Deck 1: Taking Risks and Making Profits Within the Dynamic Business Environment

Question 1

Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

Answer 1

True

Question 2

Profits of a business include the salaries paid to its employees.

Answer 2

False

Question 3

Businesses provide goods, jobs, and services to others.

Answer 3

True

Question 4

Businesses seek to earn a profit by providing goods and services to others.

Question 5

Since all businesses make a profit, starting a business is not risky.

Question 6

If a business's costs and expenses are greater than its revenue, it will suffer a loss.

Question 7

The term "standard of living" refers to the amount of debt people can incur on a given income.

Question 8

Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses.

Question 9

An entrepreneur risks time and money to start and manage a business.

Question 10

Maintaining a high quality of life requires the combined efforts of businesses, nonprofit organizations, and government agencies.

Question 11

The United States has one of the highest standards of living in the world.

Question 12

Insourcing refers to the practice of global companies setting up design and production facilities in the United States.

Question 13

Revenue is the total amount of money a business takes in during a given period by selling goods and services.

Question 14

Outsourcing means selling goods and services to people in other countries.

Question 15

Health care availability, a clean environment, and good schools all contribute to a high quality of life.

Question 16

The knowledge and skills learned in business courses are seldom relevant to students who work for nonprofit organizations or volunteer groups.

Question 17

Revenue is the amount a business earns above and beyond what it spends for expenses and costs.

Question 18

Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.

Question 19

Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government officials and environmentalists.

Question 20

Outsourcing has caused many complications in many states where jobs have been lost to overseas companies.

Question 21

By balancing the demands of customers and stockholders, businesses satisfy the demands of all stakeholders.

Question 22

The amount of profit or loss earned by a business can be found by subtracting the firm's expenses from its revenues.

Question 23

The only way a firm can increase its profits is to increase its sales revenue.

Question 24

Since businesses strive to earn a profit, their owners benefit at the expense of the rest of society.

Question 25

Nonprofit organizations are similar to businesses in that they often provide goods and services that satisfy the needs of society.

Question 26

John earned the same amount of money this year as he did last year. Thus, his standard of living must be the same as it was last year.

Question 27

Businesses and nonprofit organizations often strive to accomplish the same objectives.

Question 28

The major difference between businesses and nonprofit organizations is that only businesses can increase the standard of living, while only nonprofit organizations can improve the quality of life.

Question 29

Susan quit her job in a big city to take a less stressful position in a small town located in a scenic area. She earns less money at her new job and has had to cut back on her purchases of material goods, but she has more leisure time and really enjoys the clean air and scenic beauty of her new home. Susan has accepted a lower standard of living in order to enjoy a higher quality of life.

Question 30

The only real purpose of a business is to make money for entrepreneurs.

Question 31

An effort to please one group of stakeholders eventually pleases all stakeholders.

Question 32

Robin has started her own online consulting firm. While she recognizes the risks involved in operating a business, she is still willing to invest her time, effort, and money in hopes of earning a profit. Robin is an example of an entrepreneur.

Question 33

Unlike businesses, employees of nonprofit organizations are not required to learn the business skills of information management, marketing, or financial management.

Question 34

Social entrepreneurs are people who start and manage organizations that are not-for-profit. Their mission is to help others improve their quality of life.

Question 35

Business decisions should consider the interests of customers, employees, suppliers, government leaders, and stockholders.

Question 36

Nonprofit organizations use financial gains to meet stated social or educational goals of the organization rather than personal profit.

Question 37

Political freedom, quality education, access to health care, and a clean environment are all factors that contribute to an improved quality of life.

Question 38

People living in San Jose, CA on average earn more money than people living in St. Louis, MO. The citizens of San Jose enjoy a higher standard of living than the citizens of St. Louis.

Question 39

Insourcing creates new jobs, and helps offset the number of jobs being outsourced.

Question 40

Backstreet Books, an eclectic bookstore on a large college campus generated total revenues of $15 million while incurring expenses of $12 million. During the year Backstreet Books earned a profit of $3 million.

Question 41

Sarah is a recent U.S. college graduate who is interested in starting an import tea business. If she follows through with her plans, she will be a pioneer, because only a handful of women choose to start businesses in the U.S.

Question 42

The business environment refers to the surrounding factors that either help or hinder the development of businesses.

Question 43

If they wish to create more wealth, poor nations should focus on policies that increase entrepreneurship and the effective use of knowledge.

Question 44

Business consultant Peter Drucker said that the most important factor of production is knowledge.

