,The Legal and Regulatory Environment of Business, 18e (Pagnattaro)
Chapter 1 Law as a Foundation for Business
1) Law is considered to be a formal social force.
Answer: TRUE
Explanation: Law is a formal social force, meaning that laws come from the state and are
usually written down and accessible so those who need to understand and obey them can.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
2) The first known written set of laws was the Code of King Solomon.
Answer: FALSE
Explanation: The first known written set of laws was the Code of Hammurabi, named after the
Babylonian king of the eighteenth century BC.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
3) Rule-of-law nations adopt laws supporting the private market because it is in everyone's
interest, including the lawmakers'.
Answer: TRUE
Explanation: Lawmakers have an incentive to make laws that benefit everyone. Rule-of-law
nations adopt laws supporting the private market because it is in everyone's interest, including
the lawmakers'.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,4) Common property applies to public resources owned by the government (or "state") like
roads, public buildings, public lands, and monuments.
Answer: FALSE
Explanation: Common property applies to resources like land that more than one individual
owns jointly. Public property applies to public resources owned by the government (or "state")
like roads, public buildings, public lands, and monuments.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
5) Tort law compensates owners whose resources are wrongfully injured by the acts of others.
Answer: TRUE
Explanation: Tort law compensates owners whose resources are wrongfully injured by the
actions of others.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
6) Regulatory law forbids owners from monopolizing classes of resources and sets rules for how
businesses can compete to acquire ownership in new resources.
Answer: FALSE
Explanation: Antitrust law forbids owners from monopolizing classes of resources and sets rules
for how businesses can compete to acquire ownership in new resources. Regulatory law both
protects ownership and sets limits on private resource use.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 7) Jurisprudence is the philosophy of law.
Answer: TRUE
Explanation: Jurisprudence is the philosophy of law. Over the centuries, several ideas have
developed that help explain the origin of law and its justification.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
8) Natural law theory asserts that law contains universal moral principles.
Answer: TRUE
Explanation: Natural law theory asserts that law contains universal moral principles.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
9) The basis of sociological jurisprudence is that contemporary law should focus on legal
principles that have survived the test of time in a nation.
Answer: FALSE
Explanation: Sociological jurisprudence supports the idea that law can and should change to
meet new developments in society. The historical school of jurisprudence emphasizes that
contemporary law should focus on legal principles that have withstood the test of time in a
nation.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 1 Law as a Foundation for Business
1) Law is considered to be a formal social force.
Answer: TRUE
Explanation: Law is a formal social force, meaning that laws come from the state and are
usually written down and accessible so those who need to understand and obey them can.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
2) The first known written set of laws was the Code of King Solomon.
Answer: FALSE
Explanation: The first known written set of laws was the Code of Hammurabi, named after the
Babylonian king of the eighteenth century BC.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
3) Rule-of-law nations adopt laws supporting the private market because it is in everyone's
interest, including the lawmakers'.
Answer: TRUE
Explanation: Lawmakers have an incentive to make laws that benefit everyone. Rule-of-law
nations adopt laws supporting the private market because it is in everyone's interest, including
the lawmakers'.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-01 To understand that laws and regulations are fundamental foundations
for business.
Bloom's: Remember
AACSB: Analytical Thinking
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,4) Common property applies to public resources owned by the government (or "state") like
roads, public buildings, public lands, and monuments.
Answer: FALSE
Explanation: Common property applies to resources like land that more than one individual
owns jointly. Public property applies to public resources owned by the government (or "state")
like roads, public buildings, public lands, and monuments.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
5) Tort law compensates owners whose resources are wrongfully injured by the acts of others.
Answer: TRUE
Explanation: Tort law compensates owners whose resources are wrongfully injured by the
actions of others.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
6) Regulatory law forbids owners from monopolizing classes of resources and sets rules for how
businesses can compete to acquire ownership in new resources.
Answer: FALSE
Explanation: Antitrust law forbids owners from monopolizing classes of resources and sets rules
for how businesses can compete to acquire ownership in new resources. Regulatory law both
protects ownership and sets limits on private resource use.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 7) Jurisprudence is the philosophy of law.
Answer: TRUE
Explanation: Jurisprudence is the philosophy of law. Over the centuries, several ideas have
developed that help explain the origin of law and its justification.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
8) Natural law theory asserts that law contains universal moral principles.
Answer: TRUE
Explanation: Natural law theory asserts that law contains universal moral principles.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
9) The basis of sociological jurisprudence is that contemporary law should focus on legal
principles that have survived the test of time in a nation.
Answer: FALSE
Explanation: Sociological jurisprudence supports the idea that law can and should change to
meet new developments in society. The historical school of jurisprudence emphasizes that
contemporary law should focus on legal principles that have withstood the test of time in a
nation.
Difficulty: 1 Easy
Topic: Law, the Rule of Law, and Property
Learning Objective: 01-02 To explain that property in the law refers not to something that is
owned but to the right of ownership itself, which gives incentive for wealth creation.
Bloom's: Remember
AACSB: Analytical Thinking
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
