society"
Businesses are part of an economic system that he'ps create a higher standard of 'iing and
7ua'ity of 'ife for eeryone"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

!01" (p. 3) =ane1s income has remained sta%'e oer the past few years whi'e the prices of things
she %uys hae gone up" :eerthe'ess# =ane fee's %etter off %ecause the enironment is c'eaner#
the crime rate has dec'ined# she has more 'eisure time# and the 7ua'ity of medica' care has
improed" 0f =ane1s e)perience is typica'# we can conc'ude that the standard of 'iing has?
." increased# %ut the 7ua'ity of 'ife has decreased"
B" increased# and so has the 7ua'ity of 'ife"
C) dec'ined# %ut the 7ua'ity of 'ife has increased"
D" dec'ined# and so has the 7ua'ity of 'ife"
The standard of 'iing refers to how much peop'e can %uy with their income" ,ince prices
hae gone up faster than her income# =ane1s standard of 'iing has dec'ined" 6oweer# 7ua'ity
of 'ife refers to a %roader measure of genera' we''%eing" The improed 7ua'ity of the
enironment# safer streets# increased 'eisure time# and improed medica' care wou'd a''
contri%ute to an improement in genera' we''%eing# and hence wou'd increase the 7ua'ity of
'ife"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: St#n!#r! of "iving #n! 4u#lit, of "ife

1-1(+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0!" (p. 4) Ee and her three co''ege friends en$oy perfumes" .s a specia' gift to each of them
'ast ho'iday season# Ee found a way to make scented cand'es with each friend1s faorite
perfume scent" The three friends 'oed her gift idea and encouraged Ee to create more and
se'' them on the 0nternet" Recent'y# she is fi''ing orders from her we%site# and turning a profit"
Ee is proof that?
." me too %usinesses work"
B) when you successfu''y fi'' a market need# you can make money"
C" the 0nternet is a way to distri%ute $ust a%out anything"
D" the cost of supp'ies to make cand'es is re'atie'y cheap"
0n order to stay competitie# entrepreneurs must find a market niche - something the market
needs"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: -ntrepreneurship #n! .e#lth Buil!ing

!0(" (p. 6) ;hich of the fo''owing statements a%out socia' entrepreneurs Asuch as Muhammad
Junus who won the :o%e' Pri8eB descri%es their cha''engeH
." ,ocia' entrepreneurs may switch socia' causes seera' times %efore finding their niche"
B" ,ocia' entrepreneurs understand that their %usiness enironments are 'ess dynamic than
other %usinesses# especia''y during a recession"
C" ,ocia' entrepreneurs use different %usiness ski''s than entrepreneurs who start other
%usinesses" They shou'd focus on a different educationa' curricu'um than other entrepreneurs"
D) 4sing the same %usiness ski''s as other entrepreneurs# socia' entrepreneurs dee'op
%usinesses to improe the ski''AsB andKor 7ua'ity of 'ife of others"
,ocia' entrepreneurs dee'op %usinesses to improe the ski''s and 7ua'ity of 'ife of others"
Many of these %usinesses are organi8ed as non-profit companies"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: 7sing Business 1rinciples in 8onprofit 9rg#ni+#tions

1-1(-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0*" (p. 3) P'anet Earth Dee'opers is a 'arge nation-wide construction company with home
offices in >ansing# M0" The 'oca' media often remarks a%out the pristine 'andscaping that
surrounds the home office that sits on a (0-acre comp'e)" .t the %ack end of the comp'e) are
seera' 'arge warehouses and garages that ho'd 'arge e7uipment" The grounds surrounding
these warehouses 'ook 'ike a we''-maintained park" .cross the street from the garages are
seera' shops and %usinesses" The CE9# 5P'anet Pau'5 Aas his emp'oyees ca'' himB# often ta'ks
a%out how thankfu' he is that the town permits him to store the company e7uipment at that
site# and ows to a'ways maintain the premises for his neigh%ors Athe other %usinesses that
thrie in that areaB# not to mention that he asks 100 emp'oyees to come to work there
eeryday" ;hich of the fo''owing statements descri%es P'anet Pau'1s %usiness phi'osophyH
." P'anet Pau' is a nice guy whose company made a 'ot of money# so he is wi''ing to spread it
around"
B) P'anet Pau' understands that een though it may cost a 'itt'e more# stakeho'der
considerations are ery important if you want your %usiness to thrie"
C" P'anet Pau' is more concerned a%out town po'itics than a%out the company profits" 6e
shou'd ask his emp'oyees if they wou'd rather hae that money in their pockets than on the
'awns"
D" P'anet Pau' is taking a %usiness risk that his trucks and e7uipment wi'' not make too much
noise as they enter and e)it the garages"
;hen considering the socia' enironment of one1s %usiness# it is important to consider a''
stakeho'ders that your %usiness affects" ,takeho'ders inc'ude customers# emp'oyees# supp'iers#
and een other %usinesses and residentia' areas that are 'ocated within pro)imity of your
%usiness 'ocation"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

!0+" (p. <) The growth of 6ispanic owned %usinesses?
." remained re'atie'y constant during the past decade"
B" s'ow'y increased during the past decade"
C) increased dramatica''y in recent years"
D" decreased s'ight'y compared to other minority groups who hae stared %usinesses"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 9pportunities for -ntrepreneurs

1-1(/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!0-" (p. <) The num%er of %usinesses owned %y 6ispanics and .sians has?
." decreased after the 3-11 terrorist attack"
B" s'ow'y increased"
C) significant'y increased"
D" remained re'atie'y constant"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 9pportunities for -ntrepreneurs

!0/" (p. <) ;hich of the fo''owing entai's the greatest amount of riskH
." ;orking for the goernment
B" ;orking for a 'arge %usiness
C" ;orking for a sma'' %usiness
D) ,tarting a %usiness

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: -ntrepreneurship 5ersus .orking =or 9thers

!02" (p. <) The resources that contri%ute to the creation of wea'th are known as FFFFFFF"
." production coefficients
B) factors of production
C" production techno'ogies
D" production aggregates

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1(2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!03" (p. <) ;hich of the fo''owing is a factor of productionH
." %onds
B" money
C) know'edge
D" serice

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

!10" (p. <) .s a factor of production# the term capita' inc'udes?
." stocks and %onds issued %y corporations"
B" natura' resources such as 'and and water"
C) too's# machinery# and %ui'dings"
D" serices proided %y the goernment that ena%'e %usinesses to %e more productie"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

!11" (p. &&) Two factors of production that seem to contri%ute the most to a nation1s a%i'ity to
create wea'th are?
." 'and and 'a%or"
B" 'and and capita'"
C" entrepreneurship and 'a%or"
D) entrepreneurship and know'edge"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1(3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1!" (p. &&) FFFFFFFFFFFFFFF isKare the e)terna' and interna' circumstances that surround the
%usiness"
') The %usiness enironment
B" The factors of production
C" The %usiness corra'
D" The %usiness discip'ines

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Business -nvironment

!1(" (p. @'<) Entrepreneurs weigh the differences %etween the %enefits of starting a %usiness and
those things that they are 'ike'y to forego %ecause they choose to work for themse'es" ,uch
things they are 'ike'y to pass-up on are?
." the freedom to make their own decisions"
B" 'oca' goernment %enefits such as enterprise 8one ta) credits"
C) emp'oyer paid %enefits such as paid acation and hea'th insurance"
D" tickets to sporting eents that trading partners may proide"
Entrepreneurs and sma'' %usiness owners do not receie the emp'oyer paid %enefits that a
'arge firm can offer# inc'uding such things as paid acations and hea'th insurance %enefits"
They gie-up these opportunities for the freedom to work for themse'es and keep the profits
that their %usinesses rea'i8e"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: -ntrepreneurship 5ersus .orking =or 9thers

1-1*0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1*" (p. <) ;hich of the fo''owing is a %enefit of owning your own %usinessH
') &reedom to keep the profits from your %usiness
B" @oernment supported hea'th insurance
C" More camaraderie with emp'oyees
D" ,horter work hours
9ne of the %enefits of owning your own %usiness is the freedom to keep the profits after ta)es"
.nother is the en$oyment of %eing your own %oss"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: -ntrepreneurship 5ersus .orking =or 9thers

!1+" (p. <'&%) >eanne owns a nursery %usiness" The trucks# handcarts# and fork'ift she purchased
for the %usiness are ca''ed FFFFFFFFFF inestments"
." natura' resources
B" intangi%'e resources
C" current asset
D) capita'
.s a factor of production# capita' inc'udes too's# machinery# e7uipment# such as the trucks#
hand carts# and fork'ift machines mentioned in this 7uestion"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1*1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!1-" (p. <) .s you consider the factors of production# which of the fo''owing did management
theorist# Peter Drucker %e'iee to %e one of the most important contri%uting factors to
increasing our nation1s wea'thH
." >and
B" >a%or
C) Lnow'edge
D" Capita'
.ccording to the 'ate Peter Drucker# know'edge is and wi'' %e the most important factor of
production in our economy" 6e specifica''y refers to the high-tech workers in the ,i'icon
Na''ey as know'edge workers"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

!1/" (p. &%'&&) ;hen we compare the factors of production in wea'thy and poor nations# we find?
." poor nations hae p'enty of 'and and know'edge# %ut ery 'itt'e 'a%or"
B" poor and wea'thy nations A%othB hae an a%undance of know'edge# it is the 'and that aries#
with rich nations a'ways haing more"
C) wea'thy nations hae know'edge and entrepreneuria' opportunities# whi'e poor nations are
often 'acking in these areas"
D" wea'thy nations hae 'and and 'a%or# whi'e poor nations hae capita' and entrepreneurship"
The factors of production known as 5know'edge5 and 5entrepreneurship5 contri%ute toward a
nation1s opportunity to innoate and create new products and serices" Entrepreneurs use their
know'edge to grow their %usinesses and increase wea'th"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1*!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!12" (p. &&) . nation progresses socia''y when it has good schoo's# c'ean air and water# and
more" ;hich of the fo''owing statements addresses conditions for socia' progressH
." ,ocia' progress wi'' eo'e when capita' is apportioned to eeryone in e7ua' amounts"
B) . city# state# or nation1s socia' progress needs the right %usiness enironment"
C" The foundation for socia' progress is a handfu' of wea'thy entrepreneurs wi''ing to spread
the wea'th"
D" ,ocia' progress can on'y improe when there is a strong 'a%or poo' to draw from"
The foundation for socia' progress is haing the right %usiness enironment" ;hen %usinesses
create wea'th and $o%s# they are a%'e to contri%ute to the socia' progress in the area where they
operate" The resu't is usua''y good schoo's and other socia' serices# such a po'ice protection#
and good hea'th enironment"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Business -nvironment

