Chapter 1

Demand is the quantity of goods and services that consumers are willing to buy at different prices at a specific time.

TRUE

Economic expansion occurs when an economy is growing and people are spending more money.

TRUE

Entrepreneurs risk their wealth, time, and effort to develop for profit an innovative product or way of doing something.

TRUE

Finance refers to all activities concerned with obtaining money and using it effectively.

TRUE

Free-market capitalism and laissez-faire capitalism are essentially the same thing.

TRUE

Gross domestic product is the sum of all goods and services produced in a country during a year.

TRUE

Managers coordinate resources to achieve the firm's goals.

TRUE

Most socialist nations are democratic.

TRUE

The Industrial Revolution brought increasing prosperity and propelled the United States into a manufacturing economy.

TRUE

The equilibrium price is represented by the point where a product's supply and demand curves intersect.

TRUE

The focus of all marketing activities is customer satisfaction.

TRUE

The primary goal of business activities is profit.

TRUE

Thomas Edison was an American entrepreneur.

TRUE

The entrepreneur has been primarily associated with willingness to

Take risks.

Countries measure the state of their economies to

determine whether they are expanding or contracting.

The function concerned with obtaining and managing money and using it effectively is called

finance

In a socialist economic system, many people work in ___ jobs.

government

A continuing rise in prices over a period of time refers to

inflation

The functions of organizing, staffing, planning, and controlling are most closely associated with

managers

In the history of the American economy, the period or stage following the Industrial Revolution was known for its emphasis on

manufacturing

The American economic system is best described as _______ because the government regulates business to preserve competition and protect consumers and employees.

modified capitalism

Advertising, personal selling, coupons, and sweepstakes are forms of _____.

promotion

Profit is the reward for business in exchange for the ____ taken in providing products.

risks

Trends have gradually changed the U.S. to a(n) _____ economy focused on making life easier for busy consumers.

service

In a socialist system, citizens are dependent on _________ for many goods and services.

the government

In a capitalist system, individuals own and operate ____ businesses.

the majority of

________________ can be harmful if individuals' incomes do not increase at the same pace as rising prices because it reduces their buying power.

Inflation

Customers, employees and investors are examples of:

stakeholders.

Agricultural commodities are usually sold under which competitive environment?

Pure competition

___________ exists when there are many small businesses selling one standardized product.

Pure competition

Factors of production are

Resources used to produce goods and services.

When purchasing, a consumer is actually buying a product's anticipated benefits and

Satisfaction.

The standard of living rises because people have less money to spend.

FALSE

When a nation takes more from taxes than it spends, it has a budget deficit.

FALSE

____ have the most to lose if the business fails to make a profit.

Owners

The United States is now considered a service-oriented economy, with the service industry accounting for an estimated _____ percent of the total U.S. economy.

80

____ is often called the father of capitalism.

Adam Smith

Economic expansion occurs when

An economy is growing and people are spending more money.

Which of the following is not a product?

Business profit

What is the primary lesson to be learned from the economic scandals of the early 21st century?

Businesses' reputations depend on more than profits. Ethical conduct and corporate social responsibility are very important.

All the following are factors of production used to make goods and services except

Customers.

____ relates to the number of goods and services that consumers are willing to buy at different prices at a specific time.

Demand

Profit is what it costs to make and sell a product.

FALSE

_________________ is the study of how resources are distributed for the production of goods and services within a social system.

Economics

Equal distribution of income and social services is also referred to as:

Egalitarianism.

The group of people to whom the management activity most applies is

Employees.

After World War II, the United States became an agricultural economy.

FALSE

An oligopoly exists when there are many small businesses selling one standardized product.

FALSE

Businesses have the right to keep and use their profits as they choose, without limitations.

FALSE

Capitalism is an economic system in which the government owns and operates basic industries while individuals own most other businesses.

FALSE

In a free-market system, the government regulates business.

FALSE

Monopolistic competition exists when there is only one producer of a product in a given market.

FALSE

Nonprofit organizations such as Habitat for Humanity do not engage in management, marketing, or finance activities.

FALSE

Owners always manage their businesses.

FALSE

Owners have little responsibility to provide funds for the operation of the business.

FALSE

Products have tangible attributes only.

FALSE

____ resources are also known as labor.

Human

Which of the following functions involves activities designed to provide goods and services that fulfill needs and desires of consumers?

Marketing

When businesses can promote different features of their products and consumers are willing to pay more for products containing the features they desire, the competitive environment is probably

Monopolistic competition.

____ have both tangible and intangible characteristics.

Products

____ is the primary goal of business.

Profit

Businesses differ from nonprofit organizations in that a business's focus is on

Profit.

If a business is to be successful in the long run, it must produce quality products, operate efficiently, and be

Socially responsible.

A central issue of economics is how to fulfill an unlimited demand for goods and services in a world with limited resources.

TRUE

A product's equilibrium price is constantly changing in response to changes in economic conditions, availability of resources, and degree of competition.

TRUE

A severe recession may turn into a depression.

TRUE

Advertising first made consumers aware of differences in products and prices in the marketing economy.

TRUE

The goal of business is to earn

a profit

The early economy of the United States was marked by colonists who operated a society based primarily on

agriculture

A budget surplus, when a nation spends less than it takes in from taxes, is the opposite of a(n)

budget deficit.

All of the following are associated with the manufacturing economy except

cable television.

Financial resources are also known as _______________.

capital

All of the following are associated with the Industrial Revolution except

computers

When Target has a sale on bed linens,

consumers will demand more linens.

Increased unemployment can reduce consumer demand for goods and services, leading to

deflation.

The _______ is the price at which the number of products that businesses are willing to supply equals the number of products consumers are willing to purchase at a point in time.

equilibrium price

When Apple introduced the iPad the price of and demand for netbooks and notebooks were high. As a result,

other suppliers introduced competing products to take advantage of the demand.

When a business fails or does not make a profit, _______ have the most to lose.

owners

Economic contraction occurs when

spending declines.