Test Bank for Business in Action 10th Edition by Courtland Bovee, ISBN: 9780138188498. Chapters 1 to 16.
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Course
Business Analytics
Institution
Business Analytics
Test Bank Business in Action 10th Edition, 10e by Courtland L. Bovee, John V. Thill.
ISBN: 9780138188498.
Chapters 1 to 16 test bank for Business in Action 10e bovee.
TEST BANK Business in Action 10th Edition by Courtland L. Bovee
Business in Action, 10e (Bovee/Thill)
Chapter 1 Developing a Business Mindset
1) ________ is money that an organization brings in through the sale of its goods and services.
A) Competitive advantage
B) Revenue
C) Sales
D) Capital investment
Answer: B
Explanation: Revenue is the money a company brings in through the sale of goods and services.
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.
2) Why is the link between risk and reward critical for a business?
A) It is a key aspect of social responsibility
B) It provides opportunities for not-for-profit organizations to stay in business
C) It is essential to the counter-cyclical business model
D) It provides incentive to take on the risk
Answer: D
Explanation: Without the promise of rewards, businesses would have no incentive to take on the
risks. And without entrepreneurs and companies willing to accept risk, little would get done in the
economy.
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.
3) A(n) ________ is a framework of how a business intends to generate revenue.
A) business model
B) strategic management tool
C) profitability analysis
D) competitive advantage
Answer: A
Explanation: A company's business model is a clear, simple outline of how the business intends
to generate revenue.
Difficulty: 1: Easy
AACSB: Analytical thinking
LO: 1.1: Explain the concept of adding value in a business, and identify four useful ways to
categorize businesses.
1
,4) ________ is the term used to describe the difference between revenue and expenses.
A) Profit
B) Interest
C) Sales
D) Owner's equity
Answer: A
Explanation: Profit is the amount of money left over after all the costs involved in doing business,
have been deducted from revenue.
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.
5) ________ refers to some aspect of a product or company that makes it more appealing to target
customers.
A) Competitive advantage
B) Economies of scale
C) Horizontal integration
D) Vertical integration
Answer: A
Explanation: Competitive advantage refers to some aspect of a product or company that makes it
more appealing to target customers.
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.
6) Which type of organization seeks to operate efficiently and effectively to achieve its goals
without focusing on profit as a motive?
A) Business intermediary
B) Nonprofit organization
C) Service business
D) Goods-producing business
Answer: B
Explanation: Not-for-profit organizations (also known as nonprofit organizations) such as
museums, most universities, and charities do not have a profit motive.
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.
2
,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
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
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
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.
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
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.
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.
3
, 10) Profit refers to the money the company brings in through the sale of goods and services.
Answer: FALSE
Explanation: Profit is the amount of money left over after expenses–all the costs involved in
doing business–have been deducted from revenue.
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.
11) Businesses add value by transforming lower-value inputs (like paper and ink) into
higher-value outputs (like textbooks).
Answer: TRUE
Explanation: Businesses add value by transforming lower-value inputs to higher-value outputs.
In other words, they make goods and services more attractive from the buyer's perspective.
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.
12) In a free-market economy, companies generally have limited autonomy in deciding which
customers they want to focus on and how they want to compete.
Answer: FALSE
Explanation: In a free-market economy, companies generally have considerable freedom in
deciding which customers they want to focus on and how they want to compete.
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.
13) A company has competitive advantage when its products are more appealing to its chosen
customers.
Answer: TRUE
Explanation: Competitive advantage makes a company's products or the company as a whole
more appealing to its chosen customers.
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.
4
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