!13" (p. <'&&) ;hich of the fo''owing statements a%out factors of production is the most
accurateH
." The fie factors of production are energy# capita'# 'a%or# 'eadership and money"
B" ;ea'th creation in poor nations is s'owed %y chronic shortages of 'a%or"
C" Each of the factors of production is e7ua''y important in creating wea'th"
D) Entrepreneurship and know'edge are the most important in creating wea'th"
There are fie ma$or categories of factors of production? 'and# 'a%or# capita'# entrepreneurship
and know'edge" Poor nations often hae p'enty of 'a%or and 'and# %ut 'ack entrepreneurship
and know'edge resources" Thus# the on'y accurate statement is that know'edge and
entrepreneurship are the most important factors of production for the creation of wea'th"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1*(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!0" (p. &&) :o'iia is a sma'' and poor nation# %ut its current president has a genuine desire to
create more wea'th for :o'iia citi8ens" The president has receied recommendations from
seera' of her adisors" ;hich of the fo''owing recommendations is 'ike'y to create the most
wea'th for :o'iiaH
." .c7uire more 'and %y inading a neigh%oring country that is een poorer and weaker than
:o'iia"
B" 4se foreign aid from other nations to purchase more too's and machinery"
C) Esta%'ish a %usiness enironment that promotes and rewards entrepreneurship"
D" Esta%'ish %arriers to trade to protect :o'iia %usinesses from foreign competition"
The factors of production that seem to contri%ute most to the generation of wea'th are
entrepreneurship and know'edge" Thus one key to promoting wea'th creation is to foster
entrepreneurship"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

!!1" (p. &&) Ben and Chris com%ined their 'oe of hockey with a %usiness enture" They
purchased a sma'' porta%'e cart and %egan se''ing hockey memora%i'ia outside of the
hometown hockey arena" Their first year went we''# %ut this past year has %een a rea' strugg'e"
Due to poor economic conditions inc'uding a 'oss of $o%s# ticket sa'es at the arena are down#
which has significant'y hurt their sa'es as we''" .s a recent %usiness schoo' graduate# you
e)p'ain to Ben and Chris?
." this type of %usiness is a'ways high risk %ecause it is seasona'"
B" the %usiness does not fi'' a sufficient need for most peop'e"
C) enironmenta' circumstances are dynamic and tough to contro'"
D" socia' entrepreneurs are current'y getting most of the attention"
The %usiness enironment consists of surrounding factors that either he'p or hinder the
dee'opment of %usinesses" 0n this case the economic enironment has seere'y affected the
num%er of peop'e attending hockey games" Business enironments are dynamic" They are
constant'y changing and %usiness must 'earn to naigate the changes"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Business -nvironment

1-1**
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!!" (p. @'<) :ick is a recent finance graduate who has two passions? music and finance" 4pon
graduation# he was offered an opportunity to $oin a strugg'ing rock %and with a 'ot of
potentia'# or a $o% at a 'arge we''-esta%'ished financia' serices company" By $oining the %and#
he wi'' forego which of the fo''owingH
') .dded %enefits such as hea'th insurance proided to emp'oyees of 'arge corporations"
B" The freedom to contri%ute as an innoator in his work enironment"
C" >ong hours at work# whi'e he 'earns the %usiness and contri%utes to making it successfu'"
D" =o% protection"
Entrepreneuria' entures and sma'' %usinesses# particu'ar'y in their infancy cannot offer
ownersKemp'oyees the same %enefits as 'arge# esta%'ished companies" 0n this case# it is the
hea'th %enefits :ick wi'' forego"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: -ntrepreneurship 5ersus .orking =or 9thers

!!(" (p. &&) China is a nation with a ast amount of 'and and a ery 'arge popu'ation" .nother
characteristic of this nation is its peop'e1s affinity for saing money" Referring to the fie
factors of production# the goernment of China has made significant progress in %ui'ding its
%usiness enironment %y focusing on factors that needed improement" 0ts strategy was to?
." increase the supp'y of 'a%or"
B" increase sources for capita'"
C) increase entrepreneurship"
D" encourage neigh%oring nations to proide the necessary 'and for %usiness dee'opment"
Entrepreneurship is one of two factors of production that management theorists %e'iee to %e
most important for wea'th creation" The other is know'edge"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: The >mport#nce of -ntrepreneurs to the Cre#tion of .e#lth

1-1*+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!*" (p. &%) .ccording to the 5$pot"ight on $ma"" Business5 %o) for Chapter 1# >isa Lnoppe
Reed started a uni7ue %usiness ca''ed 5.rt for a Cause5" ;hich of the fo''owing statements
accurate'y coneys the c'imate surrounding women-owned %usinessesH
." .'though it wou'd make an idea' wor'd# it remains difficu't to make a 'iing when you
com%ine socia' causes and %usiness entures"
B" There are sti'' tremendous stigmas a%out women owning %usinesses" The few women who
attempt to run their own %usiness each year is indicatie of these cu'tura' pro%'ems"
C" 0t is difficu't enough for women to %e entrepreneurs" ;hen women com%ine socia' causes
with their %usiness ski''s# the %usiness fai'ure rate intensifies"
D) The num%er of women owned %usinesses has increased significant'y" .s a socia'
entrepreneur# >isa1s %usiness mode' proes that one can %e successfu' and a'so improe the
'ies of others"
.n important socia' trend that %egan emerging seera' years ago is growth in women-owned
%usinesses" ,purred a'ong %y the he'p of goernment grants# women continue to pursue
%usiness ownership" 9ther socia' trends inc'ude aging .mericans# diersity in hiring# and two
income fami'ies"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%: Comp#re #n! contr#st )eing #n entrepreneur #n! orking for others.
"evel of "e#rning ;: Applic#tion of principles
Topic: Spotlight on Sm#ll Business )o?

!!+" (p. &:) Ta)es and goernment regu'ations are part of the FFFFFFFFFFFFFFFF enironment
of %usiness"
') economic and 'ega'
B" competitie
C" socia'
D" techno'ogica'

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-1*-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!-" (p. &:) Businesses faor?
') minima' goernment spending %ecause it keeps ta)es to a minimum"
B" more goernment serices %ecause it minimi8es ta) conse7uences"
C" ma)imum goernment spending %ecause it raises %usiness profits"
D" 'ess goernment spending %ecause it 'owers %usiness profits"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

!!/" (p. &:'&;) 0n order to create more wea'th and proide %etter serices# some nations recogni8e
that FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF"
." raising ta)es %enefits a'' %usinesses
B) a good strategy is to minimi8e interference with the free e)change of goods and serices
C" restricting trade with other countries a'ways he'ps domestic %usinesses
D" taking contro' of priate'y owned %usinesses and making them goernment -run wi''
decrease ta)es and improe the 'ies of eeryone

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

!!2" (p. &:) 0n countries where %usinesses are goernment owned?
') there is 'ess incentie to work hard"
B" the right amount of each good is produced"
C" profits tend to %e higher"
D" the 7ua'ity of goods is high %ut profits are 'ow"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

1-1*/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!!3" (p. &;) 6igh ta) rates tend to?
." promote economic dee'opment"
B" make a nation1s currency trada%'e"
C) discourage entrepreneurship"
D" reduce the amount of money created %y the goernment"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

!(0" (p. &;) The capita'ist system re'ies heai'y on?
." protectionist po'icies with respect to wor'd markets"
B" minimi8ing goernment interention in corrupt %usiness practices"
C" making sure that currencies are neer under-a'ued"
D) honesty# integrity# and high ethica' %usiness standards"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The -conomic #n! "eg#l -nvironment

!(1" (p. &;) Contemporary goernments promote %usiness dee'opment %y?
." increasing %usiness regu'ations"
B" proiding goernment ownership of %usinesses"
C" permitting %usinesspeop'e to conduct %usiness without the use of contracts"
D) esta%'ishing a currency that1s trada%'e in wor'd markets"
The goernment can esta%'ish a currency that1s trada%'e in wor'd markets so that
%usinesspeop'e can %uy and se'' goods and serices anywhere in the wor'd using that
currency"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

1-1*2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(!" (p. &:'&;) ;hich of the fo''owing po'icies wou'd tend to foster entrepreneurshipH
') Minimi8e ta)es and regu'ations"
B" Promote more regu'ations to protect the enironment"
C" Dee'op po'icies to reduce corruption %etween indiidua's"
D" Encourage pu%'ic ownership of %usinesses"
Minimi8ing ta)es and fewer goernment regu'ations are faora%'e po'icies toward the creation
of %usinesses"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

!((" (p. &;) ;hen corruption is present in the %usiness enironment?
') company 'eaders can threaten competitors and minimi8e competition"
B" factories are easier to %ui'd without a goernment permit"
C" it promotes fair competition"
D" 'a%orers can make more money"
@oernments shou'd he'p to minimi8e corruption in %usiness for seera' reasons" 0t1s hard to
do %usiness in many poor countries %ecause the goernments ignore corruption among
%usinesses and the goernments are a'so corrupt" 0t1s ery difficu't in such countries to get
permission to %ui'd a factory or open a store without a goernment permit# which is o%tained
'arge'y through %ri%ery of pu%'ic officia's" .mong %usinesses themse'es# 'eaders can threaten
competitors and minimi8e competition"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

1-1*3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(*" (p. &;'&4) Guestiona%'e %usiness practices such as those fo''owed %y many mortgage
'ending companies in the past few years?
." encouraged inestors to increase their stock market ho'dings"
B) fundamenta''y weakened the entire economic enironment"
C" he'ped retired emp'oyees at the e)pense of current emp'oyees"
D" resu'ted from too much goernment regu'ation"
Corrupt and i''ega' actiities at some companies do negatie'y affect the %usiness community
and the economy as a who'e" The capita'ist system re'ies heai'y on honesty# integrity# and
high ethica' standards" ;hen these fundamenta's fai'# the who'e system is weakened"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The -conomic #n! "eg#l -nvironment

