,Test Bank (Download only)
for Business in Action
Revised by Susan Schanne
Business in Action
Ninth Edition
Courtland L. Bovee
John V. Thill
,Business in Action, 9e (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
E) Finance
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) The risk and reward relationship ________.
A) is a key aspect of social responsibility
B) applies only to service-intensive businesses
C) is essential to the counter-cyclical business model
D) is fundamental to businesses in every modern economy
E) is an outdated concept that's been replaced by corporate sustainability
Answer: D
Explanation: A company needs to see some promise of reward before it will decide to
accept the risks involved in creating and selling products. However, to ensure responsible
behavior, these risks need to stay attached to those decisions, meaning that if the
decisions turn out bad, that company should suffer the consequences.
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) 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
E) entrepreneurial mindset
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.
, 4) ________ is the term used to describe the difference between revenue and expenses.
A) Economies of scale
B) Interest
C) Sales
D) Owner's equity
E) Profit
Answer: E
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
E) Barrier to entry advantage
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) An organization that seeks to operate efficiently and effectively to achieve its goals
without focusing on profit as a motive is a ________.
A) business intermediary
B) nonprofit organization
C) service business
D) government-owned corporation
E) 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.
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