Multiple Choice Questions 1. ____ is the primary goal of business.    A.  Charity B.  Profit C.  Bureaucracy D.  Quality E.  Strategy Hint: Learning Objective: 01-01 Define basic concepts such as business; product; and profit. 2. Which of the following is NOT a product?    A.  A Dell personal computer B.  A veterinarian's treatment of a pet's injuries C.  A lawyer's advice in a divorce case D.  A checkup by a doctor E.  A business profit Hint: Learning Objective: 01-01 Define basic concepts such as business; product; and profit. 3. Which of the following is an example of an intangible product?    A.  A movie DVD B.  A sandwich C.  A sports car D.  A music concert E.  Jewelry Hint: Learning Objective: 01-01 Define basic concepts such as business; product; and profit. 4. Which of the following is a similarity between businesses and nonprofit organizations?    A.  Both do not have to abide by government regulations. B.  Both are unaffected by political or social change. C.  Both of them engage in management and finance activities. D.  Both of them do not need to adapt to technological changes. E.  Both aim to maximize financial returns for their owners. Hint: Learning Objective: 01-01 Define basic concepts such as business; product; and profit. 5. All the groups that have an interest in an organization's success and outcomes are known as the organization's ____.    A.  agencies B.  stakeholders C.  owners D.  investors E.  shareholders Hint: Learning Objective: 01-01 Define basic concepts such as business; product; and profit. 6. Which of the following is a force within an organization's control that has an impact on the business's daily operations?    A.  Employees B.  Regulatory environment C.  Competition D.  Political environment E.  Technology Hint: Learning Objective: 01-02 Identify the main participants and activities of business and explain why studying business is important. 7. Which of the following is true of the responsibilities of the people involved in a business?    A.  Finance is concerned with acquiring, developing, and using human effectively and efficiently. B.  Marketing refers to all activities concerned with obtaining money for the firm and using it effectively. C.  Nonprofit organizations include all the functions that businesses do, except for the marketing function. D.  Management is not involved in the day-to-day functions of production and manufacturing. E.  It is the primary responsibility of the owners to provide financial resources for the operation of the business. Hint: Learning Objective: 01-02 Identify the main participants and activities of business and explain why studying business is important. 8. The functions of organizing, staffing, planning, and controlling are most closely associated with:    A.  managers. B.  assembly line workers. C.  investment advisors. D.  stockbrokers. E.  direct sales executives. Hint: Learning Objective: 01-02 Identify t.

1. Multiple Choice Questions
1. ____ is the primary goal of business.
A. Charity
B. Profit
C. Bureaucracy
D. Quality
E. Strategy
Hint: Learning Objective: 01-01 Define basic concepts such as
business; product; and profit.
2. Which of the following is NOT a product?
A. A Dell personal computer
B. A veterinarian's treatment of a pet's injuries
C. A lawyer's advice in a divorce case
D. A checkup by a doctor
E. A business profit
Hint: Learning Objective: 01-01 Define basic concepts such as
business; product; and profit.

2. 3. Which of the following is an example of an intangible
product?
A. A movie DVD
B. A sandwich
C. A sports car
D. A music concert
E. Jewelry
Hint: Learning Objective: 01-01 Define basic concepts such as
business; product; and profit.
4. Which of the following is a similarity between businesses
and nonprofit organizations?
A. Both do not have to abide by government regulations.
B. Both are unaffected by political or social change.
C. Both of them engage in management and finance activities.
D. Both of them do not need to adapt to technological
changes.
E. Both aim to maximize financial returns for their owners.
Hint: Learning Objective: 01-01 Define basic concepts such as
business; product; and profit.

