BUSN100 Midterm Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. Which of the following best describes the primary purpose of a
business?
A. To maximize government revenue
B. To provide goods and services while earning a profit
C. To eliminate competition
D. To regulate the economy
Rationale: Businesses exist to satisfy customer needs by providing goods
and services while seeking to earn profits that ensure long-term
sustainability and growth.
2. Which economic system relies primarily on supply and demand to
determine prices?
A. Command economy
B. Market economy
C. Traditional economy
D. Socialist economy
Rationale: In a market economy, consumers and producers interact freely,
allowing prices to be determined through supply and demand.
, 3. Which of the following is considered a factor of production?
A. Advertising
B. Profit
C. Entrepreneurship
D. Marketing
Rationale: The four factors of production are land, labor, capital, and
entrepreneurship, which are the essential resources used to produce goods
and services.
4. GDP is best defined as:
A. The total value of imports into a country
B. The value of exports only
C. The total market value of all final goods and services produced within a
country during a specific period
D. Government spending only
Rationale: Gross Domestic Product measures the overall economic output
of a country by calculating the value of final goods and services produced
domestically.
5. Inflation refers to:
A. Falling consumer demand
B. Rising unemployment
C. A general increase in prices over time
D. Lower interest rates
Rationale: Inflation reduces purchasing power because consumers must
pay higher prices for goods and services.
6. Which business environment includes customers, competitors, and
suppliers?
, A. Internal environment
B. Task environment
C. Global environment
D. Legal environment
Rationale: The task environment consists of external stakeholders that
directly affect business operations.
7. Ethics in business primarily concerns:
A. Government taxation
B. Standards of right and wrong behavior
C. Pricing strategies
D. Production scheduling
Rationale: Business ethics guide organizations in making decisions that are
morally responsible and socially acceptable.
8. Corporate social responsibility means:
A. Maximizing profits regardless of consequences
B. Avoiding taxes
C. Balancing economic goals with responsibilities to society and the
environment
D. Eliminating competition
Rationale: CSR encourages businesses to consider the impact of their
actions on stakeholders and society.
9. Which form of business ownership has unlimited liability?
A. Corporation
B. Limited liability company
C. Sole proprietorship
D. Cooperative
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. Which of the following best describes the primary purpose of a
business?
A. To maximize government revenue
B. To provide goods and services while earning a profit
C. To eliminate competition
D. To regulate the economy
Rationale: Businesses exist to satisfy customer needs by providing goods
and services while seeking to earn profits that ensure long-term
sustainability and growth.
2. Which economic system relies primarily on supply and demand to
determine prices?
A. Command economy
B. Market economy
C. Traditional economy
D. Socialist economy
Rationale: In a market economy, consumers and producers interact freely,
allowing prices to be determined through supply and demand.
, 3. Which of the following is considered a factor of production?
A. Advertising
B. Profit
C. Entrepreneurship
D. Marketing
Rationale: The four factors of production are land, labor, capital, and
entrepreneurship, which are the essential resources used to produce goods
and services.
4. GDP is best defined as:
A. The total value of imports into a country
B. The value of exports only
C. The total market value of all final goods and services produced within a
country during a specific period
D. Government spending only
Rationale: Gross Domestic Product measures the overall economic output
of a country by calculating the value of final goods and services produced
domestically.
5. Inflation refers to:
A. Falling consumer demand
B. Rising unemployment
C. A general increase in prices over time
D. Lower interest rates
Rationale: Inflation reduces purchasing power because consumers must
pay higher prices for goods and services.
6. Which business environment includes customers, competitors, and
suppliers?
, A. Internal environment
B. Task environment
C. Global environment
D. Legal environment
Rationale: The task environment consists of external stakeholders that
directly affect business operations.
7. Ethics in business primarily concerns:
A. Government taxation
B. Standards of right and wrong behavior
C. Pricing strategies
D. Production scheduling
Rationale: Business ethics guide organizations in making decisions that are
morally responsible and socially acceptable.
8. Corporate social responsibility means:
A. Maximizing profits regardless of consequences
B. Avoiding taxes
C. Balancing economic goals with responsibilities to society and the
environment
D. Eliminating competition
Rationale: CSR encourages businesses to consider the impact of their
actions on stakeholders and society.
9. Which form of business ownership has unlimited liability?
A. Corporation
B. Limited liability company
C. Sole proprietorship
D. Cooperative
