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Understanding Business 11th Editionby by William Nickels -Test Bank
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, 1Student: ___________________________________________________________________________
1. Businesses provide goods, jobs, and services to others.
True False
2. Businesses seek to earn a profit by providing goods and services to others.
True False
3. Revenue is the amount a business earns above and beyond what it spends for expenses and costs.
True False
4. Profit is the amount of money a business earns above and beyond what it spends for salaries and other
expenses.
True False
5. Since all businesses make a profit, starting a business is not risky.
True False
6. An entrepreneur risks time and money to start and manage a business.
True False
7. If a business's costs and expenses are greater than its revenue, it will suffer a loss.
True False
8. Profits of a business include the salaries paid to its employees.
True False
9. Revenue is the total amount of money a business takes in during a given period by selling goods and
services.
True False
10. Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove
profitable.
True False
11. The United States has one of the highest standards of living in the world.
True False
12. The term "standard of living" refers to the amount of debt people can incur on a given income.
True False
13. Health care availability, a clean environment, and good schools all contribute to a high quality of life.
True False
14. Maintaining a high quality of life requires the combined efforts of businesses, nonprofit organizations,
and government agencies.
True False
15. Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.
True False
16. Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government
officials and environmentalists.
True False
17. Outsourcing means selling goods and services to people in other countries.
True False
,18. Outsourcing has caused many complications in many states where jobs have been lost to overseas
companies.
True False
19. Insourcing refers to the practice of global companies setting up design and production facilities in the
United States.
True False
20. The knowledge and skills learned in business courses are seldom relevant to students who work for
nonprofit organizations or volunteer groups.
True False
21. Businesses and nonprofit organizations often strive to accomplish the same objectives.
True False
22. Nonprofit organizations use financial gains to meet stated social or educational goals of the organization
rather than personal profit.
True False
23. 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.
True False
24. The only real purpose of a business is to make money for entrepreneurs.
True False
25. The only way a firm can increase its profits is to increase its sales revenue.
True False
26. The amount of profit or loss earned by a business can be found by subtracting the firm's expenses from its
revenues.
True False
27. Nonprofit organizations are similar to businesses in that they often provide goods and services that satisfy
the needs of society.
True False
28. Unlike businesses, employees of nonprofit organizations are not required to learn the business skills of
information management, marketing, or financial management.
True False
29. Business decisions should consider the interests of customers, employees, suppliers, government leaders,
and stockholders.
True False
30. By balancing the demands of customers and stockholders, businesses satisfy the demands of all
stakeholders.
True False
31. An effort to please one group of stakeholders eventually pleases all stakeholders.
True False
32. Insourcing creates new jobs, and helps offset the number of jobs being outsourced.
True False
33. 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.
True False
, 34. 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.
True False
35. Since businesses strive to earn a profit, their owners benefit at the expense of the rest of society.
True False
36. 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.
True False
37. 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.
True False
38. Political freedom, quality education, access to health care, and a clean environment are all factors that
contribute to an improved quality of life.
True False
39. 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.
True False
40. 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.
True False
41. A charitable organization, such as the American Red Cross or Salvation Army, is classified as a for-profit
organization.
True False
42. 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.
True False
43. Starting a business is a riskier path toward business success than working your way up the ranks of a
large business.
True False
44. Working as an entrepreneur is the only way to succeed in business.
True False
45. Paid vacations and health care insurance are among the benefits provided by the government to
entrepreneurs.
True False
46. Women currently own less than 10 percent of all businesses.
True False
47. The number of businesses owned by Asian Americans Hispanic Americans, and Native Americans has
grown dramatically.
True False
48. Land, sometimes called natural resources, is the most critical factor of production in explaining why some
countries are poor while others are rich.
True False
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