Solved Multiple Choice Questions: Introduction to Business

This document contains solved multiple-choice questions covering fundamental concepts in business. The questions address topics such as investment decisions, entrepreneurship, economic systems (capitalism, socialism, communism), forms of business ownership (sole proprietorships, partnerships, corporations), factors of production, supply and demand, market structures (monopoly, oligopoly, competition), and marketing principles. Specific questions delve into the advantages and disadvantages of different business structures, the role of government in encouraging entrepreneurship, and the impact of factors like corruption and taxes on the business environment. The solutions provided aim to clarify key business concepts and principles for students studying introductory business courses. Desklib offers a wealth of similar solved assignments and resources for students.

Running head: INTRODUCTION TO BUSINESS
INTRODUCTION TO BUSINESS
Name of the Student:
Name of the University:
Author note:

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INTRODUCTION TO BUSINESS
1) Ross wants to invest some money that he just inherited. He found that his bank offers a
savings account paying a guaranteed 3% rate of return. However, he would like to earn a higher
return. Ross should keep in mind that to earn a higher return on his money he:
Answer- Option C
2) Carrie, a student at Metropolitan Community College, dreams of starting her own business. In
an effort to learn as much as she can about small business management, she talked to four friends
who each offered their advice. Which of these suggestions is likely to help Carrie the most?
Answer- Option B
3) Which of the following statements would a follower of Adam Smith be most likely to make?
Answer- Option D
4) A separation between ownership and management is most likely to occur in a:
Answer- Option C
5) According to the invisible hand concept, the best way for a society to encourage the creation
of jobs and the production of the products most wanted by consumers would be to:
Answer- Option C
6) Compared to partnerships and sole proprietorship, a major advantage of the C (conventional)
corporation as a form of business ownership is that it:
Answer- Option C

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INTRODUCTION TO BUSINESS
7) Which of the following is normally considered a disadvantage of the corporate form of
business?
Answer- Option D
8) Which of the following statements about social entrepreneurs (such as Muhammad Yunus
who won the Nobel Prize) describes their challenge?
Answer-Option D
9) As a factor of production, the term capital includes:
Answer -Option C
10) Which of the following statements provide the most accurate comparison of socialism and
communism?
Answer- Option B
11) Which of the following people would tend to favor a socialist economy?
Answer -Option D
12) Which of the following statements about capitalism is the most accurate?
Answer- Option C
13) One of the greatest concerns associated with capitalism is that:
Answer-Option C

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INTRODUCTION TO BUSINESS
14) Abby left her native land in Eastern Europe to become a nanny for a family in a western
suburb of Chicago, Illinois. One of the benefits of her arrangement was that she could attend the
community college near her family’s residence. When she arrived at her new job, she
experienced some immediate differences. Abby noted that public transportation, in northern
Illinois was limited and expensive, making it difficult to get to school. For a negligible fee, the
government in her native country provided public transportation to everyone. The economic
system in Abby’s native country was more characteristic of ___________
Answer- Option B
15) The form of business ownership best suited to raising large amounts of money for expansion
is the
Answer- Option C
16) One disadvantage of _________ is the initial cost of formation.
Answer-Option A
17) As you consider the factors of production, which of the following did management theorist
Peter Drucker believe to be one of the most important contributing factors to increasing our
nation’s wealth.
Answer- Option C
18) __________ comprises about 20% of all businesses but account for about 81% of US
business receipts.
Answer- Option C

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INTRODUCTION TO BUSINESS
19) The Procter & Gamble Company is a major producer of bar soaps. In fact, Procter & Gamble
produces Ivory, Camay, Lava, Safeguard, Zest and Coast bar soaps that all claim a variety of
benefits. These products are part of Procter & Gamble’s ________ in bar soaps.
Answer- Option D
20) Fourteen years ago, Sergio noticed that a lot of people who bought personal computers did
not know much about how to use them and frequently suffered system crashes and other
aggravations. He decided he could earn a nice profit by starting a consulting business to help
other people overcome their computer woes. Although the business struggled at first, it has
experienced a good deal of success for the past five years. Sergio has many satisfied customers,
and the business has grown to the point where he now employs several workers. Sergio’s
experience is an example of:
Answer- Option C
21) One of the challenges of running a home-based business is:
Answer- Option D
22) A simple supply curve shows that an increase in the price of a good will cause the quantity
supplied to:
Answer- Option B
23) A (n)_____ curve shows the relationship between the price of a good and the quantity of that
good people are willing and able to buy in a given time period
Answer-Option A