3. 5. All the groups that have an interest in an organization's
success and outcomes are known as the organization's ____.
A. agencies
B. stakeholders
C. owners
D. investors
E. shareholders
Hint: Learning Objective: 01-01 Define basic concepts such as
business; product; and profit.
6. Which of the following is a force within an organization's
control that has an impact on the business's daily operations?
A. Employees
B. Regulatory environment
C. Competition
D. Political environment
E. Technology
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
7. Which of the following is true of the responsibilities of the

4. people involved in a business?
A. Finance is concerned with acquiring, developing, and using
human effectively and efficiently.
B. Marketing refers to all activities concerned with obtaining
money for the firm and using it effectively.
C. Nonprofit organizations include all the functions that
businesses do, except for the marketing function.
D. Management is not involved in the day-to-day functions of
production and manufacturing.
E. It is the primary responsibility of the owners to provide
financial resources for the operation of the business.
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
8. The functions of organizing, staffing, planning, and
controlling are most closely associated with:
A. managers.
B. assembly line workers.
C. investment advisors.
D. stockbrokers.
E. direct sales executives.
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
9. _________ gather information and conduct research to

5. determine what customers want. They also plan and develop
products and make decisions about how much to charge for their
products and when and where to make them available.
A. Accountants
B. Engineers
C. Marketers
D. Supervisors
E. Stock brokers
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
10. Advertising, personal selling, coupons, and sweepstakes are
forms of the _____ aspect of marketing activities.
A. finance
B. promotion
C. production
D. fund raising
E. social responsibility
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
11. When a business fails or does not make a profit, _____
have the most to lose in terms of finances.
A. consumers
B. media agencies

6. C. government bodies
D. owners
E. market experts
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
12. ___________ refers to all activities concerned with
obtaining and managing money and using it effectively.
A. Public relations
B. Marketing
C. Production
D. Advertising
E. Finance
Hint: Learning Objective: 01-02 Identify the main participants
and activities of business and explain why studying business is
important.
13. All the following are factors of production used to make
goods and services, EXCEPT:
A. natural resources.
B. human resources.
C. customers.
D. capital.

7. E. financial resources.
Hint: Learning Objective: 01-03 Define economics and
compare the four types of economic systems.
14.
Which of the following statements is true about communism?
A.
It is characterized by the government owning and operating
most businesses.
B.
It relies on supply and demand to make decisions about pricing
and production of goods.
C.
It encourages private ownership of the means of production.
D.
It encourages free market and competition.
E.
It provides scope for the production of a large variety of goods
and services.

8. Hint: Learning Objective: 01-03 Define economics and
compare the four types of economic systems.
15. In a capitalist economic system:
A. the government owns and operates all businesses.
B. there is little scope for competition.
C. consumers have a limited choice of goods and
services.
D. the majority of people possesses government jobs.
E.prices of goods and services are determined by demand and
supply.
Hint: Learning Objective: 01-03 Define economics and
compare the four types of economic systems
16. ___________ relates to the number of goods and services
that consumers are willing to buy at different prices at a
specific time.
A. Demand
B. Supply
C. Elasticity
D. Balance of payments
E. Deficit
Hint: Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
17. 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

9. time.
A. bundled price
B. equilibrium price
C. discount price
D. competitive price
E. maximum retail price
Hint: Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
18. The market for corn in Brazil has a large number of sellers,
and there is no difference in the products sold by each seller. As
there are also a large number of buyers for the corn, the actions
of a single seller or buyer cannot affect the price. The market
for corn can be described as ____.
A. a monopoly
B. monopolistic competition
C. pure competition
D. an oligopoly
E. modified competition
Hint: Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
19. A budget deficit occurs when a nation:
A. reduces its expenditures.
B. receives excess taxes.
C. has no national debts.

10. D. spends more than it takes in from taxes.
E. balances taxes and expenditures.
Hint: Learning Objective: 01-05 Specify why and how the
health of the economy is measured.
20. Which of the following is a change that occurred in the U.S.
during the Industrial Revolution?
A. Farm production decreased as industrial production
increased.
B. As work became more localized, productivity
decreased.
C. Trade within the country decreased as regions
became self-sufficient.
D. Farmers began to move to cities to find jobs in
factories.
E. Fewer goods were available, and prices of goods
increased.
Hint: Learning Objective: 01-06 Trace the evolution of the
American economy and discuss the role of the entrepreneur in
the economy.
Chapter 2
21. Obeying the law is a business's ____.
A. right

