N
O
TI
LU
SO
ST
TE
, N
O
TI
LU
SO
ST
TE
, N
O
TI
LU
SO
ST
TE
, TGREWQ
7) If individuals and companies believe they can pursue rewards without facing the risks that
should be attached to those pursuits, they are more likely to engage in irresponsible and even
unethical behavior. This situation is known as a(n) .
A) moral hazard
B) professional dilemma
C) barrier to entry
D) competitive advantage
Answer: A
TE
Explanation: If individuals and companies believe they can pursue rewards without facing the
risks that should be attached to those pursuits, they are more likely to engage in irresponsible and
even unethical behavior–a situation known as moral hazard.
Difficulty: 2: Moderate
AACSB: Ethical understanding and reasoning
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
ST
categorize businesses.
8) How do businesses generate revenue and satisfy the needs of the customers?
A) By continuously adding value during product creation
B) By expanding geographic reach as often as possible
C) By limiting the flow of goods in the free-market economy
SO
D) By offering products at the lowest prices possible
Answer: A
Explanation: A good way to understand what any business does is to view it as a system for
satisfying customers by transforming lower-value inputs into higher-value outputs. At every
stage, a company adds value to create the product in a way that makes it appealing to the next
customer in the chain.
LU
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
9) A business is any profit-seeking organization that provides goods and services designed to
TI
satisfy customers' needs.
Answer: TRUE
Explanation: In a general sense, business can be defined as any profit-seeking organization that
provides goods and services designed to satisfy customers' needs.
O
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
N
JHGFDSA YTREWQ
O
TI
LU
SO
ST
TE
, N
O
TI
LU
SO
ST
TE
, N
O
TI
LU
SO
ST
TE
, TGREWQ
7) If individuals and companies believe they can pursue rewards without facing the risks that
should be attached to those pursuits, they are more likely to engage in irresponsible and even
unethical behavior. This situation is known as a(n) .
A) moral hazard
B) professional dilemma
C) barrier to entry
D) competitive advantage
Answer: A
TE
Explanation: If individuals and companies believe they can pursue rewards without facing the
risks that should be attached to those pursuits, they are more likely to engage in irresponsible and
even unethical behavior–a situation known as moral hazard.
Difficulty: 2: Moderate
AACSB: Ethical understanding and reasoning
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
ST
categorize businesses.
8) How do businesses generate revenue and satisfy the needs of the customers?
A) By continuously adding value during product creation
B) By expanding geographic reach as often as possible
C) By limiting the flow of goods in the free-market economy
SO
D) By offering products at the lowest prices possible
Answer: A
Explanation: A good way to understand what any business does is to view it as a system for
satisfying customers by transforming lower-value inputs into higher-value outputs. At every
stage, a company adds value to create the product in a way that makes it appealing to the next
customer in the chain.
LU
Difficulty: 2: Moderate
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
9) A business is any profit-seeking organization that provides goods and services designed to
TI
satisfy customers' needs.
Answer: TRUE
Explanation: In a general sense, business can be defined as any profit-seeking organization that
provides goods and services designed to satisfy customers' needs.
O
Difficulty: 1: Easy
AACSB: Application of knowledge
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
N
JHGFDSA YTREWQ
