LHR 427 Exam 1 Questions with Correct Answers Latest Update 2025/2026
business - Answers any activity that seeks to provide goods and services to others while
operating at a profit
What are some advantages of being an entrepreneur? - Answers ¤Freedom to succeed
¤Make your own decisions
¤Possible wealth
¤Sense of self-actualization
What are some disadvantages of being an entrepreneur? - Answers ¤Freedom to fail
¤No paid vacations
¤No health insurance
¤Responsible for others' welfare
¤Ego depletion
¤Personal sacrifices
standard of living - Answers The amount of goods and services people can buy with the money
they have.
Quality of life - Answers The general well-being of a society in terms of its political freedom,
natural environment, education, health care, safety, amount of leisure, and rewards that add to
the satisfaction and joy that other goods and services provide
Stakeholders - Answers All the people or, in general, entities who stand to gain or lose by the
policies and activities of a business and whose concerns the business needs to address.
Shareholders - Answers All the people or, in general, entities who own a part pf a publicly traded
firm via a share or stock.
For-profit organizations - Answers formed to make money, or profits, by offering products or
services
Nonprofit organizations - Answers organizations that may provide goods or services but do not
have the fundamental purpose of earning profits
Social enterprises - Answers Revenue-generating business with social objectives at the core of
their operations. They can be for-profit or non-profit businesses, but all profits or surpluses are
reinvested for that social purpose rather than being distributed to shareholders and owners.
, Five Factors of Production - Answers land, labor, capital, entrepreneurship, knowledge
Economic and Legal Environment - Answers 1. Freedom of ownership
2. Contract laws
3. Elimination of corruption
4. Tradable currency
5. Minimum taxes and regulation
Technological Environment - Answers forces that create new technologies, creating new
product and market opportunities
The competitive environment - Answers customer service, stakeholder recognition, employee
service, concern for the environment
social environment - Answers diversity, demographic changes, family changes
Communism - Answers First described by Karl Marx as a society in which the people, without
regard to class, own all the nation's resources
Socialism - Answers An economic system in which the government owns and operates basic
industries, but individuals own most businesses
Capitalism - Answers An economic system based on private ownership of capital
Pure capitalism - Answers or free-market system happens when all economic decisions are
made without government intervention; also called laissez-faire capitalism
Modified capitalism - Answers differs from pure capitalism in that the government intervenes
and regulates business to some extent
pure competition - Answers The market structure that exists when there are many small
businesses selling one standardized product
monopolistic competition - Answers Fewer businesses than in a pure competition environment
and the differences among the goods they sell are small
Oligopoly - Answers The market structure that exists when there are very few businesses selling
a product
Monopoly - Answers The market structure that exists when there is only one business providing
a product in a given market
Oligopsony - Answers The market structure that exists when there are very few buyers for a
specific product
business - Answers any activity that seeks to provide goods and services to others while
operating at a profit
What are some advantages of being an entrepreneur? - Answers ¤Freedom to succeed
¤Make your own decisions
¤Possible wealth
¤Sense of self-actualization
What are some disadvantages of being an entrepreneur? - Answers ¤Freedom to fail
¤No paid vacations
¤No health insurance
¤Responsible for others' welfare
¤Ego depletion
¤Personal sacrifices
standard of living - Answers The amount of goods and services people can buy with the money
they have.
Quality of life - Answers The general well-being of a society in terms of its political freedom,
natural environment, education, health care, safety, amount of leisure, and rewards that add to
the satisfaction and joy that other goods and services provide
Stakeholders - Answers All the people or, in general, entities who stand to gain or lose by the
policies and activities of a business and whose concerns the business needs to address.
Shareholders - Answers All the people or, in general, entities who own a part pf a publicly traded
firm via a share or stock.
For-profit organizations - Answers formed to make money, or profits, by offering products or
services
Nonprofit organizations - Answers organizations that may provide goods or services but do not
have the fundamental purpose of earning profits
Social enterprises - Answers Revenue-generating business with social objectives at the core of
their operations. They can be for-profit or non-profit businesses, but all profits or surpluses are
reinvested for that social purpose rather than being distributed to shareholders and owners.
, Five Factors of Production - Answers land, labor, capital, entrepreneurship, knowledge
Economic and Legal Environment - Answers 1. Freedom of ownership
2. Contract laws
3. Elimination of corruption
4. Tradable currency
5. Minimum taxes and regulation
Technological Environment - Answers forces that create new technologies, creating new
product and market opportunities
The competitive environment - Answers customer service, stakeholder recognition, employee
service, concern for the environment
social environment - Answers diversity, demographic changes, family changes
Communism - Answers First described by Karl Marx as a society in which the people, without
regard to class, own all the nation's resources
Socialism - Answers An economic system in which the government owns and operates basic
industries, but individuals own most businesses
Capitalism - Answers An economic system based on private ownership of capital
Pure capitalism - Answers or free-market system happens when all economic decisions are
made without government intervention; also called laissez-faire capitalism
Modified capitalism - Answers differs from pure capitalism in that the government intervenes
and regulates business to some extent
pure competition - Answers The market structure that exists when there are many small
businesses selling one standardized product
monopolistic competition - Answers Fewer businesses than in a pure competition environment
and the differences among the goods they sell are small
Oligopoly - Answers The market structure that exists when there are very few businesses selling
a product
Monopoly - Answers The market structure that exists when there is only one business providing
a product in a given market
Oligopsony - Answers The market structure that exists when there are very few buyers for a
specific product