11. B. choice
C. economic responsibility
D. legal responsibility
E. ethical responsibility
Hint: Learning Objective: 02-04 Explain the four dimensions of
social responsibility.
22. The principles and standards that determine acceptable
conduct in business organizations are referred to as:
A. social responsibility.
B. business strategies.
C. business ethics.
D. business stances.
E. corporate citizenship.
Hint: Learning Objective: 02-01 Define business ethics and
social responsibility and examine their importance.
23. The term social ___________ refers to a business's
obligation to maximize its positive impact and minimize its
negative impact on society.
A. citizenship
B. strategy
C. ethics
D. responsibility

12. E. rule
Hint: Learning Objective: 02-01 Define business ethics and
social responsibility and examine their importance.
24. The ________ Act criminalized securities fraud and
toughened penalties for corporate fraud.
A. Dodd-Frank
B. Federal Trade Commission
C. Foreign Corrupt Practices
D. Sarbanes-Oxley
E. Sherman Antitrust
Hint: Learning Objective: 02-01 Define business ethics and
social responsibility and examine their importance.
25. The Sarbanes-Oxley Act was passed to:
A. punish those who committed accounting fraud in the
late 1990s.
B. improve corporate profits.
C. help laid-off employees get their jobs back.
D. help investors recoup their losses.
E. help restore confidence in corporate America.
Hint: Learning Objective: 02-01 Define business ethics and
social responsibility and examine their importance.
26. One of the most difficult things for a business to restore
after an ethics scandal is:

13. A. regulations.
B. ethics training programs.
C. trust.
D. codes of conduct.
E. morale.
Hint: Learning Objective: 02-01 Define business ethics and
social responsibility and examine their importance.
27. According to the National Business Ethics Survey, _____ is
the number one area of misconduct observed in the workplace.
A. plagiarism
B. discrimination
C. abusive behavior
D. misuse of company time
E. stealing
Hint: Learning Objective: 02-02 Detect some of the ethical
issues that may arise in business.
28. If Laura, a manager, chooses to act so that she benefits
financially at the expense of her firm, then she:
A. is bullying.
B. is engaging in bribery.
C. has a conflict of interest.
D. is cheating.
E. has broken the law.
Hint: Learning Objective: 02-02 Detect some of the ethical

14. issues that may arise in business.
29. Managers use the _____ of their position to influence
employees' decisions and actions.
A. responsibility
B. standards
C. principles
D. authority
E. acceptance
Hint: Learning Objective: 02-02 Detect some of the ethical
issues that may arise in business.
30. _____ involves taking someone else's work and presenting
it as your own.
A. Conflict of interest
B. Bullying
C. Inspiration
D. Bribery
E. Plagiarism
Hint: Learning Objective: 02-02 Detect some of the ethical
issues that may arise in business.
31. Which of the following is true of ethics?
A. Ethical conflict increases when employees feel that their
company is exerting pressure on them to engage in unethical
conduct.
B. Professional codes of ethics are informal rules and
standards that describe what the company expects of its

15. employees.
C. Codes of ethics need to be very detailed so that they take
into account every situation.
D. The development of a code of ethics should include only a
firm's executives and board of directors.
E. Employees always utilize the same ethical standards at
work as they do at home.
Hint: Learning Objective: 02-03 Specify how businesses can
promote ethical behavior.
32. A set of formalized rules and standards that describes what
a company expects of its employees is called a(n) ____.
A. contractual capacity
B. consumerist code
C. moral philosophy
D. social responsibility
E. code of ethics
Hint: Learning Objective: 02-03 Specify how businesses can
promote ethical behavior.
33. A code of ethics represents _____ rules and standards of
what a company expects of its employees.
A. unceremonious
B. short-term
C. comprehensive
D. formalized
E. situational

16. Hint: Learning Objective: 02-03 Specify how businesses can
promote ethical behavior.
34. _________ is the act of an employee exposing an
employer's wrongdoing to outsiders.
A. Fraud
B. Whistleblowing
C. Plagiarism
D. Bullying
E. A criminal lawsuit
Hint: Learning Objective: 02-03 Specify how businesses can
promote ethical behavior.
35. Being profitable relates to the dimension of _____
responsibility.
A. corporate citizenship
B. voluntary
C. ethical
D. legal
E. economic
Hint: Learning Objective: 02-04 Explain the four dimensions of
social responsibility.
36. Avoiding misconduct and doing what is right, just, and fair
relates to a business's:
A. economic responsibility.
B. corporate citizenship.
C. legal responsibility.

