1
,1) hg is hgmoney hgthat hgan hgorganization hgbrings hgin hgthrough hgthe hgsale hgof hgits hggoods hgand
hgservices.
A) Competitive hgadvantage
B) Revenue
C) Sales
D) Capital
hginvestmenth Answer:
g
hgB
Explanation: hgRevenue hgis hgthe hgmoney hga hgcompany hgbrings hgin hgthrough hgthe hgsale hgof hggoods hgand
hgservices.hgDifficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
2) Why hgis hgthe hglink hgbetween hgrisk hgand hgreward hgcritical hgfor hga hgbusiness?
A) It hgis hga hgkey hgaspect hgof hgsocial hgresponsibility
B) It hgprovides hgopportunities hgfor hgnot-for-profit hgorganizations hgto hgstay hgin hgbusiness
C) It hgis hgessential hgto hgthe hgcounter-cyclical hgbusiness hgmodel
D) It hgprovides hgincentive hgto hgtake hgon hgthe
hgriskhgAnswer: h g D
Explanation: h g Without hgthe hgpromise hgof hgrewards, hgbusinesses hgwould hghave hgno hgincentive hgto hgtake
hgon hgthehgrisks. hgAnd hgwithout hgentrepreneurs hgand hgcompanies hgwilling hgto hgaccept hgrisk, hglittle hgwould
hgget hgdone hgin hgtheheconomy.
g
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
3) A(n) is hga hgframework hgof hghow hga hgbusiness hgintends hgto hggenerate hgrevenue.
A) business hgmodel
B) strategic hgmanagement hgtool
C) profitability hganalysis
D) competitive
hgadvantagehgAnswer: h g A
Explanation: hgA hgcompany's hgbusiness hgmodel hgis hga hgclear, hgsimple hgoutline hgof hghow hgthe hgbusiness
hgintendshgto hggenerate hgrevenue.
Difficulty: hg hg h g 1: hgEasy
AACSB: h g Analytical hgthinking
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
2
,4) hg is hgthe hgterm hgused hgto hgdescribe hgthe hgdifference hgbetween hgrevenue hgand hgexpenses.
A) Profit
B) Interest
C) Sales
D) Owner's
hgequityhgAnswer:
hgA
Explanation: h g Profit hgis hgthe hgamount hgof hgmoneyhgleft hgover hgafter hgall hgthe hgcosts hginvolved hgin hgdoing
hgbusiness,hghave hgbeen hgdeducted hgfrom hgrevenue.
Difficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
5) hg refers hgto hgsome hgaspect hgof hga hgproduct hgor hgcompany hgthat hgmakes hgit hgmore hgappealing
hgto hgtargethgcustomers.
A) Competitive hgadvantage
B) Economies hgof hgscale
C) Horizontal hgintegration
D) Vertical
hgintegrationhgAnswer:
hgA
Explanation: h g Competitive hgadvantage hgrefers hgto hgsome hgaspect hgof hga hgproduct hgor hgcompany hgthat
hgmakes hgithgmore hgappealing hgto hgtarget hgcustomers.
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
6) Which hgtype hgof hgorganization hgseeks hgto hgoperate hgefficiently hgand hgeffectively hgto hgachieve
hgits hggoalshgwithout hgfocusing hgon hgprofit hgas hga hgmotive?
A) Business hgintermediary
B) Nonprofit hgorganization
C) Service hgbusiness
D) Goods-producing
hgbusinesshgAnswer: h g B
Explanation: hgNot-for-profit hgorganizations hg(also hgknown hgas hgnonprofit hgorganizations) hgsuch
hgashgmuseums, hgmost hguniversities, hgand hgcharities hgdo hgnot hghave hga hgprofit hgmotive.
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
3
, 7) If hgindividuals hgand hgcompanies hgbelieve hgthey hgcan hgpursue hgrewards hgwithout hgfacing hgthe
hgrisks hgthat hgshould hgbe hgattached hgto hgthose hgpursuits, hgthey hgare hgmore hglikely hgto hgengage hgin
hgirresponsible hgand hgevenh unethical hgbehavior. hgThis hgsituation hgis hgknown hgas hga(n) .
g
A) moral hghazard
B) professional hgdilemma
C) barrier hgto hgentry
D) competitive
hgadvantagehgAnswer: h g A
Explanation: h g If hgindividuals hgand hgcompanies hgbelieve hgthey hgcan hgpursue hgrewards hgwithout
hgfacing hgthe hgrisks hgthat hgshould hgbe hgattached hgto hgthose hgpursuits, hgthey hgare hgmore hglikely hgto
hgengage hgin hgirresponsible hgandh even hgunethical hgbehavior–a hgsituation hgknown hgas hgmoral hghazard.
g
Difficulty: h g 2: hgModerate
AACSB: h g Ethical hgunderstanding hgand hgreasoning
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
8) How hgdo hgbusinesses hggenerate hgrevenue hgand hgsatisfy hgthe hgneeds hgof hgthe hgcustomers?
