CHAPTER 1

Understanding the Canadian Business System

1) The most important difference between command economies and market economies
is______.
A) access to human rights
B) who controls the factors of production
C) the government in power
D) freedom of the press
Answer:
B) who controls the factors of production

2) When Henry Ford adopted the assembly line to mass produce the Model-T in 1913, he
decided to pay his workers a relatively high wage because he believed that workers should be
able to afford to buy what they make. This is consistent with the idea of _______________.
A) communism
B) input and output markets
C) socialism
D) privatization
Answer:
B) input and output markets
3) The political basis for the free market economy is called ____________ which allows
private ownership of the factors of production and encourages entrepreneurship by offering
profits as an incentive.
A) Marxism
B) Capitalism
C) Consumerism
D) Socialism
Answer:
B) Capitalism

4) If U2 is playing to a sold-out concert this Friday night but tickets are still in high
demand, concert-goers are likely to buy tickets from scalpers at prices considerably higher than
the original price. This situation can be described as a:
A) shortage; in which quantity demanded exceeds quantity supplied.
B) surplus; in which quantity demanded exceeds quantity supplied.

C) shortage; in which quantity supplied exceeds quantity demanded.

D) surplus; in which quantity supplied exceeds quantity demanded.
Answer:
A) shortage; in which quantity demanded exceeds quantity supplied.

5) The markets for laundry detergents, soft drinks and cars are all dominated by just a few
producers. In terms of competition these markets are described by the term:
A) perfect competition
B) monopoly
C) oligopoly
D) pure competition
Answer:
C) Oligopoly

CHAPTER 2
The Environment of Business

1) Environmental protection laws, interest rates, societal values, and the emergence of
new technologies can significantly impact the profitability of a firm. These types of issues can
not be controlled by a business as they are considered to exist in the ________.
A) external environment
B) internal environment
C) organizations boundaries
D) global context
Answer:
A) external environment
2) The total amount of money that a country owes its creditors.
A) National Deficit
B) Purchasing Power Parity Index
C) National Debt
D) Gross Domestic Product
Answer:
C) National Debt
3) The federal government manages the Canadian economic system through two sets of
policies: fiscal and monetary. Fiscal Policy refers to:
A) the control of the money supply

B) the control of interest rates

C) the governments approach to its spending and taxation
D) the effective management and control of the national debt
Answer:
C) the governments approach to its spending and taxation
4) Simon would like to buy a Valentines gift for his girl friend as a sign of his affection.
To his dismay he discovers that roses cost $75 a dozen. Luckily, he can buy chocolates for $20.
According to Porters Five Forces Model, chocolates are a less costly _________.
A) option
B) substitute
C) replacement
D) complement
Answer:
B) substitute
5) An organizations core competencies refers to:
A) The companys strategies to increase market share
B) The companys product offerings which achieve the highest profit levels
C) The training programs used to increase employee productivity
D) The skills and resources with which they compete best and create the most value for
owners.
Answer: D) The skills and resources with which they compete best and create the most
value for owners.
CHAPTER 3
Conducting Business Ethically and Responsibly

1) An example of CSR in action is the ___________ movement, which was motivated by

concerns that workers in developing countries who produce commodities like coffee were not
receiving adequate payment for their products.
A) fair trade
B) consumerism
C) ethical dilemma
D) managerial environmentalism
Answer:
A) fair trade
2) ______________ is a movement dedicated to protecting the rights of consumers in
their dealings with businesses.

A) Fair trade
B) Consumerism
C) Stealth justice
D) Stakeholder revolt
Answer:
B) Consumerism

3) Which of the following represents one of the fundamental customer rights listed in the

text?
A) Right to low prices
B) Right to be heard
C) Right to return all products
D) Right to a money back guarantee
Answer:
B) Right to be heard
4) If a CEO sells most of his shares in the company a few days before disastrous results
are made public, he is likely guilty of ___________.
A) collusion
B) misrepresentation of finances
C) insider trading
D) profiteering
Answer:
C) insider trading
5) Businesses that take an _____________ to social responsibility do as little as possible
to solve social or environmental problems. When they cross the ethical or legal line that
separates acceptable from unacceptable practices, their typical response is to deny or cover up
their actions.
A) accommodative
B) defensive
C) proactive
D) obstructionist
Answer:
D) obstructionist