!(+" (p. &:'&;) ;hich of the fo''owing goernment po'icies wou'd %e "east 'ike'y to encourage
entrepreneurshipH
." Passage of 'aws that ena%'e %usinesspeop'e to write enforcea%'e contracts"
B" Esta%'ishment of a currency that is trada%'e in wor'd markets"
C) Esta%'ishment of strict regu'ations specifying e)act'y how products shou'd %e made to
ensure safety and afforda%i'ity"
D" Passage of 'aws that e'iminate corruption in goernment and %usiness"
9ne of the things goernments can do to encourage entrepreneurship is keep %usiness
regu'ations to a minimum" Regu'ations may %e desira%'e in other respects# %ut they tend to
discourage entrepreneurship %y making the formation and management of %usinesses more
difficu't and e)pensie"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

1-1+0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(-" (p. &;) . recent :ew Jork Times artic'e a%out Bernard Madoff and his i''ega' Pon8i
scheme stated# 5;hen money goes g'o%a'# fraud does too"5 .'though the goa' of inestors
who trusted Madoff1s inestment company was to earn the highest return possi%'e on their
inestments# they turned a %'ind-eye toward the fact that some of those returns were too good
to %e true" 0ndiidua' inestors# companies# and een charities 'ost 'arge sums of money %y
inesting with Madoff1s company" ;hich of the fo''owing statements re'ates to this storyH
') The unethica' %ehaior of one company had a wor'dwide ripp'e effect that can impact the
we'' %eing of an economy"
B" Too much regu'ation caused the capita'istic nature of Mr" Madoff1s %usiness mode' to fai'"
C" Peop'e 'ost money %ecause of the f'uctuations in wor'd trading currencies# 7uestioning the
'egitimacy of trading a%road"
D" 0nestors did not sign contracts with Mr" Madoff1s company" The goernment can on'y
protect indiidua's and companies who sign enforcea%'e contracts"
4nethica' %ehaior can hae a steamro''ing effect on %usiness as consumers 'ose confidence
and the oera'' effect on the economy turns negatie"

AACSB: -thics
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

!(/" (p. &;) .dam Rip'ey se''s custom %icyc'es" .dam %uys seera' %ike parts inc'uding whee's
and tires from the @ood Treads Company" .'though seera' goernment-supported
regu'ations he'p .dam in his %usiness# regu'ations that make it easy for .dam1s %usiness to
en$oy good endor re'ationships are?
." 'ower ta)es that %usiness to %usiness customers pay to each other"
B" 'aws that permit minima' corruption in %anking institutions"
C" 'aws that permit sma'' %usinesses to use the goernment as an intermediary when doing
%usiness with other sma'' %usinesses"
D) 'aws that support enforcea%'e contracts %etween firms"
;ithout enforcea%'e contracts %etween firms# sma'' and 'arge %usinesses cannot efficient'y
conduct %usiness" The goernment can 'essen the risks of entrepreneurship %y passing 'aws
that ena%'e peop'e to write good %usiness contracts that are enforcea%'e in court"

AACSB: -thics
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

1-1+1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!(2" (p. &:) =ay and =im ,pears own a 'awn irrigation system %usiness" They perform
insta''ations and maintenance of these systems" ,eera' of their customers are go'f courses#
%ut they sere a 'arge group of residentia' customers as we''" ;hen they started the %usiness
ten years ago# they made a pact to a'ways operate within the 'ega' 'imits of the 'aw# %ut 'ate'y#
the competition is eating them a'ie" >oca' competitors hae hired i''ega' immigrants to
perform the manua' 'a%or" They do not pay ta)es on these emp'oyees - they $ust pay them in
cash at the end of the week" Emp'oyment ta)es are a %urden for sma'' %usinesses" =ay and =im
do not want to hire i''ega' workers" There1s a risk if you permit an i''ega' worker to drie a
truckM or# if heKshe has an accident on the $o%" Jou hae $ust studied %usiness ethics in your
c'ass" Jou inform this partnership that?
." Ta)es on'y need to %e paid for the owners"
B) They are not on'y taking a chance that a %igger pro%'em may occur# they are indirect'y
setting the ethics code for their firm"
C" ,ma'' %usinesses may not %e a%'e to worry a%out ethics codes" These types of documents
are %etter suited for %ig %usiness"
D" 0t is not unethica' to try to %etter the 'ies of others" Eeryone needs $o%s"
.s the student wi'' read in Chapter *# management1s %usiness ethics sets the tone for the
company1s a'ue system" Corruption and i''ega' actiities at some companies do negatie'y
affect the %usiness community as a who'e" The capita'ist system re'ies heai'y on honesty#
integrity# and high ethica' standards"

AACSB: -thics
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: 2#king -thic#l (ecisions )o?

!(3" (p. &4) The 0nternet and the emergence of an information-%ased economy are important
parts of the FFFFFFFFFFF enironment in which %usinesses operate"
." economic and 'ega'
B) techno'ogica'
C" competitie
D" g'o%a'

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-1+!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*0" (p. &4) Techno'ogy affects peop'e in?
') a'' industries"
B" most industries"
C" information techno'ogy industries with the e)ception of agricu'ture"
D" primari'y high income countries"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!*1" (p. &4) Emp'oyers proide too's and techno'ogy for their emp'oyees in order to?
." increase the cost of production and profita%i'ity"
B) improe their efficiency and productiity"
C" reduce corruption in %usiness and e'iminate scanda's"
D" encourage the priate ownership of %usinesses"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!*!" (p. &4) Efficiency means?
." producing the desired resu't"
B) producing goods and serices using the 'east amount of resources"
C" the amount of output you generate gien the amount of input"
D" the %uying and se''ing of goods using the most amount of resources"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-1+(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*(" (p. &4) FFFFFFFFFFF refers to the amount of output generated with a gien amount of
input# e"g"# the num%er of pi88as produced per worker per hour"
." Efficiency
B" Techno'ogy
C" Te'ecommuting
D) Productiity

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!**" (p. &4) FFFFFFFFFFF means producing the desired resu't"
') Effectieness
B" Techno'ogy
C" E-production
D" Productiity

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!*+" (p. &4) FFFFFFFFFFF means producing items using the 'east amount of resources"
') Efficiency
B" Techno'ogy
C" E-production
D" Productiity

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-1+*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*-" (p. &4'&/) The two main types of e-commerce are?
." on'ine and off'ine"
B" ED0 and EDC"
C" who'esa'e and retai'"
D) B!B and B!C"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!*/" (p. &4'&/) ;hen %usinesses se'' to other %usinesses oer the 0nternet# these transactions are
known as?
." B!C transactions"
B" e-who'esa'e transactions"
C) B!B transactions"
D" intermediate e-commerce transactions"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!*2" (p. &4'&/) Companies that se'' goods to consumers oer the 0nternet are engaging in?
') B!C transactions"
B" 094 transactions"
C" B!B transactions"
D" J!L transactions"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-1++
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!*3" (p. &/) The series of 'ines on a product packaging that the cashier scans when you check
out at a grocery store or discount store is ca''ed a?
') %ar code"
B" 8ip code"
C" scan code"
D" 'aser code"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!+0" (p. &/) .n e'ectronic storage fi'e where firms keep customer information is known as aAnB
FFFFFFFFF"
." MP( fi'e
B" management information system
C) data%ase
D" e-mai' serer

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!+1" (p. &/) FFFFFFFFFF is i''ega''y o%taining and i''ega''y using priate information a%out a
person# such as using someone1s credit card num%er"
." Petty theft
B) 0dentity theft
C" Banking theft
D" 9n'ine theft

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

1-1+-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+!" (p. &/) 9ne adantage of a data%ase is?
." it permits a retai' store to direct'y gather information on the customers who do %usiness
with its competitors# so it can target promotiona' materia's to those peop'e"
B) it creates efficiency in that the store can 7uick'y rep'enish items that are purchased"
C" it preents identity theft"
D" it preents stores from e)changing customer information with each other"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Technologic#l -nvironment

!+(" (p. &4) ;hich of the fo''owing is an adantage of uti'i8ing techno'ogyH
." Techno'ogy increases the cost of production"
B" Techno'ogy reduces the need for a marketing p'an"
C) Productiity increases"
D" Management %ecomes iso'ated from the demands of stakeho'ders"
Techno'ogy is eerything from phones to software programs that make %usinesses more
efficient and productie" Productiity is the amount of output you generate gien the amount
of input"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

1-1+/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+*" (p. &4'&/) ;hich of the fo''owing %est descri%es the main difference %etween B!B and B!C
transactionsH B!B transactions?
') ino'e transactions where the %uyers and se''ers are %oth %usinesses# whi'e B!C ino'es
transactions %etween %usinesses and consumers"
B" focus on financia' transactions whi'e B!C e-commerce focuses on the sa'e of manufactured
goods"
C" refer to %usiness %etween nonprofit organi8ations whi'e B!C e-commerce is carried out %y
%usiness firms seeking to earn a profit"
D" ino'e sa'es in foreign markets whi'e B!C e-commerce is restricted to domestic markets"
B!B stands for %usiness-to-%usiness and B!C stands for %usiness-to-consumer"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

!++" (p. &4) 0n recent years# %usinesses in genera' hae e)perienced a 'asting impact due to the
emergence of FFFFFFFFFFFF"
." motor-re'ated techno'ogies
B" techno'ogies re'ated to %rain studies
C" counterfeit techno'ogies
D) information techno'ogies
Too's and machines dee'oped throughout history hae changed the techno'ogica'
enironment" 0nformation techno'ogy %enefits workers in a'' industries and proides
%usinesses with the a%i'ity to %e more responsie to customer needs"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Technologic#l -nvironment

1-1+2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+-" (p. &4'&/) :tercon is an 0nternet-%ased company that proides on'ine support serices for
%usinesses that need he'p in setting up and maintaining their we%sites" :tercon is an e)amp'e
of a company that is engaged in?
." B!C e-commerce"
B" :!J e-commerce"
C" J!L e-commerce"
D) B!B e-commerce"
,ince :tercon is proiding serices to other %usinesses oer the 0nternet# it is engaging in
%usiness-to-%usiness AB!BB transactions"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