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INTRODUCTION TO BUSINESS
24) Entice-Mint Breath Mints is a new brand of breath fresheners. The company realizes that
product location is very important since consumers desire to buy this type product with a
minimum of effort. Entice-Mint mints represent a:
Answer- Option C
25) A __________ is a name, symbol, or design (or combination of these) that identifies the
goods or services of one seller or group of sellers and distinguishes them from those of
competitors.
Answer- Option B
26) Attracting attention, describing contents, explaining benefits and identifying the uses of a
product are all functions of:
Answer- Option C
27) When prices are free to adjust over time, in the long run, the market place of a good tends to:
Answer-Option B
28) _________ is the market situation in which there are many sellers in a market and no seller is
large enough to dictate the price of a product
Answer- Option A
29) _________ exists when the entire supply of a good is controlled by a single seller:
Answer- Option D
30) An oligopoly is a market that is characterized by:

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INTRODUCTION TO BUSINESS
Answer -Option C
31) The market place of apples is currently rising. In a free-market economy, the most likely
explanation of this price change is that:
Answer- Option A
32) Which of the following statements about factors of production is the most accurate?
Answer- Option D
33) Taxes and government regulations are part of the _______ environment of business.
Answer- Option A
34) On its website, Papa John's pizza compares itself to the competition with the following
message: "better ingredients, better pizza". The company wants to achieve:
Answer- Option A
35) Which of the following government policies would be least likely to encourage
entrepreneurship?
Answer-Option C
36) When businesses sell to other businesses over the Internet, these transactions are known as:
Answer-Option C
37) A major premise of a socialist system is:
Answer- Option B

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INTRODUCTION TO BUSINESS
38) A major benefit of socialism is the:
Answer -Option C
39) ,Under the _______ system there is a very little incentive to work hard or to produce quality
goods or services.
Answer -Option C
40) ,Under the ________ system the number of choices in the market is directly related to
government involvement in markets.
Answer -Option B
41) The capitalist system relies heavily on:
Answer- Option D
42) When corruption is present in the business environment:
Answer Option A
43) Communism is an economic system in which:
Answer-Option C
44) In recent years, countries with communist economic and political systems have:
Answer -Option B
45) To many businesspeople, one of the major attractions of a sole proprietorship is:
Answer -Option D

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INTRODUCTION TO BUSINESS
46) One of the major disadvantages of a sole proprietorship is the:
Answer -Option B
47) With respect to taxes, the sole proprietorship:
Answer -Option B
48) Unlimited liability means:
Answer-Option A
49) Nick wants to start his own business. Nick should consider a sole proprietorship if he:
Answer -Option C
50) A partner (owner) who invests money in a business, does not take an active role in managing
the operation, and is only subject to losing the funds he/she invested.
Answer -Option B
51) The reason a professional such as lawyer or doctor would incorporate his/her business is:
Answer Option C
52) A successful web-based strategy that helps a business spread the word about its web site and
products is called _________
Answer -Option D
53) Which of the following are products consumers buy after comparing quality, price, and style
from a variety of sellers?

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INTRODUCTION TO BUSINESS
Answer -Option A
54) Under capitalism:
Answer -Option A
55) The freedom of people to buy, sell and use land, buildings, machinery and inventions are
basic capitalist rights under:
Answer- Option A
56) The quantity of a good or service that producers are willing to sell at different prices during a
specific time period is known as the:
Answer -Option A
57) Compared to a sole proprietorship, which of the following is considered an advantage of a
general partnership?
Answer -Option A
58) Which of the following is an advantage of a partnership?
Answer -Option C
59) When entering into a new partnership, a good strategy is to:
Answer -Option B
60) _________ is the chance a business owner will lose the time and money invested in a
business that proves to be unprofitable.

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INTRODUCTION TO BUSINESS
Answer- Option B
61) The total amount of money that businesses take in by selling goods and services is called
_____
Answer -Option B
62) _______ is a measure of the general well-being and satisfaction derived from a variety of
factors including political freedom, safety, education and a clean environment.
Answer -Option B
63) The amount of goods and services people can buy with the money they have is called their:
Answer – Option B
64) In order to make an intelligent investment decision, entrepreneurs should:
Answer- Option D
65) One difference between partnerships and sole proprietorships is that partnerships:
Answer -Option D
66) A good reason why partners should spell out the details of their partnership arrangements in
writing is:
Answer-Option B
67) One way to eliminate some of the risk of your partners making costly mistakes that could
jeopardize your personal assets is to set up a:

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INTRODUCTION TO BUSINESS
Answer- Option D
68) Randy and Mandy, plan to pool their money and musical talents to form a geberal
partnership and begin booking weekend gigs. One of the first things Randy and Mandy should do
is:
Answer -Option B
69) A (n) ___________ is a state-chartered legal entity with authority to act and to have liability
separate from its owners.
Answer -Option B
70) A separation between ownership and management is most likely to occur in a:
Answer -Option C
71) One disadvantage of ________ is the initial cost of formation.
Answer-Option C
72) The form of business ownership that usually requires the most detailed record keeping is the:
Answer- Option A
73), One reason limited liability companies have become so popular is that they:
Answer -Option A
74) The purpose of _______ is to create real or perceived product differences.
Answer -Option B