CHAPTER 4
Entrepreneurship, Small Business, and New Venture Creation

1) ____________ are people that create something new within the context of a large
organization.
A) Venture Capitalists
B) Angels
C) Intrapreneurs
D) Nascent Investors
Answer:
C) Intrapreneurs
2) The entrepreneurial process is like a journey which is influenced by social, economic,
political, and technological factors. The three key elements in the process are:
A) The product, the promotions and the place or location of the venture
B) The entrepreneur, the size of the market and the scale of the business
C) The market, the capital investment and the growth potential
D) The entrepreneur, the opportunity, and the resources
Answer:
D) The entrepreneur, the opportunity, and the resources
3) The first section of a business plan is the:
A) Company Description
B) Market analysis
C) Executive Summary
D) Operating Plan
Answer:
C) Executive Summary
4) _________have voting rights and receive a vote for each share that they own. They are
considered owners of the company although the extent of ownership depends on the number of
shares they possess.
A) Preferred Capitalists
B) Bondholders
C) Common stockholders
D) Derivative titleholders
Answer:
C) Common stockholders
5) A ___________ is an organization that is owned and controlled by the people who use
it - producers, consumers and workers with similar needs who pool their resources for mutual
benefit.
A) private corporation
B) joint venture
C) co-operative

D) public corporation
Answer:
C) co-operative
CHAPTER 5
The Global Context of Business

1) The BRICS nations are major players in global trade and they are gaining more power
and stature every year. Brazil, Russia, India and China have all grown in importance in recent
years for different reasons. Which country was recently admitted to join this group of nations?
A) Singapore
B) South Africa
C) South Korea
D) Slovakia
Answer:
B) South Africa
2) The Theory of _____________ was identified by Michael Porter to help explain why
some countries are so strong in certain industries. He describes the importance of factor
conditions (i.e. land and labour), the level of demand in the home market, the strength of
supporting industries in the nation, and the level of rivalry among firms in a market.
A) Absolute Advantage
B) National Competitive Advantage
C) Competitive Advantage
D) National Subsidy
Answer:
B) National Competitive Advantage

3) If total exports from Canada in a given year amount to $360 billion and the total
imports amount to $372 billion. Canada is said to be in a _________ position.
A) trade deficit
B) balance of payments
C) trade surplus
D) balance of trade
Answer:
A) trade deficit
4) Among the options of international organizational structure, __________ is the most
risky, but also yields the greatest profit potential.

A) strategic alliances
B) exporting/importing
C) licensing arrangements
D) foreign direct investment
Answer:
D) foreign direct investment

5) The mandate of the _______________ is to encourage trade by helping members to

resolve disagreements, promote free trade agreements, and encourage fair trade practices.
A) North American Free Trade Agreement
B) International Monetary Fund
C) United Nations
D) World Trade Organization
Answer:
D) World Trade Organization

CHAPTER 6
Managing the Business Enterprise

1) Tactical planning is concerned with:

A) finding the optimal solution for an emergency situation.
B) developing specific short-run strategies about what needs to be done, who will do it,
and how it will be accomplished.
C) devising alternative courses of action to be used if the original plan does not work out.
D) setting long-run goals that will dictate the strategic plan of the organization.
Answer: B) developing specific short-run strategies about what needs to be done, who will
do it, and how it will be accomplished.

2) When Jasmine analyzes monthly sales figures for her flower shop, and uses this
information to determine the optimal variety of flowers to order for next month, she is involved
in the _________ function of the management process.
A) leading
B) planning
C) controlling
D) organizing
Answer:
C) controlling
3) All managers require human relations, conceptual, time management, and decisionmaking skills, but top managers depend most on ______________.

A) human relations skills

B) conceptual skills
C) time management skills
D) decision-making skills
Answer:
B) conceptual skills
4) Effective goal setting is helped by comparing the outcomes to the SMART guideline.
What does SMART stand for?
A) Specific, Measurable, Achievable, Realistic, and Time-framed
B) Simple, Mature, Achievable, Responsible and Time-Framed
C) Simple, Maximized, Achievable, Reliable and Time-Framed
D) Specific, Mature, Aggressive, Realistic and Time-Framed
Answer:
A) Specific, Measurable, Achievable, Realistic, and Time-framed
5) When one company buys a competitor in the same industry it is known as
____________.
A) horizontal integration
B) diversification
C) vertical integration
D) lateral divestment
Answer:
A) horizontal integration