Better Business – 6th Edition
ST
TEST BANK
UV
IA
_A
Michael Solomon
Mary Anne Poatsy
PP
Kendall Martin
RO
VE
Comprehensive Test Bank for Instructors and
D?
Students
??
© Michael Solomon, Mary Anne Poatsy & Kendall Martin
All rights reserved. Reproduction or distribution without permission is prohibited.
©STUDYSTREAM
, Better Business, 6e (Solomon/Poatsy/Martin)
Chapter 1 Business Basics
ST
1) Which of the following occurs when company's revenue is greater than its expenses?
A) The company earns a profit
B) The company spends more than it earns
C) The company's income is decreasing
D) The company needs to increase its spending
UV
E) The company must increase its productivity
Answer: A
Explanation: A company earns a profit when it takes in more revenue (earnings) than it spends.
If a company spends more than it earns, it does not make a profit. Instead, it suffers a loss. A
company can make a profit even if its income is decreasing, as long as its earnings continue to
IA
exceed its expenses. A profitable company may or may not need to increase its spending,
depending on its business goals.
Diff: 1
AACSB: Reflective Thinking
_A
LO: 1.1: Define business, and list the factors of production.
Classification: Concept
Learning Outcome: Explain how economic performance is monitored
2) What are the physical products that a business offers referred to as?
PP
A) Goods
B) Services
C) Assets
D) Devices
E) Intangible
RO
Answer: A
Explanation: By definition, physical products that a business offers are called goods. Services
are intangible products, for example, hair styling or bookkeeping. A physical product may be an
asset to the business or the purchaser, but it is a more general term that could include any
valuable product or aspect of the business. A device is a physical product, but not all physical
products are devices. For instance, pizza would be considered a physical product, but a pizza is
VE
not a device.
Diff: 1
AACSB: Reflective Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Concept
D?
??
1
Copyright © 2023 Pearson Education, Inc.
, 3) Emma bought a tablet and a smartphone. These products are called goods because ________.
A) they do a good job of satisfying a customer's needs
B) they are physical and tangible products
ST
C) they are produced in an economical offshore factory
D) they can be sold either in a store or online
E) they are good at increasing a company's profit margin
Answer: B
Explanation: Goods are physical or tangible products offered by a business. Goods are typically
UV
produced in a factory, but not in any particular location. It is true that goods can be sold either in
a store or online, or by other means, such as direct marketing. However, other business offerings,
such as services, can also be sold in a store or online.
Diff: 1
AACSB: Reflective Thinking
IA
LO: 1.1: Define business, and list the factors of production.
Classification: Application
4) Jose called an electrician to repair some appliances in his home. Which of the following terms
_A
BEST describes the electrician's repairs?
A) A service
B) A good
C) Telecommuting
D) Intellectual property
PP
E) E-commerce
Answer: A
Explanation: An electrical repair is an example of a nontangible business product called a
service. An electrical repair is not a good, which is a tangible physical product.
Diff: 1
RO
AACSB: Reflective Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Application
5) Some companies offer products that are both goods and services. Which of the following is an
example of a company that offers products that are both goods and services?
VE
A) A manufacturing plant
B) A green technology company
C) A university
D) A parts supplier
E) A restaurant
D?
Answer: E
Explanation: Some companies offer products that are both goods and services. Take, for
example, a restaurant franchises. When you order food, you're paying for the goods (the food) as
well as the service of preparing, cooking, and serving the food.
Diff: 2
??
AACSB: Application of Knowledge
LO: 1.1: Define business, and list the factors of production.
Classification: Application
2
Copyright © 2023 Pearson Education, Inc.
, 6) What do profits allow a company to do?
A) Increase productivity
B) Lower employee wages
ST
C) Control expenses
D) Eliminate factors of production
E) Eliminate competitors
Answer: A
Explanation: Profits allow a company to reward employees, increase productivity, and expand
UV
into new areas. To maintain productivity, a company would need to remain concerned about
controlling expenses, and maintain or increase employee wages.
Diff: 2
AACSB: Reflective Thinking, Analytical Thinking
LO: 1.1: Define business, and list the factors of production.
IA
Classification: Concept
Learning Outcome: Explain how economic performance is monitored
7) Nina's furniture store has had a successful year and made a significant profit. Which of the
_A
following actions using Nina's store profits would BEST increase productivity?
A) Pay for utilities and inventory in advance.
B) Develop a website that would enable customers to shop and place orders online.
C) Hire more staff.
D) Create an emergency fund.
PP
E) Service her community through social and educational means.
Answer: B
Explanation: A website with an online shopping function would increase productivity by
generating sales without requiring additional staff time. It might also provide more options for
customers, since the online store could carry more items than could be viewed in the store.
RO
Diff: 3
AACSB: Analytical Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Application
Learning Outcome: Explain how economic performance is monitored
VE
D?
??
3
Copyright © 2023 Pearson Education, Inc.