17. D. ethical responsibility.
E. government's responsibility.
Hint: Learning Objective: 02-04 Explain the four dimensions of
social responsibility.
37. Being a "good corporate citizen" is an example of the
_____ social responsibility dimension.
A. puritanical
B. economic
C. legal
D. ethical
E. voluntary
Hint: Learning Objective: 02-04 Explain the four dimensions of
social responsibility.
38. Studies have found a direct link between social
responsibility and _____ in business.
A. profitability
B. ethics
C. declining stock prices
D. happiness of stakeholders
E. global warming
Hint: Learning Objective: 02-05 Debate an organization's social
responsibilities to owners; employees; consumers; the
environment; and the community.
39. Laws regarding workplace safety are enforced by the ____.
A. Federal Trade Commission
B. Occupational Safety and Health Administration

18. C. Environmental Protection Agency
D. Consumer Bill of Rights
E. Corrupt Practices Act
Hint: Learning Objective: 02-05 Debate an organization's social
responsibilities to owners; employees; consumers; the
environment; and the community.
40. ________ involves the interaction among nature and
individuals, organizations, and business strategies and includes
the assessment and improvement of business strategies,
economic sectors, work practices, technologies, and lifestyles,
so that they maintain the health of the natural environment.
A. Philanthropy
B. Consumerism
C. Sustainability
D. Biodiversity
E. Dualism
Hint: Learning Objective: 02-05 Debate an organization's social
responsibilities to owners; employees; consumers; the
environment; and the community.
Chapter 3
41. _________ is the transferring of manufacturing or other
tasks—such as data processing—to countries where labor and
supplies are less expensive.
A. Importing
B. Exporting

19. C. Outsourcing
D. Dumping
E. Insourcing
Hint: Learning Objective: 03-01 Explore some of the factors
within the international trade environment that influence
business.
42. A favorable balance of trade exists when a country:
A. imports more than it exports.
B. exports more than it imports.
C. has more debt liabilities than assets.
D. spends more than it saves.
E. saves more than it spends.
Hint: Learning Objective: 03-01 Explore some of the factors
within the international trade environment that influence
business.
43. Which of the following is likely to be an impact of a
decrease in the value of yen in relation to dollar?
A. An increase in Japanese imports of U.S. goods
B. An increase in the number of Japanese tourists in
the U.S.
C. An increase in the demand for Japanese yen in the
foreign exchange market
D. An increase in the price of U.S. goods in Japanese

20. markets
E. An increase in Japanese exports
Hint: Learning Objective: 03-02 Investigate some of the
economic; legal-political; social; cultural; and technological
barriers to international business.
44. A sudden change in power can result in a regime that is
hostile to foreign investment. This is a primary example of a
____.
A. political barrier
B. cultural barrier
C. exchange barrier
D. language barrier
E. geographic barrier
Hint: Learning Objective: 03-02 Investigate some of the
economic; legal-political; social; cultural; and technological
barriers to international business.
45. Understanding that Arab businessmen tend to stand face to
face when holding a conversation reveals the importance of
understanding another culture's use of:
A. language.
B. dialect.