!+/" (p. &/) >ife of >u)ury# 0nc"# is a mai' order firm that specia'i8es in e)pensie and unusua'
gifts for a'' occasions" The company keeps a 'arge fi'e of information on a'' of its regu'ar
customers# inc'uding names# addresses# type of gifts they hae ordered in the past# and the si8e
and fre7uency of their orders" The e'ectronic fi'e which stores this information is aAnB?
." spreadsheet"
B" MP( fi'e"
C" PERT fi'e"
D) data%ase"
. data%ase is an e'ectronic storage fi'e where information is kept"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-1+3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!+2" (p. &/) ;hich of the fo''owing predictions a%out the impact of e-commerce on traditiona'
%usinesses is 'ike'y to %e most accurateH
." E-commerce wi'' hae 'itt'e impact on most traditiona' %usinesses# %ecause on'y a few
types of products can %e so'd effectie'y oer the 0nternet"
B) Traditiona' %rick-and-mortar firms wi'' enter the e-commerce market %y creating their own
we% sites"
C" E-commerce wi'' proe to %e ery successfu' in competing against traditiona' firms in B!C
markets# %ut wi'' hae much 'ess success in B!B markets"
D" Brick-and-mortar %usinesses wi'' cease to e)ist within twenty years"
Businesses that de'ight their customers %y proiding 7ua'ity products at good prices with great
serice wi'' succeed" Esta%'ished firms hae 7uick'y adapted the techno'ogy necessary to
compete in the e-commerce market"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

!+3" (p. &/) Tyre'' recent'y noticed that he was receiing seera' cata'ogs and direct mai'
adertisements than he had in the past een though he had not re7uested any of them" ;hich
of the fo''owing %est e)p'ains why this is happeningH
." Tyre'' was a ictim of on'ine theft"
B) Tyre'' gae his persona' information to a %usiness# which then traded it to other companies
and these companies then %egan sending him cata'ogs"
C" .'' %usinesses routine'y hae a'' customers1 persona' information"
D" Tyre''1s accountant gae his information to the direct mai' marketers"
The information Tyre'' gae a %usiness when he purchased something from it was entered into
its data%ase and then traded to another company so that many more retai'ers know what Tyre''
%uys and from whom he %uys it"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-1-0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-0" (p. &/) @a%rie''a wants to compare the price of a designer %ag she saw in a 'oca'
department store# with other stores that may hae the same" ,he 'ocates the product on three
different we%sites on the 0nternet# and then stum%'es on a site that does the price shopping for
her" @a%rie''a1s 7uest is an e)amp'e of how customers are using FFFFFFFFFF to so'e
pro%'ems"
." price shopping
B" data%ases
C) information techno'ogy
D" socia' networking
The 0nternet has 'ed to the growth of e-commerce" Customers can interactie'y use the
0nternet to compare items# their 7ua'ity# and price" 0t has dramatica''y changed the shopping
e)perience"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

!-1" (p. &/) Char'es Ma'one recent'y renewed his card mem%ership at DiscountMania" The card
has an annua' <*0 fee# %ut Char'es %e'iees that it pays for itse'f %ecause he receies good
prices on e'ectronics# contact 'enses# and een tires for his car" ,hort'y after renewing the card#
Char'es %egan receiing ca''s from co''ection agencies c'aiming that he owed money" ;ith the
he'p of others# he 'earned that another Char'es Ma'one a'so owned a DiscountMania card# and
wrote checks with insufficient %ank funds when making purchases" DiscountMania had 'inked
Char'es1 persona' information with the other Char'es Ma'one1s persona' information" Char'es
e)perienced FFFFFFFFFFFFFF"
." Buyer myopia
B" Data%ase fraud
C" 0nformation trafficking
D) 0dentity theft
0dentity theft is o%taining of priate information a%out a person# such as ,ocia' ,ecurity
num%ers andKor credit card num%er# and using that information for i''ega' purposes# such as
%uying things with it"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-1-1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-!" (p. &/) Mar'a ,tap'es is concerned with identity theft" 9ne of the ways that she can protect
her information from 'eaking-out to the wrong hands is?
." .oid a'' e-commerce transactions %ecause this is the on'y type of %uying transactions
where we%sites and others hand'e sensitie# persona' information"
B) 0nsta'' antiirus software# firewa''s# and anti-spyware software on her computer"
C" >imit her purchases with endors that she knows do not store her information in a
data%ase"
D" >imit her trae's to the 4nited ,tates %ecause identity theft is an internationa' pro%'em"
0dentify theft continues to %e a concern as peop'e continue to use the 0nternet and other
sources to get 7uick and conenient information" 0t is important to protect your computer
hardware and software with antiirus software# firewa''s# and anti-spyware software" .s with
any new techno'ogy# peop'e eentua''y find ways to corrupt the system" :ew protections must
%e dee'oped to com%at hackers and others who inade your computer system to try and
%enefit i''ega''y %y stea'ing your identity"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

!-(" (p. &/) .ndy B'ake got a ca'' yesterday from P'anet Bank# the company that issued his
credit card in7uiring a%out an <2+"00 charge made in Caracas# Nene8ue'a" 4pon 'earning that
.ndy had not made this purchase# the Bank 7uick'y took steps to cance' the card and issue a
new one" @ien the circumstances that .ndy1s credit card num%er had an i''ega' transaction#
.ndy may a'so want to?
." Check his computer1s firewa'' to make sure its working"
B" Cance' his account with P'anet Bank# a'together and e'iminate credit cards from his 'ife"
C) Check his credit report"
D" Diersify his spending ha%its %y using one of seera' credit cards when making purchases"
Checking your credit report is an important step in preenting identity theft"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

1-1-!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-*" (p. &3) 0n today1s competitie enironment# good a'ue means?
." making products with 8ero defects"
B" superior 7ua'ity that trans'ates into dura%'e products"
C" offering the 'atest trends without seeming 'ike you are oer the top"
D) proiding 7ua'ity products and serices at competitie prices"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

!-+" (p. &3) ,uccessfu' %usinesses are keen'y focused on their?
') customers"
B" managers"
C" creditors"
D" %ureaucrats"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

!--" (p. &3'&6) Empowerment means?
') giing emp'oyees the authority to make decisions"
B" making certain that emp'oyees a'ways defer to management when making decisions"
C" hiring emp'oyees that do not re7uire training due to the cost'y nature of this actiity"
D" asking emp'oyees to write the po'icies which goern their $o%s"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

1-1-(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-/" (p. &3) Empowerment re7uires that managers focus more on FFFFFFFFFF 'ower-'ee'
emp'oyees"
." direct'y superising
B) training
C" simp'ifying the $o%s of
D" contro''ing and correcting

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Competitive -nvironment

!-2" (p. &6) To imp'ement a po'icy of empowerment# the organi8ation wi'' restructure so that?
." managers hae more responsi%i'ity and emp'oyees 'earn to fo''ow directions"
B) emp'oyees assume more responsi%i'ity"
C" workers agree to work oertime without e)tra pay"
D" an entire 'ee' of management is remoed from the organi8ation"
Empowering emp'oyees 'eads to dee'oping entire'y new organi8ation structures to meet the
changing needs of customers and emp'oyees" 0t may take years to restructure an organi8ation
so that managers are wi''ing to gie up some of their authority and emp'oyees are wi''ing to
assume more responsi%i'ity"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

1-1-*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!-3" (p. &3'&6) ;hich of the fo''owing statements a%out the competitie enironment is most
accurateH
." &irms that produce a 7ua'ity product wi'' a'most a'ways succeed in the competitie
marketp'ace"
B" Traditiona' firms wi'' %e una%'e to successfu''y compete against the new 0nternet firms
un'ess they immediate'y create a way to reach customers through this techno'ogy"
C" &irms that empower their emp'oyees wi'' continue to perform poor'y in the competitie
enironment"
D) Companies now hae to offer %oth high-7ua'ity products and outstanding serice at
competitie prices"
Companies now hae to offer %oth high-7ua'ity products and outstanding serice at
competitie prices Aa'ueB"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

!/0" (p. &3) 0n order to compete we'' and gain market share# contemporary %usinesses are
changing to %e more FFFFFFFFFFFFFFFF"
') customer-drien
B" cash-drien
C" management-drien
D" production-drien
Competition among %usinesses has neer %een greater" The nature of the competitie
enironment has encouraged %usinesses to offer high 7ua'ity products and outstanding
serice" The goa' is to %e customer-drien"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Competitive -nvironment

1-1-+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/1" (p. &6) >amar is a sa'esperson for Bi-,tate Direct" 6e rea''y appreciates the amount of
freedom and authority Bi-,tate gies its sa'es peop'e in order to %etter meet the needs of
customers" >amar1s e)perience suggests that Bi-,tate practices?
." Centra'i8ed management"
B" &ast response theory"
C" Enfranchisement"
D) Empowerment"
Empowerment means giing front-'ine workers more freedom to respond 7uick'y to customer
re7uests"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

!/!" (p. &3) @reg is working as a marketing trainee for an on'ine Music CD and ideo retai'er"
6is %oss ca''ed a meeting for ne)t week with one thing on the agenda? 5Bring with you your
ideas a%out how we can gain a competitie adantage"5 @reg p'ans to proide the fo''owing
response?
." Create a management-drien enironment with 'ots of emp'oyee training"
B) Create a customer-drien enironment where we constant'y try to create customer a'ue"
C" Restructure the organi8ation so that there is a'ways a manager on duty to chat with on'ine
customers who are haing pro%'ems with their orders"
D" .'ways match the promotions of our competitors" Price is the on'y thing customers care
a%out"
Businesses must %e customer-drien" ;hi'e consumers demand high 7ua'ity# they a'so hae
come to e)pect reasona%'e prices and e)ceptiona' serice" 0n today1s high'y competitie
%usiness enironment# proiding a 7ua'ity product is no 'onger enough" Consumers and
industria' %uyers now e)pect more"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

1-1--
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/(" (p. &3'&6) ;hich of the fo''owing statements %est descri%es how firms must treat their front-
'ine workers in order to remain competitieH &ront-'ine workers must %e FFFFFFFFFFF"
') empowered with the authority to respond 7uick'y to the unmet needs of customers
B" c'ose'y superised to reduce the risk of product 'ia%i'ity and discrimination 'aw suits
C" e'iminated and rep'aced with automated e7uipment wheneer possi%'e
D" re'ieed of any %urden to make a customer decision
0n order to meet the needs of customers# firms must gie their front-'ine workers more
freedom to respond 7uick'y to customer re7uests" This is the concept of empowerment# which
is an important theme throughout the te)t"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

