Business Essentials, 13e (Ebert/Griffin)
Chapter 1 The U.S. Business Environment
1) Which of the following best describes profit?
A) Total money taken in by a corporation
B) Increases in income from year to year
C) Increases in a corporation's stock price
D) Revenue generated by goods and services
E) Difference between revenues and expenses
Answer: E
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Application
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
2) Which of the following is defined as the environment where a firm conducts its operations and
derives its revenues known as?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
3) Factors such as international trade agreements, economic conditions, and political unrest will
have the greatest impact on which type of business environment?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
1
Copyright © 2022 Pearson Education, Inc.
,4) Changes in which type of business environment can reduce or replace the need for traditional
working methods, physical equipment, and other platforms needed to conduct business?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: D
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
5) As a teenager, Melinda started cutting grass for her neighbor. She did a good job, and more
and more neighbors began to hire her. After saving money and investing in additional equipment,
Melinda began to earn an even greater profit. Which of the following did Melinda create when
she began cutting her neighbor's yard and earning income?
A) Nonprofit
B) Corporate culture
C) Market economy
D) Monopolistic competition
E) Business
Answer: E
Difficulty: Easy
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
6) In which way does consumer choice and demand affect the way a business operates?
A) Businesses must take into account what consumers want or need.
B) Businesses must produce most of the goods and services we consume.
C) Businesses must find opportunity and develop a plan to capitalize on it.
D) Business must prepare to compete in the global marketplace.
E) Business must use technology to track changing demographics in the community.
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
2
Copyright © 2022 Pearson Education, Inc.
,7) Which of the following consists of everything outside an organization's boundaries that might
affect how the business operates?
A) Opportunities and enterprise
B) Corporate culture
C) External environment
D) Domestic business environment
E) Political-legal environment
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
8) Aimee wants to open her retail shop in her local community so that she can establish strong
relationships with suppliers and customers, and distinguish herself and her shop from the
competition. In which environment does Aimee wish to do business?
A) Global
B) Political-legal
C) Domestic
D) Economic
E) Technological
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
9) The Basic Broom Company orders much of its raw material from overseas markets, even
though the product is made locally. Which of the following business environments might prevent
The Basic Broom Company from being able to get its supply of raw material when they need it?
A) Changes in the global business environment
B) Changes in the technological environment
C) Changes in the economic environment
D) Changes in the factors of production
E) Changes in the labor force
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
3
Copyright © 2022 Pearson Education, Inc.
, 10) Which of the following includes all the ways a firm creates value for their customers?
A) Technological environment
B) Profitability
C) Economic environment
D) Creation of a market economy
E) Law of supply and demand
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
11) Sally's Supply shop has recently had to change her process for shipping supplies because of
changes in government regulations. She now also has to change how she reports profit and loss,
and when those reports are processed. Which of the following is forcing these changes for Sally's
Supply shop
A) The laws of supply and demand
B) Political-legal environment
C) The establishment of perfect competition
D) Changes in the market economy
E) Economic environment
Answer: B
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
12) A new restaurant recently opened in the local community. It serves a variety of ethnic foods,
and plays background music in keeping with the customers and values of the local demographics
make up of the community. Which external environment of business is this restaurant
considering when they support the customs, values, and demographics of the local community?
A) Monopoly
B) Sociocultural
C) Freedom of choice
D) Perfect competition
E) Global
Answer: B
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
4
Copyright © 2022 Pearson Education, Inc.
Chapter 1 The U.S. Business Environment
1) Which of the following best describes profit?
A) Total money taken in by a corporation
B) Increases in income from year to year
C) Increases in a corporation's stock price
D) Revenue generated by goods and services
E) Difference between revenues and expenses
Answer: E
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Application
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
2) Which of the following is defined as the environment where a firm conducts its operations and
derives its revenues known as?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
3) Factors such as international trade agreements, economic conditions, and political unrest will
have the greatest impact on which type of business environment?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
1
Copyright © 2022 Pearson Education, Inc.
,4) Changes in which type of business environment can reduce or replace the need for traditional
working methods, physical equipment, and other platforms needed to conduct business?
A) Global business environment
B) Economic environment
C) Domestic business environment
D) Technological environment
E) Political-legal environment
Answer: D
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
5) As a teenager, Melinda started cutting grass for her neighbor. She did a good job, and more
and more neighbors began to hire her. After saving money and investing in additional equipment,
Melinda began to earn an even greater profit. Which of the following did Melinda create when
she began cutting her neighbor's yard and earning income?
A) Nonprofit
B) Corporate culture
C) Market economy
D) Monopolistic competition
E) Business
Answer: E
Difficulty: Easy
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
6) In which way does consumer choice and demand affect the way a business operates?
A) Businesses must take into account what consumers want or need.
B) Businesses must produce most of the goods and services we consume.
C) Businesses must find opportunity and develop a plan to capitalize on it.
D) Business must prepare to compete in the global marketplace.
E) Business must use technology to track changing demographics in the community.
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
2
Copyright © 2022 Pearson Education, Inc.
,7) Which of the following consists of everything outside an organization's boundaries that might
affect how the business operates?
A) Opportunities and enterprise
B) Corporate culture
C) External environment
D) Domestic business environment
E) Political-legal environment
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
8) Aimee wants to open her retail shop in her local community so that she can establish strong
relationships with suppliers and customers, and distinguish herself and her shop from the
competition. In which environment does Aimee wish to do business?
A) Global
B) Political-legal
C) Domestic
D) Economic
E) Technological
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
9) The Basic Broom Company orders much of its raw material from overseas markets, even
though the product is made locally. Which of the following business environments might prevent
The Basic Broom Company from being able to get its supply of raw material when they need it?
A) Changes in the global business environment
B) Changes in the technological environment
C) Changes in the economic environment
D) Changes in the factors of production
E) Changes in the labor force
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
3
Copyright © 2022 Pearson Education, Inc.
, 10) Which of the following includes all the ways a firm creates value for their customers?
A) Technological environment
B) Profitability
C) Economic environment
D) Creation of a market economy
E) Law of supply and demand
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
11) Sally's Supply shop has recently had to change her process for shipping supplies because of
changes in government regulations. She now also has to change how she reports profit and loss,
and when those reports are processed. Which of the following is forcing these changes for Sally's
Supply shop
A) The laws of supply and demand
B) Political-legal environment
C) The establishment of perfect competition
D) Changes in the market economy
E) Economic environment
Answer: B
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
12) A new restaurant recently opened in the local community. It serves a variety of ethnic foods,
and plays background music in keeping with the customers and values of the local demographics
make up of the community. Which external environment of business is this restaurant
considering when they support the customs, values, and demographics of the local community?
A) Monopoly
B) Sociocultural
C) Freedom of choice
D) Perfect competition
E) Global
Answer: B
Difficulty: Moderate
AACSB: Application of knowledge
Question Category: Concept
LO: 1.1: Define the nature of U.S. business, describe the external environments of business,
and discuss how these environments affect the success or failure of organizations.
4
Copyright © 2022 Pearson Education, Inc.