21. C. religious practices.
D. ethics.
E. body language.
Hint: Learning Objective: 03-02 Investigate some of the
economic; legal-political; social; cultural; and technological
barriers to international business.
46. The effective translation of product names can be crucial to
the success in foreign markets because of:
A. political barriers.
B. cultural barriers.
C. legal barriers.
D. the presence of export quotas.
E. the differences in body language.
Hint: Learning Objective: 03-02 Investigate some of the
economic; legal-political; social; cultural; and technological
barriers to international business.
47. Which of the following is the reason for establishing the
World Bank?
A. To fund the member nations of the NAFTA and EU
B. To aid developed economies during financial crisis
C. To act as a global policing service
D. To loan money to underdeveloped and developing
countries
E. To help developed nations obtain money to start
businesses
Hint: Learning Objective: 03-03 Specify some of the

22. agreements; alliances; and organizations that may encourage
trade across international boundaries.
48. Suppose Coca-Cola allows a Mexican firm to use its name,
formula, and brands in return for a royalty. This arrangement is
known as:
A. exporting.
B. licensing.
C. direct investment.
D. contract manufacturing.
E. a joint venture.
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
49. Apple Inc., a leading manufacturer of cell phones and
tablets, hires Taiwan's Foxconn Technology Group, whose
subsidiary assembles Apple devices in factories in China.
Which of the following refers to the business arrangement
between Apple and Foxconn?
A. Exporting
B. Licensing
C. A direct investment
D. Contract manufacturing
E. A joint venture
Hint: Learning Objective: 03-04 Summarize the different levels

23. of organizational involvement in international trade.
50. Which of the following is likely to be a reason for some
U.S. companies to bring their outsourced production processes
back to the United States?
A. Increasing labor unionization in the United States
B. Increased government regulation of business in the United
States
C. Increasingly strict enforcement of intellectual property
rights in Asian countries
D. High cost of transporting products to the home country
E. Increase in labor turnover rates in the United States
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
51. The sharing of the costs and operations of a business
between a foreign company and a local partner is called
___________________.
A. exporting
B. licensing
C. direct investment
D. contract manufacturing
E. a joint venture
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.

24. 52. The purchase of overseas production and marketing
facilities is an example of ____.
A. licensing
B. contract manufacturing
C. using an export agent
D. direct investment
E. exporting
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
53. A corporation that operates in several countries but without
significant ties to any of them is an example of a(n):
A. licensor.
B. exporter.
C. monopolist.
D. multinational.
E. contract manufacturer.
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
54. Which of the following is an example of foreign direct
investment?
A. A software development company in the United States
investing in shares of an American computer manufacturing
firm.

25. B. A U.S. investor buying stocks of a German automobile
manufacturing company.
C. A Canadian firm purchasing a majority stake in a Japanese
company.
D. A U.S. cell phone manufacturer hiring an Indian firm to
provide customer support services and trouble shooting.
E. A Chinese steel manufacturing firm exporting 60 percent
of its output to European nations.
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
55. Which of the following is true of an MNC?
A. It is the highest level of international business involvement.
B. It operates on a national scale.
C. It has significant ties to specific nations or regions.
D. They usually have lesser assets than the countries in which
they operate.
E. They are less complicated than corporations.
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
56. On which of the following grounds are MNCs often
criticized by antiglobalization activists?
A. They increase unemployment in the host country.
B. They bring in technology that is unknown to the host
country.
C. They use capital-intensive mode of production.

26. D. They are liable to pay the taxes levied by the government
of the host country.
E. They increase the gap between rich and poor nations.
Hint: Learning Objective: 03-04 Summarize the different levels
of organizational involvement in international trade.
57. McDonald's had to adapt its menus to reflect local
preferences in India because:
A. Indians do not like hamburgers.
B. all Indians are vegetarians.
C. Indians only like to have a low-fat diet.
D. it had to account for religious and dietary customs related
to serving pork and beef.
E. McDonald's had a bad reputation before opening franchises
in India.
Hint: Learning Objective: 03-05 Contrast two basic strategies
used in international business.
58. Lever Brothers changed the formula of its bar soap to match
different countries' water conditions and washing habits. This is
an example of:
A. globalization strategy.
B. outsourcing.
C. strategic alliance.