ST
TEST BANK
UV
IA
_A
Michael Solomon
Mary Anne Poatsy
PP
Kendall Martin
RO
VE
Comprehensive Test Bank for Instructors and
D?
Students
??
© Michael Solomon, Mary Anne Poatsy & Kendall Martin
All rights reserved. Reproduction or distribution without permission is prohibited.
©STUDYSTREAM
, Better Business, 6e (Solomon/Poatsy/Martin)
Chapter 1 Business Basics
ST
1) Which of the following occurs when company's revenue is greater than its expenses?
A) The company earns a profit
B) The company spends more than it earns
C) The company's income is decreasing
D) The company needs to increase its spending
UV
E) The company must increase its productivity
Answer: A
Explanation: A company earns a profit when it takes in more revenue (earnings) than it spends.
If a company spends more than it earns, it does not make a profit. Instead, it suffers a loss. A
company can make a profit even if its income is decreasing, as long as its earnings continue to
IA
exceed its expenses. A profitable company may or may not need to increase its spending,
depending on its business goals.
Diff: 1
AACSB: Reflective Thinking
_A
LO: 1.1: Define business, and list the factors of production.
Classification: Concept
Learning Outcome: Explain how economic performance is monitored
2) What are the physical products that a business offers referred to as?
PP
A) Goods
B) Services
C) Assets
D) Devices
E) Intangible
RO
Answer: A
Explanation: By definition, physical products that a business offers are called goods. Services
are intangible products, for example, hair styling or bookkeeping. A physical product may be an
asset to the business or the purchaser, but it is a more general term that could include any
valuable product or aspect of the business. A device is a physical product, but not all physical
products are devices. For instance, pizza would be considered a physical product, but a pizza is
VE
not a device.
Diff: 1
AACSB: Reflective Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Concept
D?
??
1
Copyright © 2023 Pearson Education, Inc.
, 3) Emma bought a tablet and a smartphone. These products are called goods because ________.
A) they do a good job of satisfying a customer's needs
B) they are physical and tangible products
ST
C) they are produced in an economical offshore factory
D) they can be sold either in a store or online
E) they are good at increasing a company's profit margin
Answer: B
Explanation: Goods are physical or tangible products offered by a business. Goods are typically
UV
produced in a factory, but not in any particular location. It is true that goods can be sold either in
a store or online, or by other means, such as direct marketing. However, other business offerings,
such as services, can also be sold in a store or online.
Diff: 1
AACSB: Reflective Thinking
IA
LO: 1.1: Define business, and list the factors of production.
Classification: Application
4) Jose called an electrician to repair some appliances in his home. Which of the following terms
_A
BEST describes the electrician's repairs?
A) A service
B) A good
C) Telecommuting
D) Intellectual property
PP
E) E-commerce
Answer: A
Explanation: An electrical repair is an example of a nontangible business product called a
service. An electrical repair is not a good, which is a tangible physical product.
Diff: 1
RO
AACSB: Reflective Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Application
5) Some companies offer products that are both goods and services. Which of the following is an
example of a company that offers products that are both goods and services?
VE
A) A manufacturing plant
B) A green technology company
C) A university
D) A parts supplier
E) A restaurant
D?
Answer: E
Explanation: Some companies offer products that are both goods and services. Take, for
example, a restaurant franchises. When you order food, you're paying for the goods (the food) as
well as the service of preparing, cooking, and serving the food.
Diff: 2
??
AACSB: Application of Knowledge
LO: 1.1: Define business, and list the factors of production.
Classification: Application
2
Copyright © 2023 Pearson Education, Inc.
, 6) What do profits allow a company to do?
A) Increase productivity
B) Lower employee wages
ST
C) Control expenses
D) Eliminate factors of production
E) Eliminate competitors
Answer: A
Explanation: Profits allow a company to reward employees, increase productivity, and expand
UV
into new areas. To maintain productivity, a company would need to remain concerned about
controlling expenses, and maintain or increase employee wages.
Diff: 2
AACSB: Reflective Thinking, Analytical Thinking
LO: 1.1: Define business, and list the factors of production.
IA
Classification: Concept
Learning Outcome: Explain how economic performance is monitored
7) Nina's furniture store has had a successful year and made a significant profit. Which of the
_A
following actions using Nina's store profits would BEST increase productivity?
A) Pay for utilities and inventory in advance.
B) Develop a website that would enable customers to shop and place orders online.
C) Hire more staff.
D) Create an emergency fund.
PP
E) Service her community through social and educational means.
Answer: B
Explanation: A website with an online shopping function would increase productivity by
generating sales without requiring additional staff time. It might also provide more options for
customers, since the online store could carry more items than could be viewed in the store.
RO
Diff: 3
AACSB: Analytical Thinking
LO: 1.1: Define business, and list the factors of production.
Classification: Application
Learning Outcome: Explain how economic performance is monitored
VE
D?
??
3
Copyright © 2023 Pearson Education, Inc.