A) By hgcontinuously hgadding hgvalue hgduring hgproduct hgcreation
B) By hgexpanding hggeographic hgreach hgas hgoften hgas hgpossible
C) By hglimiting hgthe hgflow hgof hggoods hgin hgthe hgfree-market hgeconomy
D) By hgoffering hgproducts hgat hgthe hglowest hgprices
hgpossiblehgAnswer: h g A
Explanation: h g A hggood hgway hgto hgunderstand hgwhat hgany hgbusiness hgdoes hgis hgto hgview hgit hgas hga
hgsystem hgfor hgsatisfying hgcustomers hgby hgtransforming hglower-value hginputs hginto hghigher-value
hgoutputs. hgAt hgevery hgstage,h ga hgcompanyhgadds hgvalue hgto hgcreate hgthe hgproduct hgin hga hgway hgthat hgmakes hgit
hgappealing hgto hgthe hgnext hgcustomer hginh
the hgchain.
g
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
9) A hgbusiness hgis hgany hgprofit-seeking hgorganization hgthat hgprovides hggoods hgand hgservices
hgdesigned hgtoh satisfy hgcustomers' hgneeds.
g
Answer: h g TRUE
Explanation: h g In hga hggeneral hgsense, hgbusiness hgcan hgbe hgdefined hgas hgany hgprofit-seeking
hgorganization hgthath provides hggoods hgand hgservices hgdesigned hgto hgsatisfy hgcustomers' hgneeds.
g
Difficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: h g 1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
4
,1) hg is hgmoney hgthat hgan hgorganization hgbrings hgin hgthrough hgthe hgsale hgof hgits hggoods hgand
hgservices.
A) Competitive hgadvantage
B) Revenue
C) Sales
D) Capital
hginvestmenth Answer:
g
hgB
Explanation: hgRevenue hgis hgthe hgmoney hga hgcompany hgbrings hgin hgthrough hgthe hgsale hgof hggoods hgand
hgservices.hgDifficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
2) Why hgis hgthe hglink hgbetween hgrisk hgand hgreward hgcritical hgfor hga hgbusiness?
A) It hgis hga hgkey hgaspect hgof hgsocial hgresponsibility
B) It hgprovides hgopportunities hgfor hgnot-for-profit hgorganizations hgto hgstay hgin hgbusiness
C) It hgis hgessential hgto hgthe hgcounter-cyclical hgbusiness hgmodel
D) It hgprovides hgincentive hgto hgtake hgon hgthe
hgriskhgAnswer: h g D
Explanation: h g Without hgthe hgpromise hgof hgrewards, hgbusinesses hgwould hghave hgno hgincentive hgto hgtake
hgon hgthehgrisks. hgAnd hgwithout hgentrepreneurs hgand hgcompanies hgwilling hgto hgaccept hgrisk, hglittle hgwould
hgget hgdone hgin hgtheheconomy.
g
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
3) A(n) is hga hgframework hgof hghow hga hgbusiness hgintends hgto hggenerate hgrevenue.
A) business hgmodel
B) strategic hgmanagement hgtool
C) profitability hganalysis
D) competitive
hgadvantagehgAnswer: h g A
Explanation: hgA hgcompany's hgbusiness hgmodel hgis hga hgclear, hgsimple hgoutline hgof hghow hgthe hgbusiness
hgintendshgto hggenerate hgrevenue.
Difficulty: hg hg h g 1: hgEasy
AACSB: h g Analytical hgthinking
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
2
,4) hg is hgthe hgterm hgused hgto hgdescribe hgthe hgdifference hgbetween hgrevenue hgand hgexpenses.
A) Profit
B) Interest
C) Sales
D) Owner's
hgequityhgAnswer:
hgA
Explanation: h g Profit hgis hgthe hgamount hgof hgmoneyhgleft hgover hgafter hgall hgthe hgcosts hginvolved hgin hgdoing
hgbusiness,hghave hgbeen hgdeducted hgfrom hgrevenue.
Difficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
5) hg refers hgto hgsome hgaspect hgof hga hgproduct hgor hgcompany hgthat hgmakes hgit hgmore hgappealing
hgto hgtargethgcustomers.
A) Competitive hgadvantage
B) Economies hgof hgscale
C) Horizontal hgintegration
D) Vertical
hgintegrationhgAnswer:
hgA
Explanation: h g Competitive hgadvantage hgrefers hgto hgsome hgaspect hgof hga hgproduct hgor hgcompany hgthat
hgmakes hgithgmore hgappealing hgto hgtarget hgcustomers.
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
6) Which hgtype hgof hgorganization hgseeks hgto hgoperate hgefficiently hgand hgeffectively hgto hgachieve
hgits hggoalshgwithout hgfocusing hgon hgprofit hgas hga hgmotive?
A) Business hgintermediary
B) Nonprofit hgorganization
C) Service hgbusiness
D) Goods-producing
hgbusinesshgAnswer: h g B
Explanation: hgNot-for-profit hgorganizations hg(also hgknown hgas hgnonprofit hgorganizations) hgsuch
hgashgmuseums, hgmost hguniversities, hgand hgcharities hgdo hgnot hghave hga hgprofit hgmotive.
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
3
, 7) If hgindividuals hgand hgcompanies hgbelieve hgthey hgcan hgpursue hgrewards hgwithout hgfacing hgthe
hgrisks hgthat hgshould hgbe hgattached hgto hgthose hgpursuits, hgthey hgare hgmore hglikely hgto hgengage hgin
hgirresponsible hgand hgevenh unethical hgbehavior. hgThis hgsituation hgis hgknown hgas hga(n) .
g
A) moral hghazard
B) professional hgdilemma
C) barrier hgto hgentry
D) competitive
hgadvantagehgAnswer: h g A
Explanation: h g If hgindividuals hgand hgcompanies hgbelieve hgthey hgcan hgpursue hgrewards hgwithout
hgfacing hgthe hgrisks hgthat hgshould hgbe hgattached hgto hgthose hgpursuits, hgthey hgare hgmore hglikely hgto
hgengage hgin hgirresponsible hgandh even hgunethical hgbehavior–a hgsituation hgknown hgas hgmoral hghazard.
g
Difficulty: h g 2: hgModerate
AACSB: h g Ethical hgunderstanding hgand hgreasoning
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
8) How hgdo hgbusinesses hggenerate hgrevenue hgand hgsatisfy hgthe hgneeds hgof hgthe hgcustomers?
A) By hgcontinuously hgadding hgvalue hgduring hgproduct hgcreation
B) By hgexpanding hggeographic hgreach hgas hgoften hgas hgpossible
C) By hglimiting hgthe hgflow hgof hggoods hgin hgthe hgfree-market hgeconomy
D) By hgoffering hgproducts hgat hgthe hglowest hgprices
hgpossiblehgAnswer: h g A
Explanation: h g A hggood hgway hgto hgunderstand hgwhat hgany hgbusiness hgdoes hgis hgto hgview hgit hgas hga
hgsystem hgfor hgsatisfying hgcustomers hgby hgtransforming hglower-value hginputs hginto hghigher-value
hgoutputs. hgAt hgevery hgstage,h ga hgcompanyhgadds hgvalue hgto hgcreate hgthe hgproduct hgin hga hgway hgthat hgmakes hgit
hgappealing hgto hgthe hgnext hgcustomer hginh
the hgchain.
g
Difficulty: h g 2: hgModerate
AACSB: h g Application hgof hgknowledge
LO: hg1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
9) A hgbusiness hgis hgany hgprofit-seeking hgorganization hgthat hgprovides hggoods hgand hgservices
hgdesigned hgtoh satisfy hgcustomers' hgneeds.
g
Answer: h g TRUE
Explanation: h g In hga hggeneral hgsense, hgbusiness hgcan hgbe hgdefined hgas hgany hgprofit-seeking
hgorganization hgthath provides hggoods hgand hgservices hgdesigned hgto hgsatisfy hgcustomers' hgneeds.
g
Difficulty: h g 1: hgEasy
AACSB: h g Application hgof hgknowledge
LO: h g 1.1: hgExplain hgthe hgconcept hgof hgadding hgvalue hgin hga hgbusiness, hgand hgidentify hgfour hguseful
hgways hgtohgcategorize hgbusinesses.
4