Question 45

Land, sometimes called natural resources, is the most critical factor of production in explaining why some countries are poor while others are rich.

Question 46

Countries with an inadequately trained work force and few entrepreneurs often achieve the highest levels of income by relying on a large number of workers.

Question 47

Money is one of the five factors of production that contribute to the creation of wealth.

Question 48

Women currently own less than ten percent of all businesses.

Question 49

Working as an entrepreneur is the only way to succeed in business.

Question 50

Entrepreneurship is one of the five factors of production that contribute to the creation of wealth.

Question 51

Starting a business is a riskier path toward business success than working your way up the ranks of a large business.

Question 52

Greg recently completed his degree in construction management and is planning to start a business developing apartment buildings. After researching several potential areas, he chose Mexico City due to its high population. Greg felt that this factor would create a large labor pool, the most important of the five factors of production.

Question 53

The major advantage rich nations have over poor nations is an abundance of land and labor.

Question 54

Paid vacations and health care insurance are among the benefits provided by the government to entrepreneurs.

Question 55

Tools, machinery, and buildings are examples of capital resources.

Question 56

The number of businesses owned by Asians, Hispanics, and Native Americans has grown dramatically.

Question 57

To realize his passion, Alex recently opened Original Tunes, Inc., a small state of the art recording studio in Nashville, TN. He probably could have set-up shop in several major cities, but Nashville offered him the two most important factors that he learned in business school would enhance the creation of wealth: labor and political freedom.

Question 58

A charitable organization, such as the American Red Cross or Salvation Army, is classified as a for-profit organization.

Question 59

Most business experts agree that entrepreneurship and the effective use of knowledge are the most important contributors to the creation of wealth.

Question 60

It was reported by a Beijing newspaper that China succeeded in improving its people's standard of living and establishing a relatively affluent society recently. This report clearly indicates that both income levels and the price of goods and services rose significantly during that time period.

Question 61

In countries where businesses cannot enter into binding contracts, business owners assume additional risk.

Question 62

Technology can help businesses become more efficient and productive.

Question 63

Taxes and government regulations are part of the economic and legal environment in which businesses operate.

Question 64

Corruption and illegal activities are expected in a capitalist system and can be beneficial.

Question 65

Honesty, integrity, and high ethical standards are essential to a capitalist economic system like the one that operates in the United States.

Question 66

Though it has received a lot of attention, the development of the Internet has had less of an impact on the way businesses operate than many other technological changes.

Question 67

One of the best things the governments of developing countries can do to increase wealth is to minimize interference with the free exchange of goods and services.

Question 68

The failure to uphold high ethical business standards by a few companies can negatively impact the entire U.S. business community.

Question 69

One way for a government to actively promote entrepreneurship is to establish a currency that's tradable in world markets so that you can buy and sell goods anywhere in the world using that currency.

Question 70

Productivity is the amount of output you generate given the amount of input such as hours worked.

Question 71

Several years ago, the government of the small nation of Allegro owned the nation's telephone company and landlines. This relatively poor government relied on taxes to develop this industry and provide service to its citizens. If the government desired to rapidly improve people's access to phone service, its best course of action would involve selling the telephone company to private investors.

Question 72

The government of the nation of Winstone is trying to achieve a high quality of life by imposing strict regulations to protect the environment and ensure safe working conditions in factories and mines. The government also has established ambitious programs to help the poor, financing them by setting high tax rates. These efforts by Winstone's government should create an atmosphere that encourages entrepreneurship.

Question 73

Laws that allow companies to write enforceable contracts decrease the risk of doing business.

Question 74

Effectiveness means producing the desired result.

Question 75

High taxes and government restrictions help to encourage entrepreneurs by providing greater incentives for people to work hard and create profit.

Question 76

Effectiveness means producing goods and services using the least amount of resources.

Question 77

In rich countries such as the United States, changes in the level of taxation have little impact on the incentives of entrepreneurs.

Question 78

In an effort to increase wealth and their country's standard of living, many governments are taking over major industries and operating them as nonprofit organizations.

Question 79

Jarett is supposed to be cramming for finals but his mind keeps wandering to the Colorado slopes. Several years ago, his Uncle Mike made it big and now owns a ski lodge just north of Aspen. He promised Jarett a management trainee position and the opportunity to buy into the company by contributing a portion of his paycheck each month back into the business. As he dreams about the opportunity to be his own boss, reality bites as Jarett scans his business book and reads, "freedom to succeed also means freedom to fail."

Question 80

An increase in productivity indicates that more can be produced in a given time period with the same amount of resources.