Test Bank For Better Business 5th Edition by Michael Solomon, Mary Anne Poatsy, Kendall Martin (All Chapters)

Better Business – 5th 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, 5e (Solomon/Poatsy/Martin)
Chapter 1 Business Basics
ST
1) When a company's revenue is greater than its expenses, it means that ________.
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) The physical products that a business offers are called ________.
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 © 2018 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 or 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. They may or may
UV
not do a good job of satisfying a customer's needs, although they must do so if a business is to be
successful. Goods are typically 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
IA
AACSB: Reflective Thinking
LO: 1.1: Define business and list the factors of production.
Classification: Application
_A
4) Jose called an electrician to repair some appliances in his home. Which of the following terms
BEST describes the electrician's repairs?
A) a service
B) a good
C) a benefit
PP
D) an appointment
E) a liability
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. Although the
RO
repair might involve the installation of a physical product, or good, the primary offering of the
electrician is the service he or she provides by coming to a location, identifying the problem, and
if necessary, making a repair. Such a service may be a benefit to the customer, but any business
offering, physical or nontangible, could be a benefit. Although electricians typically provide
services by appointment, "appointment" does not define the type of product the electrician
provides.
VE
Diff: 1
AACSB: Reflective Thinking
LO: 1.1: Define business and list the factors of production.
Classification: Application
D?
??

2
Copyright © 2018 Pearson Education, Inc.

, 5) Chris orders a salad at a restaurant. What is the BEST definition of what he is buying?
A) Chris is buying a good.
B) Chris is buying a service.
ST
C) Chris is buying a service, but not a good.
D) Chris is buying neither a good nor a service.
E) Chris is buying both a good and a service.
Answer: E
Explanation: Chris is buying a combination of products offered by the restaurant. He is buying a
UV
good (the salad) as well as the services of preparing and serving the salad.
Diff: 1
AACSB: Reflective Thinking
LO: 1.1: Define business and list the factors of production.
Classification: Application
IA
6) Profits allow a company to ________.
A) increase productivity
B) lower employee wages
_A
C) reduce its span of operations
D) disregard concern about expenses
E) lower standards of living for the entire society
Answer: A
Explanation: Profits allow a company to reward employees, increase productivity, and expand
into new areas. To maintain productivity, a company would need to remain concerned about
PP
controlling expenses, and maintain or increase employee wages. Profits would be likely to allow
for growth in its operations, not a reduction.
Diff: 2
AACSB: Reflective Thinking, Analytical Thinking
RO
LO: 1.1: Define business and list the factors of production.
Classification: Concept
Learning Outcome: Explain how economic performance is monitored
VE
D?
??

3
Copyright © 2018 Pearson Education, Inc.