!/*" (p. &3) Ma) is in charge of production for a fami'y-owned firm that makes and se''s sports
g'oes inc'uding %ase%a'' g'oes# soft%a'' g'oes# go'f g'oes# and more" 6e has stated that
speed of de'iery is the most important factor for success in the competitie enironment"
;hich of the fo''owing wou'd %e the %est response to Ma)H
." Jou are right on target# Ma)" Time is money"
B" Jou are the man# Ma)" .s 'ong as our price is competitie# speedy de'iery wi'' win in
today1s changing marketp'ace"
C) ;e'' Ma)# speed isn1t eerything" ;hat wou'd e)ceed our customers1 e)pectationsH ,ome
consumers may put more importance on high 7ua'ity andKor 'ower prices"
D" Dude# you cou'dn1t %e more wrong" Gua'ity is the name of the game" 6e who has the %est
product wi'' win in the competitie enironment"
,uccessfu' organi8ations are customer-drien" This means that customers1 wants and need are
the first priority" .'' decisions are focused on the %'end of price# serice# and 7ua'ity that wi''
%est de'ight the customers"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

1-1-/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/+" (p. &6) The statistica' study of human popu'ation to 'earn its si8e# density# and
characteristics is ca''ed?
." psychographics"
B" econometrics"
C) demography"
D" geometry"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!/-" (p. &6) Businesses co''ect FFFFFFFF information on where peop'e 'ie# what they %uy# and
how they spend their time"
." geometric
B" econometric
C) demographic
D" anthropo'ogic

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!//" (p. &6) Diersity is more than recruiting and keeping minorities and women" Diersity
means appreciating and understanding other differences in our customers and in our
workforce" The statement that %est descri%es this difference is?
') disa%i'ities# se)ua' orientation# re'igious preferences# and een persona'ity differences such
as e)troerts and introerts"
B" gender ro'es"
C" surface 'ee' things such as green eyes ersus %rown eyes"
D" racia' differences and gender differences"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-1-2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!/2" (p. &6) Efforts are underway to sere the needs of a dierse popu'ation" Diersity means?
." se''ing products to immigrants"
B) dea'ing sensitie'y with workers and cu'tures around the wor'd"
C" proiding goernment programs such as free hea'th care for i''ega' and 'ega' immigrants"
D" meeting emp'oyment 7uotas so that dierse groups are a'ways represented in your
workforce"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!/3" (p. &6'&@) Due to popu'ation shifts#
') %usinesses that cater to o'der consumers wi'' see e)ceptiona' growth"
B" %usinesses that cater to o'der consumers wi'' see s'ower growth"
C" %usinesses that se'' e'ectronic deices wi'' see a significant dec'ine"
D" hea'thcare wi'' emerge as the on'y %usiness sector that wi'' grow"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!20" (p. &@) ;hich of the fo''owing industries wi'' %enefit from an aging popu'ationH
." &inancia' serices to he'p c'ients p'an for their education
B) 6ome hea'th care %usinesses
C" Chi'dren1s day-care centers
D" .uto industry

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-1-3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!21" (p. &@) The socia' security system#
." continues to %urden %usinesses due to the fact that %usinesses must proide and pay for this
%enefit for their emp'oyees"
B) met the needs of our nation when it was conceied# %ut needs an oerhau'"
C" wi'' continue to sere the needs of 4"," citi8ens into the distant future# due to the fact that
there are so few retirees p'acing a strain on it"
D" is fai'ing %ecause the 4"," goernment fai'ed to inest the money that emp'oyees
contri%uted"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!2!" (p. &@) Peop'e %etween the ages of -+ and /* represent?
." the unemp'oyed generation
B" the sing'e-parent fami'y generation
C) a 'ucratie market
D" a group that has neer contri%uted to socia' security

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

!2(" (p. &@) Businesses are supporting sing'e-parent fami'ies with?
." socia' security %enefits"
B" a more 'enient we'fare system"
C) more f'e)i%'e work %enefits such as f'e) time and fami'y 'eae"
D" 'imited %enefits due to the dec'ining num%ers of these fami'ies" &ie-mem%er fami'ies are
steadi'y growing"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The Soci#l -nvironment

1-1/0
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!2*" (p. &6) ;hich of the statements a%out demography is most accurateH Demographic studies?
." focus on factors that hae great po'itica' re'eance# %ut 'itt'e re'eance to %usiness firms"
B" suggest that the num%er of sing'e-parent fami'ies wi'' dec'ine in the future"
C) proide %usinesses and indiidua's with insights into %usiness and career opportunities for
the future"
D" are an important source of information a%out changes in hea'th patterns"
Demography is the statistica' study of the human popu'ation to 'earn its si8e# density# and
characteristics" Demographics can proide important insights into which markets are growing
and which are dec'ining"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

!2+" (p. &@) ;hich of the fo''owing %usiness po'icies wou'd most 'ike'y he'p a sing'e-parent
fami'yH
." Re7uiring the emp'oyee to work regu'ar'y schedu'ed hours each day"
B" .''owing sick 'eae to %e used on'y if the emp'oyee is i''"
C" Re7uiring education outside of regu'ar %usiness hours to he'p the emp'oyee adance"
D) .''owing fami'y 'eae and f'e)time"
,ing'e parents hae encouraged %usinesses to imp'ement programs such as fami'y 'eae
Awhere workers can take time off to attend to a sick chi'dB and f'e)time Awhere workers can
come in or 'eae at se'ected timesB"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-1/1
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!2-" (p. &6) The immigrant popu'ation A%oth 'ega' and i''ega'B is haing a dramatic effect on
." car and truck makers
B" mining and minera's industry
C) schoo's# hospita's and other serices type industries
D" ice cream and confection industry
The serice industry is great'y impacted %y immigration" .s the immigrant popu'ation
increases# more socia' serices are needed# particu'ar'y hea'th serices and education serices"
The goernment costs hae increased due to the need for accommodations in seera' different
'anguages"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

!2/" (p. &@) Retired peop'e wi'' %e draining the 4"," economy of wea'th" This is due to?
." The fact that most hae smoked a'' their 'ies and now are unwi''ing to pay for hea'thcare
in order to stay a'ie"
B) The fact there are not enough workers in su%se7uent generations to support the ongoing
drain of o'der persons into the socia' security system"
C" Their 'ack of interest in supporting restaurants# resorts# educationa' institutions# and
serice-intensie companies"
D" The fact that they refuse to use current information techno'ogy to improe efficiency"
. particu'ar situation that wi'' %e negatie'y impacting the socia' enironment is the num%er
of aging .mericans and the drain on the socia' security system" Today1s workers pay for
today1s retirees" ;hen the system was enacted in 13*0# there were *! workers for each retiree"
Today the ratio has %ecome much sma''er" ;ith %a%y-%oomers retiring# the ratio is more 'ike
two workers for eery one retiree" By !012# it is predicted that 'ess money wi'' %e going into
the socia' security system than money coming out"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The Soci#l -nvironment

1-1/!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!22" (p. &@) =i'' is 'ooking into the possi%i'ity of opening up a day care center in her community#
%ecause she is aware of many sing'e-parent fami'ies that need a p'ace for their chi'dren to stay
whi'e the parents work" ,he is concerned a%out the 'ong-term prospects for such a %usiness"
=i'' %e'iees the future of her center wi'' depend on whether %irth rates and the num%er of
sing'e-parent fami'ies remain high" These concerns i''ustrate how %usinesses can %e affected
%y?
." econometric trends"
B) demographic trends"
C" ho'ographic trends"
D" psychometric trends"
Demography is the statistica' study of the human popu'ation to 'earn its si8e# density and
characteristics" Birth rates and the num%er of sing'e-parent fami'ies are %oth demographic
factors"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

!23" (p. &@) ,t" C'aire 6ospita' is considering a program that wou'd a''ow some of its workers to
use f'e)time" 9ne group of workers who wou'd pro%a%'y %enefit from f'e)time is?
." ;orkers who do not hae access to computers at home"
B" ;orkers who hae 'itt'e se'f-motiation to work eight-hour days"
C" &ront-'ine workers who fre7uent'y go out to meet with home furnishing designers"
D) ,ing'e-parent fami'ies"
&'e)time is the practice of coming in or 'eaing work at se'ected times" This a''ows workers
with young chi'dren the f'e)i%i'ity they often need"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

1-1/(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!30" (p. &@) Preferred Pet Care# 0nc"# a mo%i'e eterinary care company is p'anning for the
future" .s a %usiness student who has studied socia' trends# which of the fo''owing statements
ref'ects the need for Preferred Pet Care1s serice in the futureH
." Mo%i'e pet care wi'' not %e needed %ecause the ma$ority of peop'e are working which
means that no%ody is home"
B" Peop'e wi'' a'ways prefer to take their pets to the eterinary c'inic"
C) The aging popu'ation wi'' %e a si8ea%'e market for this firm"
D" Peop'e who wou'd re7uire this serice wou'd %e higher income indiidua's" Retired peop'e
wou'd not %e a market for this firm %ecause they do not hae money to care for pets"
Peop'e are 'iing 'onger and 'iing 'onger in their homes" There are many %usiness
opportunities to sere the aging popu'ation" .s pets hae %ecome important fami'y mem%ers#
the aging popu'ation is 'ike'y to %e a si8ea%'e market for pet care and in-home pet care"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

!31" (p. &@'&<) The g'o%a' enironment#
." is a new frontier"
B) is far reaching and affects a'' the other %usiness enironments"
C" is shrinking"
D" has not affected the 4nited ,tates due to its strong gross domestic product"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1-1/*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!3!" (p. &<) The threat of terrorism more often FFFFFFFFFF the cost of operating a %usiness"
') increases
B" decreases
C" sta%i'i8e
D" desta%i'i8es

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

!3(" (p. &<) The war on terrorism wi''?
." improe the confidence 'ee' of most consumers"
B" hurt the profita%i'ity of eery %usiness operating in the 4","
C) he'p some %usinesses and hurt others"
D" sta%i'i8e the %usiness sector"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

!3*" (p. &<) .n increase in g'o%a' trade wi''?
." increase prices"
B" decrease $o%s"
C" increase po'itica' insta%i'ity"
D) increase g'o%a' competition"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

1-1/+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!3+" (p. &<) @'o%a'i8ation?
') has great'y improed 'iing standards around the wor'd"
B" has significant'y reduced 'iing standards around the wor'd"
C" has opened doors to on'y a handfu' of markets"
D" has great'y changed companies that hire peop'e to se'' products# %ut not for companies that
hire peop'e to proide serices"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

!3-" (p. &<) @reening refers to?
." the need for more car%on dio)ide in our air"
B" firms ac7uiring more green %acks A4"," do''arsB from wor'd trade"
C) finding ways to 'essen the harm on our enironment"
D" the agricu'tura' industry1s push to dee'op and produce new green egeta%'es to feed the
wor'd"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: The $lo)#l -nvironment

