Unit 3 Review Test

Question 1

What is a business?

Answer 1

A business is an organization involved in the production, sale, or exchange of goods and services to consumers with the goal of making a profit.

Question 2

What is the purpose of a business?

Answer 2

The purpose of a business is to produce goods or offer services that satisfy the needs and wants of consumers while gaining profit for the owners and stakeholders.

Question 3

What are the 7 characteristics that differentiate businesses?

Answer 3

• Size (small, medium, large)
• Industry (e.g., technology, healthcare, retail)
• Ownership structure (private, public, partnership, etc.)
• Market reach (local, national, global)
• Target audience (business-to-consumer or business-to-business)
• Products and services offered (goods, services, or both)
• Goals (profit-driven, socially responsible, sustainable)

Question 4

What is profit?

Answer 4

Profit is the financial gain a business makes after subtracting its expenses from its revenue.

Question 5

What is a for-profit business?

Answer 5

A for-profit business is an organization that operates with the primary goal of making a profit for its owners, shareholders, or stakeholders.

Question 6

What is a non-profit business?

Answer 6

A non-profit business operates to fulfill a charitable, educational, or social mission rather than to generate profit.

Question 7

What is a not-for-profit business?

Answer 7

A not-for-profit business is similar to a non-profit but generally focuses on specific charitable, educational, or social purposes.

Question 8

What is the difference between a small, medium, and large business?

Answer 8

• Small business: Fewer employees and lower revenue, often serving local markets.
• Medium business: Larger than small businesses, broader market reach, and more employees.
• Large business: Many employees, large revenue, and significant market influence.

Question 9

What type of product can a business provide?

Answer 9

A business can provide goods (physical items) or services (intangible activities or benefits).

Question 10

What are examples of goods?

Answer 10

• Electronics (smartphones, computers)
• Clothing and apparel
• Food and beverages
• Furniture
• Vehicles

Question 11

What are examples of services?

Answer 11

• Healthcare (doctor visits, hospitals)
• Education (schools, tutoring)
• Financial services (banking, insurance)
• Entertainment (movies, concerts)
• Consulting (business or marketing consulting)

Question 12

What does a channel of distribution mean?

Answer 12

A channel of distribution refers to the path through which goods and services flow from the producer to the end consumer.

Question 13

What is direct distribution?

Answer 13

Direct distribution is when a company sells its products directly to consumers without using intermediaries.

Question 14

What is indirect distribution?

Answer 14

Indirect distribution involves third-party intermediaries like wholesalers, retailers, and distributors.

Question 15

What is a producer?

Answer 15

A producer is an individual or organization that creates goods or services that are sold or exchanged in the market.

Question 16

What is the difference between a consumer and a customer?

Answer 16

• Consumer: The person or entity that uses or consumes a product or service.
• Customer: The person or entity that purchases a product or service.

Question 17

What is a marketplace?

Answer 17

A marketplace is a place or platform where goods and services are bought and sold.

Question 18

What does it mean when businesses have pricing power?

Answer 18

Pricing power refers to a business’s ability to set and control the price of its products without losing customers.

Question 19

What is consumer purchasing power?

Answer 19

Consumer purchasing power is the ability of consumers to buy goods and services based on their income and the prices of products.

Question 20

How have consumers influenced products, prices, and services?

Answer 20

Consumers influence products, prices, and services through their preferences, demands, feedback, and purchasing decisions.

Question 21

What are factors influencing customer purchasing habits?

Answer 21

• Price
• Quality of the product or service
• Brand reputation
• Social influences
• Convenience
• Economic conditions

Question 22

What is the difference between a need and a want?

Answer 22

• Need: Essential for survival (e.g., food, water, shelter)
• Want: Desired for personal satisfaction (e.g., luxury items, entertainment)

Question 23

What are some basic needs?

Answer 23

• Food
• Water
• Shelter
• Clothing
• Healthcare

Question 24

What are some wants?

Answer 24

• Luxury items (e.g., designer clothes, expensive cars)
• Entertainment (e.g., movies, vacations)
• Non-essential gadgets (e.g., the latest smartphone)

Question 25

What is Maslow’s Hierarchy of Needs?

Answer 25

Maslow’s Hierarchy of Needs categorizes human needs into five levels: physiological, safety, love and belonging, esteem, and self-actualization.

Question 26

How can businesses attract consumer interests?

Answer 26

Businesses can attract consumer interest by offering high-quality products, effective advertising, promotions, and customer engagement.

Question 27

What are economic resources also referred to as?

Answer 27

Economic resources are also called factors of production.

Question 28

What are the three types of economic resources?

Answer 28

* Land: Natural resources * Labor: Human resources * Capital: Man-made resources

Question 29

What is interdependence?

Answer 29

Interdependence refers to the mutual reliance between businesses or countries for the exchange of goods, services, or resources.

Question 30

What is the purpose of an economic system?

Answer 30

The purpose of an economic system is to organize and manage the production, distribution, and consumption of goods and services.

Question 31

What is economics?

Answer 31

Economics is the study of how individuals, businesses, and societies allocate limited resources to satisfy unlimited wants and needs.

Question 32

What is demand?

Answer 32

Demand is the quantity of a product or service that consumers are willing and able to buy at different prices.

Question 33

What is supply?

Answer 33

Supply is the quantity of a product or service that producers are willing and able to provide at different prices.

Question 34

What is the difference between shortages and surplus?

Answer 34

* Shortage: Demand exceeds supply * Surplus: Supply exceeds demand

Question 35

When does the market reach equilibrium?

Answer 35

The market reaches equilibrium when the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Question 36

What is the Law of Supply and Demand?

Answer 36

The Law of Supply and Demand states that when demand for a product increases and supply remains the same, prices tend to rise.

Question 37

What are factors impacting supply and demand?

Answer 37

* Consumer preferences * Income levels * Price of related goods * Technology and innovation * External factors

Question 38

How does price impact supply and demand?

Answer 38

Higher prices typically decrease demand but increase supply, while lower prices increase demand but may decrease supply.