,Business: A Practical Introduction (Williams/Sawyer/Berston)
Chapter 1 Starting Out
1) A nonprofit organization is a business.
Answer: FALSE
Explanation: A business is an organization focused on earning profits, so a nonprofit
organization does not fit the definition of a business.
Page Ref: 4
Difficulty: Easy
Objective: 1.1 What is business, and how are profits made?
Classification: Concept
2) Global outsourcing is the practice of using suppliers outside the United States to provide
labor, goods, or services for an American business.
Answer: TRUE
Explanation: Global outsourcing is also known as offshoring, and has contributed to the decline
in American manufacturing.
Page Ref: 6
Difficulty: Easy
Objective: 1.1 What is business, and how are profits made?
Classification: Concept
AACSB: Dynamics of the Global Economy
3) Only nonprofit organizations provide benefits to society.
Answer: FALSE
Explanation: Business organizations offer many societal benefits, including an improved quality
of life and financial support for government services.
Page Ref: 7
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
4) Innovation is one factor used to measure a society's quality of life.
Answer: TRUE
Explanation: Quality of life is measured by standard of living, health care, education, freedom,
happiness, art, environmental health, and innovation.
Page Ref: 7
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
1
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
,5) Taxes paid to the government by both a business and its employees provide an important
social benefit.
Answer: TRUE
Explanation: Local, state, and federal governments use tax revenues to pay for important public
services such as education, safety, and health.
Page Ref: 8
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
6) Donating goods or services to a community group will cause a business to become a
nonprofit.
Answer: FALSE
Explanation: A business can earn profits and still provide direct social benefits through
donations.
Page Ref: 8
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
7) People who are self-employed are more likely to be wealthy than people working in a salaried
position.
Answer: TRUE
Explanation: Researchers Stanley and Danko found that self-employed people are four times
more likely to be millionaires than salaried workers.
Page Ref: 9
Learning Outcome: Explain the entrepreneurship process
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
8) Higher degrees of wealth are always generated by high-end businesses such as jewelers and
lush seaside resorts.
Answer: FALSE
Explanation: Business type is not a predictor of wealth. Many self-employed millionaires are
engaged in agriculture, pest control, and other "unglamorous" fields.
Page Ref: 9
Learning Outcome: Explain the entrepreneurship process
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
2
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
, 9) Compared to entrepreneurs, salaried employees face no risk in their ability to earn a living and
generate wealth.
Answer: FALSE
Explanation: Entrepreneurs face the risk of a business not earning profit, but salaried employees
are at risk of losing their job due to outsourcing, economic conditions, and other factors.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
10) Businesses in the high-tech sector have no need for natural resource factors of production.
Answer: FALSE
Explanation: A technology-based business may utilize land for facilities, water to cool
machinery, and sunlight to generate power.
Page Ref: 10
Difficulty: Moderate
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
11) Businesses that only provide services do not rely on factors of production.
Answer: FALSE
Explanation: The word production does not imply manufactured goods. Service businesses rely
on natural resources, capital, human resources, entrepreneurship, and knowledge—the factors of
production.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
12) Most natural resource factors of production cannot be created by a business.
Answer: TRUE
Explanation: Most of these resources are created by nature and must be mined, harvested,
harnessed, or purified.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
13) Money is not considered a factor of production.
Answer: TRUE
Explanation: Within the definition of factors of production, the term capital includes buildings,
machines, tools, and technology used to produce goods and services.
Page Ref: 11
Difficulty: Moderate
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
3
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Chapter 1 Starting Out
1) A nonprofit organization is a business.
Answer: FALSE
Explanation: A business is an organization focused on earning profits, so a nonprofit
organization does not fit the definition of a business.
Page Ref: 4
Difficulty: Easy
Objective: 1.1 What is business, and how are profits made?
Classification: Concept
2) Global outsourcing is the practice of using suppliers outside the United States to provide
labor, goods, or services for an American business.
Answer: TRUE
Explanation: Global outsourcing is also known as offshoring, and has contributed to the decline
in American manufacturing.
Page Ref: 6
Difficulty: Easy
Objective: 1.1 What is business, and how are profits made?
Classification: Concept
AACSB: Dynamics of the Global Economy
3) Only nonprofit organizations provide benefits to society.
Answer: FALSE
Explanation: Business organizations offer many societal benefits, including an improved quality
of life and financial support for government services.
Page Ref: 7
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
4) Innovation is one factor used to measure a society's quality of life.
Answer: TRUE
Explanation: Quality of life is measured by standard of living, health care, education, freedom,
happiness, art, environmental health, and innovation.
Page Ref: 7
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
1
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
,5) Taxes paid to the government by both a business and its employees provide an important
social benefit.
Answer: TRUE
Explanation: Local, state, and federal governments use tax revenues to pay for important public
services such as education, safety, and health.
Page Ref: 8
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Concept
6) Donating goods or services to a community group will cause a business to become a
nonprofit.
Answer: FALSE
Explanation: A business can earn profits and still provide direct social benefits through
donations.
Page Ref: 8
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 1.2 How can business benefit society?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
7) People who are self-employed are more likely to be wealthy than people working in a salaried
position.
Answer: TRUE
Explanation: Researchers Stanley and Danko found that self-employed people are four times
more likely to be millionaires than salaried workers.
Page Ref: 9
Learning Outcome: Explain the entrepreneurship process
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
8) Higher degrees of wealth are always generated by high-end businesses such as jewelers and
lush seaside resorts.
Answer: FALSE
Explanation: Business type is not a predictor of wealth. Many self-employed millionaires are
engaged in agriculture, pest control, and other "unglamorous" fields.
Page Ref: 9
Learning Outcome: Explain the entrepreneurship process
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
2
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
, 9) Compared to entrepreneurs, salaried employees face no risk in their ability to earn a living and
generate wealth.
Answer: FALSE
Explanation: Entrepreneurs face the risk of a business not earning profit, but salaried employees
are at risk of losing their job due to outsourcing, economic conditions, and other factors.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
10) Businesses in the high-tech sector have no need for natural resource factors of production.
Answer: FALSE
Explanation: A technology-based business may utilize land for facilities, water to cool
machinery, and sunlight to generate power.
Page Ref: 10
Difficulty: Moderate
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
11) Businesses that only provide services do not rely on factors of production.
Answer: FALSE
Explanation: The word production does not imply manufactured goods. Service businesses rely
on natural resources, capital, human resources, entrepreneurship, and knowledge—the factors of
production.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
12) Most natural resource factors of production cannot be created by a business.
Answer: TRUE
Explanation: Most of these resources are created by nature and must be mined, harvested,
harnessed, or purified.
Page Ref: 10
Difficulty: Easy
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
13) Money is not considered a factor of production.
Answer: TRUE
Explanation: Within the definition of factors of production, the term capital includes buildings,
machines, tools, and technology used to produce goods and services.
Page Ref: 11
Difficulty: Moderate
Objective: 1.3 What are the main sources of wealth?
Classification: Concept
3
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