!3/" (p. &@'&<) Efficiency in distri%ution systems around the wor'd has 'ed to?
') increased wor'd trade"
B" decreased wor'd trade"
C" decreased internationa' competition"
D" reduced standards of 'iing around the wor'd"
Two things that hae 'ed to more trade are improements in transportation and
communication inc'uding more efficient distri%ution systems"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1-1/-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
!32" (p. &<) .ir'ine companies around the wor'd are e)periencing increased costs in part due to
FFFFFFFFFF"
." decreases in the cost of fue'
B" decreasing wor'd trade
C) the threat of terrorism
D" 'ack of interest in f'ying
The threat of terrorism has 'ed to increased costs for air'ines" They hae had to insta'' stronger
cockpit doors# %uy more security e7uipment# and hire new security personne'"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

!33" (p. &<) The war on terrorism in many parts of the wor'd shou'd 'ead to FFFFF"
." a decrease in warring nations
B" consumers spending more %ecause they fee' more patriotic
C" an increase in prosperity and peace throughout the wor'd
D) consumer and economic hardship due to increased mi'itary spending
The war on terrorism wi'' cause hardships for consumers and the economy due to the
moement of goernment funds from socia' programs and issues to mi'itary spending"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

1-1//
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(00" (p. &<) The green moement is?
." a trend that started with the 4"," goernment"
B) concerned with dep'etion of natura' resources and 'eaing a 'arge car%on footprint"
C" dee'oping more green food products to feed the wor'd1s poor"
D" our concern with the fact that eerywhere we 'ook# things are remaining green for 'onger
periods of time"
The greening trend is a%out saing energy and natura' resources and concern with what we
'eae %ehind"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: The $lo)#l -nvironment

(01" (p. &<) Mark recent'y graduated with honors from his co''ege" 6e has %ragged to his friends
that his academic performance has prepared him so we'' for a successfu' career that he can
forget schoo' or training in his future" 0n ea'uating the future of the workp'ace# Mark is?
." e)act'y right" 6is past performance shou'd carry him to success"
B" comp'ete'y wrong" ,tudies show that a co''ege education has 'itt'e to do with success"
C) oer confident" @'o%a' competition means that continuous 'earning wi'' %e needed in the
future to adapt to rapid changes"
D" pro%a%'y right" ,pecia'i8ed training today is a key to continued success in the future"
The high'y competitie nature of the g'o%a' economy and rapid changes in techno'ogy mean
that students must keep their ski''s and know'edge up to date een after they graduate"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1-1/2
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0!" (p. &<) The threat of terrorism#
." %enefits most %usinesses %ecause $ust a%out a'' companies contri%ute toward aerting these
threats"
B" wi'' certain'y affect companies that participate in g'o%a' trade# %ut most 'arge 4","
companies do their %usiness domestica''y"
C" has increased the 7ua'ity of 'ife of most peop'e %ecause companies emp'oy more workers
when the threat is high# and workers he'p companies increase profits"
D) is cost'y to most firms %ecause it is cost'y to goernments who increase ta)es to pay for
added protection"
The threat of terrorism adds great'y to %usiness costs# inc'uding the cost of security personne'#
security e7uipment# and insurance" The goernment has a'so e)perienced huge costs increases
%ecause of home'and security issues" ;hi'e many %usinesses wi'' strugg'e in this new
enironment# others stand to gainQparticu'ar'y those in the defense industry"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

(0(" (p. &<) >aura and Tim Mc:ash recent'y moed to :orth Caro'ina on a three-acre home site"
They purposefu''y purchased their home within %iking distance to the uniersity where they
are %oth emp'oyed# and their %ikes each hae room for two c'oth %ags for groceries if they
need to purchase food on the way home# a'though they p'an to grow much of their own" >aura
and Tim are e)amp'es of a growing num%er of young peop'e who?
." hae dee'oped a hea'th conscious attitude"
B) want to change their 'ifesty'e to %e more in tune to saing energy"
C" dis'ike ur%an centers and wish to 'ie in the country"
D" stay away from ur%an areas due to increased threats of terrorist attacks in those 'oca'ities"
.n important socia' trend affecting the socia' enironment of a'' %usiness is sustaina%i'ity# or
going green" .s the student wi'' recogni8e through the te)t%ook# the green moement is
changing the way we run our %usinesses# and the way our customers want us to run our
%usinesses" ,ustaina%i'ity has g'o%a' imp'ications"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1-1/3
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0*" (p. &<) ;hich of the fo''owing statements descri%es a recurring theme a%out today1s
eco'ogica' enironmentH
." Most peop'e agree that there is strong eidence that the temperature of the p'anet is going
down"
B" ,mart %usinesses know that green %usiness is current'y a trend and they shou'd proceed
with caution %ecause most green initiaties are more cost'y than wars and terrorism"
C) There is a strong push %y customers that %usinesses dee'op products and serices that
c'ear'y sae energy"
D" C'ear'y# the greening issue is an .merican trend that has not captured the attention of the
internationa' %usiness community"
Eco'ogica''y# customers want %usinesses to se'' products and serices that do not 'eae a
car%on footprint" The greening moement is a we''-respected moement with g'o%a'
imp'ications"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

(0+" (p. &<) Ty'er ,amue's recent'y returned from the war in 0ra7 where he was a mem%er of the
high'y ski''ed specia' operations forces" 6e is now in the 4nited ,tates where he co''ects the
@"0" Bi'' in order to go to schoo'" This is one e)amp'e of?
." 6ow an eent such as a war educates young peop'e a%out conditions a%road"
B) The cost of war"
C" The %enefits of war on education"
D" . s7uee8e on emp'oyer %enefits"
;ars are ery cost'y" The goernment dierts funds from other serices to pay for wars" 0n
order to proide incenties for young men and women to sere in the mi'itary# the goernment
a'so pays for %enefits for those that return"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment

1-120
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(0-" (p. :%':&) During the past 1+0 years# the 4"," has eo'ed from?
." .n agrarian economy to an information techno'ogy economy"
B" . %usiness to %usiness economy to a %usiness to consumer economy"
C) .n agrarian economy to a manufacturing economy to a serice oriented economy"
D" . manufacturing economy to a serice economy# to a cottage economy# and now we are
trending %ack to an agrarian economy"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

(0/" (p. :&) Businesses that produce and se'' tangi%'e products such as stee' and machines are
part of the?
') manufacturing industry"
B" know'edge-%ased industry"
C" serice industry"
D" production sector"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

(02" (p. :&) The serice industry represents FFFFFFFF of the a'ue of the 4"," economy"
." a%out (0I
B" under +0I
C) a%out /0I
D" a%out +0I

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1-121
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(03" (p. :&) 6ea'th care# insurance# recreation and other intangi%'e products are proided %y
the?
." g'o%a' sector"
B) serice industry"
C" industria' sector"
D" manufacturing industry"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

(10" (p. :%':&) ,ince the %eginning of the 1300s# the agricu'tura' sector of the 4nited ,tates has?
." ,een the num%er of fami'y farms more than dou%'e"
B" Become 'ess and 'ess competitie in the g'o%a' economy"
C" Produced a consistent output per farm"
D) E)perienced a significant drop in emp'oyment# main'y %ecause of tremendous
improements in efficiency"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

(11" (p. :&) 0n recent years# a'most a'' new $o% creation in the 4nited ,tates has occurred in the
FFFFFFFFFF sector?
') serice
B" manufacturing
C" agricu'tura'
D" te'ecommunications

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: 1rogress in Service >n!ustries

1-12!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(1!" (p. :&) The new era of %usiness is 'ike'y to %e dominated %y the?
." serice sector"
B) information-%ased sector"
C" manufacturing sector"
D" continued dec'ine in productiity"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning &: Knole!ge of ke, terms
Topic: Aour =uture in Business

(1(" (p. :&) .pp'iance repair firms# ta) consu'tants# 'aw firms# and insurance companies are a''
%usiness firms that are part of the?
." production sector"
B" management sector"
C" neo-industria' sector"
D) serice sector"
.'' of these companies proide an intangi%'e product" Thus# they are inc'uded in the serice
sector"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 1rogress in Service >n!ustries

1-12(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(1*" (p. :&) 0n recent years# manufacturing firms in the 4nited ,tates hae 'aid off workers" The
%est e)p'anation of this trend is that?
." firms hae %een trying to weaken unions %y reducing their re'iance on 'a%or"
B" workers in the 4"," hae %ecome 'ess productie and are no 'onger a%'e to compete in the
g'o%a' economy"
C) firms in many industries hae %ecome so efficient that they need fewer workers"
D" the economy has %een in a pro'onged depression that has 'asted more than a decade"
;hi'e 'ayoffs in manufacturing seem to imp'y that .merican firms are %ecoming 'ess
competitie# the opposite is actua''y the case" The 'ayoffs are the resu't of tremendous
improements in productiity in recent years# which hae ena%'ed 4"," manufacturing firms
to produce more goods with fewer workers"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

(1+" (p. :&) ;hich of the fo''owing %est descri%es recent $o% growth in the serice sectorH
') The serice sector has generated a'most a'' new $o%s in the .merican economy since the
mid 1320s# %ut the rate of $o% growth in serices has s'owed in recent years"
B" =o%s in the serice sector hae increased s'ow'y oer the past decade# %ut most new $o%s
are created in the manufacturing industries"
C" Emp'oyment in the serice sector has dec'ined in recent years# and this dec'ine is e)pected
to continue"
D" There has %een 'itt'e change in the num%er of $o%s in the serice sector in recent years#
howeer emp'oyment is e)pected to increase rapid'y"
The serice sector has grown rapid'y oer the past two decades" 6oweer# the growth rate has
s'owed in recent years"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning :: 7n!erst#n!ing of concepts #n! principles
Topic: 1rogress in Service >n!ustries

1-12*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(1-" (p. :&) ;hich of the fo''owing organi8ations is an e)amp'e of the goods-producing sector
of the economyH
') &ord Motor Company
B" &'orida ,tate 4niersity
C" Chi'dren1s 6ospita'
D" 6 O R B'ock Ta) Consu'ting
&irms in the goods-producing sector produce tangi%'e products" 9f the organi8ations 'isted in
this 7uestion# on'y &ord Motor Company produces a tangi%'e product"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: 1rogress in Service >n!ustries

