Chapter 01
Law as a Foundation for Business
True/False Questions
1. Law is considered to be an informal social force.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
Feedback: Law is a formal social force, meaning that laws come from the state and are
usually written down and accessible so those who need to understand and obey them can.
2. The first known written set of laws was the Code of Hammurabi.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
Feedback: The first known written set of laws was the Code of Hammurabi, named after
the Babylonian king of the eighteenth century BC.
3. Rule-of-law nations adopt laws supporting the private market because it is in
everyone’s interest, including the lawmakers’.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
,Feedback: Lawmakers have an incentive to make laws that benefit everyone. Rule-of-law
nations adopt laws supporting the private market because it is in everyone’s interest,
including the lawmakers’.
4. Common property applies to public resources owned by the government (or “state”)
like roads, public buildings, public lands, and monuments.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Common property applies to resources like land that more than one individual
owns jointly. Public property applies to public resources owned by the government (or
“state”) like roads, public buildings, public lands, and monuments.
5. Contract law compensates owners whose resources are wrongfully harmed by the
actions of others.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Tort law compensates owners whose resources are wrongfully harmed by the
actions of others. Contract law enables an owner to exchange resources, especially at a
future date.
6. Regulatory law forbids owners from monopolizing classes of resources and sets rules
for how businesses can compete to acquire ownership in new resources.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
,Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Antitrust law forbids owners from monopolizing classes of resources and sets
rules for how businesses can compete to acquire ownership in new resources. Regulatory
law both protects ownership and sets limits on private resource use.
7. Jurisprudence is the rule of law.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Jurisprudence is the philosophy of law. Over the centuries, several ideas have
developed that help explain the origin of law and its justification.
8. Natural law theory asserts that law contains universal moral principles.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Natural law theory asserts that law contains universal moral principles.
9. Sociological jurisprudence emphasizes that contemporary law should focus on legal
principles that have withstood the test of time in a nation.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
, Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Sociological jurisprudence supports the idea that law can and should change to
meet new developments in society. The historical school of jurisprudence emphasizes
that contemporary law should focus on legal principles that have withstood the test of
time in a nation.
10. Jurisprudence refers to the general body of law interpretations by judges as different
from legislation passed by legislators.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Jurisprudence is the philosophy of law. It also refers to the general body of law
interpretations by judges as different from legislation passed by legislators.
11. Legal realism is the idea that courts should understand the meaning of the
Constitution relative to the times in which they interpret it.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Legal realism tries to go beyond just the words of law to examine what police,
administrators, prosecutors, and judges are actually doing as they enforce, interpret, and
apply laws. In constitutional law, the idea that courts should understand the meaning of
the Constitution relative to the times in which they interpret it is known as constitutional
relativity.
Law as a Foundation for Business
True/False Questions
1. Law is considered to be an informal social force.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
Feedback: Law is a formal social force, meaning that laws come from the state and are
usually written down and accessible so those who need to understand and obey them can.
2. The first known written set of laws was the Code of Hammurabi.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
Feedback: The first known written set of laws was the Code of Hammurabi, named after
the Babylonian king of the eighteenth century BC.
3. Rule-of-law nations adopt laws supporting the private market because it is in
everyone’s interest, including the lawmakers’.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 To understand that laws and regulations are fundamental
foundations for business.
Topic: Law, the Rule of Law, and Property
,Feedback: Lawmakers have an incentive to make laws that benefit everyone. Rule-of-law
nations adopt laws supporting the private market because it is in everyone’s interest,
including the lawmakers’.
4. Common property applies to public resources owned by the government (or “state”)
like roads, public buildings, public lands, and monuments.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Common property applies to resources like land that more than one individual
owns jointly. Public property applies to public resources owned by the government (or
“state”) like roads, public buildings, public lands, and monuments.
5. Contract law compensates owners whose resources are wrongfully harmed by the
actions of others.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Tort law compensates owners whose resources are wrongfully harmed by the
actions of others. Contract law enables an owner to exchange resources, especially at a
future date.
6. Regulatory law forbids owners from monopolizing classes of resources and sets rules
for how businesses can compete to acquire ownership in new resources.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
,Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Antitrust law forbids owners from monopolizing classes of resources and sets
rules for how businesses can compete to acquire ownership in new resources. Regulatory
law both protects ownership and sets limits on private resource use.
7. Jurisprudence is the rule of law.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Jurisprudence is the philosophy of law. Over the centuries, several ideas have
developed that help explain the origin of law and its justification.
8. Natural law theory asserts that law contains universal moral principles.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Natural law theory asserts that law contains universal moral principles.
9. Sociological jurisprudence emphasizes that contemporary law should focus on legal
principles that have withstood the test of time in a nation.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
, Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Sociological jurisprudence supports the idea that law can and should change to
meet new developments in society. The historical school of jurisprudence emphasizes
that contemporary law should focus on legal principles that have withstood the test of
time in a nation.
10. Jurisprudence refers to the general body of law interpretations by judges as different
from legislation passed by legislators.
Answer: True
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Jurisprudence is the philosophy of law. It also refers to the general body of law
interpretations by judges as different from legislation passed by legislators.
11. Legal realism is the idea that courts should understand the meaning of the
Constitution relative to the times in which they interpret it.
Answer: False
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 To explain that “property” in the law refers not to something
that is owned but to the right of ownership itself, which gives incentive for wealth
creation.
Topic: Law, the Rule of Law, and Property
Feedback: Legal realism tries to go beyond just the words of law to examine what police,
administrators, prosecutors, and judges are actually doing as they enforce, interpret, and
apply laws. In constitutional law, the idea that courts should understand the meaning of
the Constitution relative to the times in which they interpret it is known as constitutional
relativity.
