Test

CHAPTER 1

1. Any organization that produces a good or service can be classified as a business.

Answer: False LG: 1/LL: 1 Page: 4

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

Answer: True LG: 1/LL: 1 Page: 4

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

Answer: True LG: 1/LL: 1 Page: 8

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

Answer: True LG: 1/LL: 1 Page: 6

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

Answer: False LG: 1/LL: 2 Page: 5

Rationale: In the pursuit of profit, businesses create jobs, produce goods and services that contribute to a higher standard of living, and pay taxes that support important government programs. Thus, businesses benefit others in society as well as their owners.

6. People living in the nation of Carpozia earn more money than people living in the country of Wagonia. This will result in the citizens of Carpozia enjoying a higher standard of living than the citizens of Wagonia.

Answer: False LG: 1/LL: 2 Page: 5

Rationale: The standard of living depends on the price level as well as the income people earn. As our text indicates, people in Germany and Japan may earn more money than Americans, but they have a lower standard of living because the prices they pay for goods and services are higher.

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

Answer: False LG: 1/LL: 2 Page: 7

Rationale: Balancing the demands of all stakeholders is a tremendous challenge for organizations. Tradeoffs are common. Benefiting one group may have a negative impact on another group of stakeholders.

8. A charitable organization,...