(1/" (p. :%':&) Certain industries of the 4"," economy such as farming and heay e7uipment
manufacturing hae e)perienced a significant dec'ine in emp'oyment" ;hich of the fo''owing
%est e)p'ains this $o% 'ossH
." The cause is a dec'ine in the productiity of 'a%or in these industries"
B) ;orkers 'ost these $o%s %ecause techno'ogica' adances increased productiity"
C" The 4"," economy cannot compete in these industries any 'onger"
D" @oernment regu'ations hae e'iminated profit opportunities in these industries"
6istory shows that techno'ogy has a''owed %usiness organi8ations to %e more productie and
therefore re7uire 'ess 'a%or" This scenario first was o%sered in agricu'ture as productiity
increases resu'ted in fewer farm $o%s" Techno'ogica' improements in manufacturing hae
a'so resu'ted in increased productiity and fewer $o%s"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: 1rogress in the Agricultur#l #n! 2#nuf#cturing >n!ustries

1-12+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(12" (p. :&) =enna >eigh is an information say# !0-something person who is trying to se'ect
%etween two marketing $o% offers" ,he can either $oin a company that makes sma'' hammers
and screwdriers for the do-it-yourse'f hardware store %usiness# or she can $oin a company
dee'oping the fourth generation ce'' phone serice" ,he is 7uite impressed that the hardware
%usiness is growing 7uite nice'y in China# Me)ico# and 0ndia where peop'e are starting to
e)pand their 'iing spaces" ,he is a'so aware of?
." Dec'ines in the te'ecommunications %usiness now that new ce'' phone serice companies
are springing-up eerywhere"
B" . dec'ine in the domestic hardware market due to o'der .mericans 'osing interest in
keeping up their 'iing 7uarters"
C) .n information-%ased g'o%a' reo'ution that might make her career at a
te'ecommunications company more 'ucratie in the 'ong run"
D" .n increase in the price of the actua' ce'' phones must indicate that there is sti'' a great
demand for phones"
&uturistic %usiness professiona's %e'iee we are in the midst of an information-%ased g'o%a'
reo'ution that wi'' a'ter a'' sectors of the economy? agricu'tura'# industria'# and serice"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: Aour =uture in Business

1-12-
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(13" (p. :&) The &"B"0" has a D:. data%ase with oer -"/ mi''ion samp'es" 0t is e)pected to
increase %y another 1"! mi''ions samp'es %y the year !01!" 0n the past# co''ection was 'imited
to conicted persons# %ut now they wi'' %egin co''ecting samp'es from persons detained and
arrested prior to coniction" This inc'udes immigrants" The &"B"0" %e'iees that e)panding their
co''ection to inc'ude persons presumed innocent wi'' he'p in the so'ing of io'ent crimes"
This new strategy is?
." not considered an inasion of priacy %ecause the goernment a'ready has most of our
information"
B" pointing toward the &"B"0" %ecoming a priate security company and operating for a profit"
C" suspect %ecause D:. is not yet proen to %e a definitie way of catching crimina's# and it
'eads us to %ecoming a genetic surei''ance society"
D) an e)amp'e of an outcome of the information-%ased reo'ution discussed in %usiness
c'asses"
This is an e)amp'e of how the information-%ased reo'ution has changed the techno'ogica'
enironment in a'most eery industry# inc'uding 'aw enforcement" Data%ases can now store
ast amounts of information a%out peop'e" =ust a%out eery industry has %enefitted %y the
a%i'ity to co''ect and store information faster than eer"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: Aour =uture in Business


1-12/
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
Essay #uestions

(!0" (p. &:'&;) Descri%e seera' ways that goernments can foster entrepreneurship and
encourage the creation of wea'th"
9ne of the %est things goernment can do is he'p decrease the risk of starting %usinesses" This
strategy wi'' increase entrepreneurship and su%se7uent'y increase wea'th"
The goernment can do this %y keeping ta)es and regu'ations to a minimum" 6igh ta)es and
%urdensome regu'ations increase the cost of doing %usiness and undermine incenties to work
hard and take risks" >aws that encourage entrepreneurship hae %een enacted a'' across the
4"," and the wor'd" Entrepreneurs tend to faor those states and 'oca' areas where ta)es are
'owest and regu'ations are 'east restrictie"
.nother way for goernment to actie'y promote entrepreneurship is to a''ow priate
ownership of %usinesses" This wi'' create profit opportunities for indiidua's wi''ing to take
the risk of starting their own %usiness" ,uccessfu' new %usinesses he'p to create more $o%s and
income in their communities"
The goernment can pass 'aws that ena%'e %usinesses to write enforcea%'e contracts# thus
reducing the risk of operating a %usiness"
The goernment can esta%'ish a currency that is trada%'e in wor'd markets# making it possi%'e
for firms to compete in wor'd markets"
@oernment can pass and enforce 'aws that reduce corruption among goernment officia's
and %usinesses" Corrupt practices such as the need to %ri%e goernment officia's to get
contracts approed not on'y make it more e)pensie to do %usiness# they a'so tend to
undermine competition %y giing the corrupt firms an unfair adantage"

AACSB: Reflective Thinking
Bloom's: Comprehension
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

1-122
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!1" (p. &/'&3) Descri%e how %usinesses can use techno'ogy to %e more responsie to customers"
Businesses continua''y search for new techno'ogies that wi'' a''ow them to %e more
responsie to customer needs" Things such as scanners at checkout counters# inentory
scanners# %ar-code techno'ogy# and data%ases are proing to %e a'ua%'e too's for most
%usinesses" Particu'ar'y# data%ases store customer information" They he'p %usinesses p'an and
rep'enish inentory more e)pedient'y# %ecause management can determine e)act'y what was
purchased and how often# and %y whom"
The 0nternet has offered %usinesses a new way to reach customers# and a way to proide
information to customers that he'p with %uying decisions" Both B!B and B!C %uyers and
se''ers conerse ia the 0nternet" The B!B market continues to e)pand as 7uick'y as the B!C
market"
Businesses are a'so responsie to customer priacy" Due to the increase in identity theft#
companies sometimes promise to not share or se'' customer information to other %usinesses or
entities"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%4 (escri)e the effect of technolog, on )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Technologic#l -nvironment

(!!" (p. &3'&6) Competition among %usinesses has neer %een greater" 0dentify and descri%e
seera' ways that %usinesses can %ecome more competitie"
Businesses can compete %y e)ceeding customer e)pectations and empowering emp'oyees"
Businesses are %ecoming more customer-drien" They are putting the wants and needs of
customers first# and ad$usting their products# po'icies and practices to make sure that
customers are satisfied" Leeping the customer happy means producing a good 7ua'ity product#
proiding great serice# and keeping prices 'ow"
Businesses a'so compete %y responding to the needs of their emp'oyees" 0n order to %e more
f'e)i%'e and more responsie# many %usinesses hae empowered their 'ower 'ee' emp'oyees#
a''owing them to make decisions and respond to the needs of customers without consu'ting
management" 0n order for empowerment to work# managers must do a %etter $o% training#
supporting# and motiating front'ine workers" Managers wi'' hae to gie up some of their
authority and find ways to encourage workers to accept more responsi%i'ity"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

1-123
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!(" (p. &6'&@) ;hat is demographyH 0dentify seera' demographic trends in the 4nited ,tates
and discuss how they wi'' impact 4"," %usinesses"
Demography is the statistica' study of popu'ations to 'earn a%out their si8e# density and
characteristics" The 4nited ,tates is e)periencing seera' demographic trends that wi'' hae
important impacts on how and where we 'ie# what we %uy and how we spend our time?
Respecting Diversity" Diersity has come to mean much more than recruiting and keeping
minorities and women" Many more groups are now inc'uded in diersity efforts" &or e)amp'e#
&ederated Department ,tores has identified diersity groups to inc'ude seniors# the disa%'ed#
homose)ua's# atheists# e)troerts# introerts# married peop'e# sing'es# and the deout"
Companies hae responded to this dierse customer %ase %y hiring a more dierse workforce
to sere them" Businesses wi'' need to %e sensitie to these cu'tura' changes and find ways to
optimi8e the contri%utions of peop'e from different ethnic and cu'tura' %ackgrounds" 0f
hand'ed correct'y# this diersity can %e a source of strength for .merican %usinesses"
. second trend is the 'arge increase in the num%er of o'der .mericans that wi'' occur oer the
ne)t few decades" This is the resu't of the aging %a%y-%oom generation" .s .merica ages# the
markets for products that appea' to midd'e-aged and e'der'y consumers wi'' grow" Thus# there
shou'd %e a %oom in the demand for medicine# retirement homes# home hea'th care# and a
ariety of recreationa' goods"
'ging Popu"ation" Retired peop'e wi'' %e draining the economy of wea'th" Paying ,ocia'
,ecurity to senior citi8ens in the future wi'' draw huge amounts of money from the economy"
0n the past# the goernment estimated that there were *! workers for each retiree" :ow there
are 'ess than ( workers for each retiree" The num%er continues to dec'ine" Peop'e are 'iing
'onger and the %a%y-%oom generation Athe 'argest popu'ation of peop'eB are retiring"
To he'p so'e this pro%'em one option may %e to a''ow young peop'e to inest part of their
,ocia' ,ecurity money" This wou'd certain'y hae imp'ications for the financia' serices and
%anking industries"
$ing"e%Parent !ami"ies" 9ne fina' trend has %een the rapid growth in the num%er of sing'e-
parent househo'ds" ,ing'e parents hae encouraged %usinesses to offer programs such as
f'e)i%'e work schedu'es and fami'y 'eae that wi'' a''ow the parent to remain home with sick
chi'dren"

AACSB: Reflective Thinking
Bloom's: Knole!ge
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

1-130
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!*" (p. &<':%) Descri%e what we mean %y greening and thinking green" >ist seera' ways that
peop'e and %usinesses are participating in the green moement" >ist %usiness opportunities
that may emerge from this moement"
@reening refers to a moement to sae energy and natura' resources# to produce products and
serices that cause 'ess harm to the enironment"
;ays that peop'e can contri%ute toward sustaining what we hae inc'ude?
6eating or coo'ing their dwe''ings 'ess"
4sing reusa%'e %ags when shopping"
4sing 'ight %u'%s and other home app'iances that take 'ess energy"
Recyc'ing g'ass# p'astics# papers# a'uminum# iron# stee'# and other recyc'a%'e products"
Buying products such as autos and trucks that are fue' efficient or hy%rids"
;a'king and %icyc'ing when possi%'e"
4sing other sources of energy other than fossi' fue's to heat and coo' %ui'dings"
&'ushing-out and recyc'ing water"
Purchasing 'oca''y grown produce and other foods to aoid added shipping"
@reen %usiness opportunities inc'ude %usinesses that hau' away ha8ardous wasteM green
restaurants that on'y use green materia's and sere 'oca''y grown foodsM green construction
companies that se'' and insta'' energy saing products# inc'uding so'ar pane's and green
%ui'ding materia's that meet >EED certification A>eadership in Energy and Enironmenta'
DesignBM and# organic farms"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%6 >!entif, h#t )usinesses must !o to meet glo)#l ch#llenge* hich inclu!es #r #n! terrorism.
"evel of "e#rning ;: Applic#tion of principles
Topic: The $lo)#l -nvironment0 Thinking $reen )o?

1-131
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!+" (p. :%':&) Trace the eo'ution of .merican %usiness" 0dentify the key trends# and discuss the
imp'ications these trends hae for the future"
&or most of our nation1s history# the agricu'tura' sector 'ed the way" .t the %eginning of the
1300s there were a%out +"/ mi''ion farms" 6oweer# at the %eginning of the !1
st
century the
num%er of farms had dropped to 'ess than ! mi''ion# and the num%er of farm workers had
dropped to a sma'' fraction of the num%er a century ear'ier" This 'oss of farm workers was not
a sign that farming was a dec'ining industry" Rather# it ref'ected tremendous improements in
efficiency and productiity" Today .merican agricu'tura' workers are so productie that more
food can %e produced with a sma'' fraction of the workers emp'oyed a century ear'ier"
Many of the workers disp'aced %y the rising productiity in agricu'ture found emp'oyment in
the manufacturing sector# which e)panded rapid'y during the ear'y 1300s" 6oweer#
techno'ogica' %reakthroughs in manufacturing 'ed to higher productiity" Eentua''y
manufacturing firms were a%'e to produce more output with fewer workers# and emp'oyment
in manufacturing %egan to fa''# $ust as in farming" .gain# this was a sign of strength rather
than dec'ine"
Many workers who 'ost $o%s in manufacturing found emp'oyment in the serice sector" ,ince
the mid-1320s this sector has generated a'most a'' of the new $o% growth in the .merican
economy" This is a ery %road sector# and many A%ut certain'y not a''B $o%s pay 7uite we''" 0n
fact# there are more high paying $o%s in serice industries than in manufacturing"
.'though the serice sector is 'ike'y to continue to grow# the rate of growth is 'ike'y to s'ow"
The 4"," economy now seems to %e 'eaing the serice era and moing into an era that can %e
characteri8ed as an information-%ased g'o%a' reo'ution that wi'' a'ter a'' sectors of the
economy? agricu'tura'# industria'# and serice"
These trends suggest seera' 'essons to keep in mind" &irst# dec'ines in emp'oyment are often
a sign of increased efficiency and improed productiity rather than dec'ining
competitieness" ,econd# dec'ines in emp'oyment in one sector do not necessari'y mean the
economy as a who'e wi'' suffer from higher unemp'oyment or a 'oss of wea'th" 6istorica''y#
as emp'oyment in one sector dec'ines# workers are a%'e to moe into other sectors where
emp'oyment is growing" This transition can %e painfu'# %ut it may %enefit society as a who'e
and create more wea'th in the 'ong run" &ina''y# the eo'ution of the .merican %usiness sector
is not oer" ;orkers today must %e aware of the possi%i'ity of changes in the $o% market" The
%est strategy is to remain f'e)i%'e# watch trends# and %e ready and wi''ing to moe to where
the $o%s are"
The current consensus is that we are in the midst of an information-%ased reo'ution# where
the g'o%a' economy wi'' set wor'd 7ua'ity standards for products and serices" Businesses and
goernments wi'' continue to support techno'ogies that proide the necessary information to
make %etter %usiness decisions"

1-13!
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%@ Revie ho p#st tren!s #re )eing repe#te! in the present #n! h#t those tren!s me#n for tomorro's college
gr#!u#tes.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -volution of 7.S. Business


Mu"tip"e Choice #uestions

Mini%Case
,ergio @on8a'es is emp'oyed %y Big%u) :ationa' Bank# one of the 'argest %anks in the
Midwest" 6e is a 'oan officer# specia'i8ing in home e7uity 'oans" Tio Rau'# ,ergio1s faorite
Aand wea'thiestB unc'e# passed away 'ast month and 'eft ,ergio a si8a%'e amount of money"
,ergio is 'ooking at the %est way to inest his new'y ac7uired wea'th" 6e is considering many
options# ranging from simp'y putting the money into a saings account to the possi%i'ity of
starting his own %usiness" .'though his %ank $o% pays we'' and offers p'easant working
conditions# ,ergio is frustrated %ecause he has 'itt'e freedom or f'e)i%i'ity to dea' with
customers since eery decision he makes must %e approed %y his superisor" Besides# he1s a
%it %ored and 'ooking for a cha''enge" 6e thinks he might get a 'ot of satisfaction from owning
his own %usiness" ,ergio has not made a definite decision yet# %ut has ta'ked to a 'ot of peop'e
searching for a good idea for a new %usiness" 0f he can come up with an idea he 'ikes# he
might $ust 7uit his current $o% and use his inheritance to go into %usiness for himse'fC

1-13(
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!-" (p. /) .s he e)p'ores his options# ,ergio notices that some opportunities appear to %e
riskier than others" ;hen considering arious opportunities# ,ergio shou'd keep in mind that?
." he wi'' %e %etter off picking a 'ow risk %usiness opportunity# since the safest ones are
usua''y the most profita%'e as we''"
B" een though some opportunities appear riskier than others# the 'ee' of risk actua''y aries
'itt'e from one opportunity to another"
C) high risk %usiness opportunities often hae the potentia' for high returns as we''"
D" goernment regu'ations are in p'ace to protect inestors and entrepreneurs from fai'ure# so
there is no need to worry a%out risk"
0n many cases# %usiness opportunities that hae the potentia' for earning high profits a'so
carry a high 'ee' of risk" 0nestors must weigh profit and risk and choose opportunities that
offer an accepta%'e trade-off %etween the two"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: 2#tching Risk ith 1rofit

(!/" (p. &3'&6) ,ergio1s frustration with his 'ack of freedom and f'e)i%i'ity at work indicates that
Big%u)?
." prefers the use of cross-functiona' teams rather than indiidua' initiatie"
B) has not adopted a strategy of empowerment"
C" knows that the %est way to ensure good customer serice is to c'ose'y monitor its 'ower-
'ee' emp'oyees"
D" is trying to p'ease customers as we'' as other stakeho'ders"
Empowerment means giing 'ower-'ee' workers the freedom and f'e)i%i'ity to respond
7uick'y to customers without consu'ting with managers"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%/ (emonstr#te ho )usinesses c#n meet #n! )e#t competition.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Competitive -nvironment

1-13*
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
(!2" (p. &6) Two of his friends approached ,ergio with a proposa' to start a 'anguage schoo'"
,ergio is f'uent in Eng'ish and ,panish# and a'so has an education degree" ,ergio is strong'y
considering the idea %ut a'so wants to know if there is a growing demand for his serices" 6e
'earns that an important demographic trend is?
." the serice sector is 'ike'y to dec'ine in significance in the ne)t few years"
B" the num%er of young chi'dren in the 4"," wi'' decrease significant'y oer the ne)t few
years as the popu'ation of the country 'ee's off"
C) the num%er of immigrants from ,outh and Centra' .merica is increasing steadi'y in his
area# and across the nation" Professiona's in hospita's and schoo's need to know how to speak
,panish" 0mmigrants need to know how to speak Eng'ish"
D" the num%er of retirees is decreasing# making way for a younger generation"
>ega' and i''ega' immigrants hae had a dramatic effect on many cities" The schoo's and
hospita's# and other serices hae %een affected" ,ome 'oca' goernments are making eery
effort to adapt# inc'uding changing signs# %rochures# we%sites# and forms to inc'ude other
'anguages"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%3 An#l,+e the soci#l ch#nges #ffecting )usiness.
"evel of "e#rning ;: Applic#tion of principles
Topic: The Soci#l -nvironment

(!3" (p. &:'&;) .s he e)p'ores his options for starting a new %usiness# ,ergio has 'ooked into the
ta) imp'ications and goernment regu'ations that he wou'd encounter" 6e wants to maintain
an office in a different 'ocation from his home" 6e has discoered that some near%y
communities offer ta) credits and 'ower ta)es than his town" ,ergio1s decision wi'' %e
inf'uenced %y the?
." demographic enironment"
B" techno'ogica' enironment"
C" socio-re'igious enironment"
D) economic and 'ega' enironment"
The economic enironment inc'udes ta)es and goernment regu'ations" .s the te)t%ook notes?
Entrepreneuria' decisions a%out where to 'ocate a %usiness can %e strong'y inf'uenced %y
differences in ta)es and goernment regu'ations"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%; An#l,+e the #ffect of the economic environment #n! t#?es on )usinesses.
"evel of "e#rning ;: Applic#tion of principles
Topic: The -conomic #n! "eg#l -nvironment

1-13+
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Enironment
((0" (p. 3'6) 0f ,ergio starts his own %usiness# his firm1s actiities and po'icies wi'' impact many
different groups and indiidua's# inc'uding emp'oyees# customers# creditors# supp'iers# and
peop'e 'iing in the community where his %usiness is 'ocated" ;hich of the fo''owing
statements represents how ,ergio shou'd dea' with these arious groupsH ,ergio shou'd?
') take the needs of a'' of these groups into account# and try to satisfy each group as much as
possi%'e"
B" concentrate on meeting the needs of his customers# since they are crucia' to the success of
his %usiness# %ut ignore the needs of other groups in order to keep costs 'ow"
C" satisfy whicheer group comp'ains the 'oudest# using the 5s7ueaky whee' gets the grease5
phi'osophy"
D" concentrate on ma)imi8ing his own profits and 'et eeryone e'se 'ook out for themse'es"
.'' of the groups mentioned in this 7uestion are stakeho'ders in a %usiness" They are a''
affected %y the products# po'icies# and practices of the firm and their concerns need to %e
addressed"

AACSB: Reflective Thinking
Bloom's: Applic#tion
"e#rning $o#l: %&'%& (escri)e the rel#tionship )eteen profit #n! risk* #n! sho ho )usinesses #n! nonprofit org#ni+#tions c#n r#ise the
st#n!#r! of living for #ll.
"evel of "e#rning ;: Applic#tion of principles
Topic: Respon!ing to the 5#rious Business St#kehol!ers

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