27. D. multinational strategy.
E. joint venture.
Hint: Learning Objective: 03-05 Contrast two basic strategies
used in international business.
59. When a firm's products are standardized in all countries:
A. advertising cannot be used.
B. only publicity can be used for promotion.
C. using different advertisement content is illegal.
D. distribution is more expensive.
E. advertising may still need modification.
Hint: Learning Objective: 03-05 Contrast two basic strategies
used in international business.
60. Standardizing products for the whole world as if it were a
single entity is a characteristic of the ____.
A. global strategy
B. individualized strategy
C. domestic strategy
D. customization strategy
E. national strategy
Hint: Learning Objective: 03-05 Contrast two basic strategies
used in international business.
Chapter 11
61. Ryan has produced 1000 jars of pickled oranges using the
oranges in his orchard. By concentrating his efforts on

28. advertising and publicity, he is trying to encourage people to
notice and buy his product. Through his promotional activities,
Ryan is primarily engaging in the marketing function of ____.
A. financing
B. grading
C. warehousing
D. buying
E. selling
Hint: Learning Objective: 11-02 Specify the functions of
Marketing.
62. Burgerama Inc., a popular fast food chain, is famous for its
French fries and hash browns. It is one of the few fast food
chains to exclusively use the potatoes from its own farms.
However, its potatoes can be harvested for only three months of
the year. Which of the following marketing functions can
Burgerama employ to achieve time utility and satisfy year-round
demand for its exclusively grown French fries and hash
browns?
A. Grading
B. Selling
C. Storing
D. Buying
E. Financing
Hint: Learning Objective: 11-02 Specify the functions of
Marketing.

29. 63. _____ is the chance of loss associated with marketing
decisions.
A. Value
B. Utility
C. Liability
D. Risk
E. Cost
Hint: Learning Objective: 11-02 Specify the functions of
Marketing.
64. A customer's subjective assessment of benefits relative to
costs in determining the worth of a product is known as ____.
A. risk
B. value
C. cost
D. price
E. profit
Hint: Learning Objective: 11-02 Specify the functions of
Marketing.
65.___________________ is the goal of the marketing concept.
A. Product orientation
B. Productivity boosting

30. C. Customer satisfaction
D. Asset turnover
E. Sales orientation
Hint: 11-03 Explain the marketing concept and its implications
for developing marketing strategies.
66. Which of the following is an ineffective practice to follow
while implementing the marketing concept?
A. Using the customer's perception of value as the ultimate
measure of work performance
B. Striking a balance between achieving organizational
objectives and satisfying customers
C. Adopting a product orientation instead of a consumer
orientation to deliver the right good or service
D. Involving the entire organization instead of only the
marketing department, in achieving customer satisfaction
E. Adapting products and services according to the changing
consumer needs and wants
Hint: 11-03 Explain the marketing concept and its implications
for developing marketing strategies.
67. Which of the following requires organizations to gather
information about customer needs, share that information
throughout the firm, and use it to help build long-term
relationships with customers?
A. Marketing concept
B. Production orientation
C. Sales orientation

31. D. Market orientation
E. Customer-relationship orientation
Hint: 11-03 Explain the marketing concept and its implications
for developing marketing strategies.
68. The first step in developing a marketing strategy is:
A. cultivating effective customer relationships.
B. attracting new customers.
C. selecting a target market.
D. developing an appropriate marketing mix.
E. conducting a SWOT analysis.
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
69. A(n) _____ is best described as a group of people who have
a need, purchasing power, and the desire and authority to spend
money on goods, services, and ideas.
A. market
B. focus group
C. command group
D. target market

32. E. market segment
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
70. Ferava Inc. is a company that markets its products—luxury
wristwatches—exclusively to high-income individuals and
celebrities. Thus, high-income individuals and celebrities are
most likely Ferava Inc.'s ______________.
A. target market
B. control group
C. reference group
D. market
E. market segment
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
71. Kemmen Foods Inc., a company that manufactures and sells
breakfast cereals, has customized its cereal flavors to suit
different lifestyles, personal tastes, and age groups. For
example, it makes organic cereals for its health-conscious
customers, and it makes colorful cereals with cartoon characters
for children. Which of the following market segment approaches
is Kemmen Foods Inc. using in this scenario?
A. Niche market approach

33. B. Mass market approach
C. Total-market approach
D. Concentration approach
E. Multisegment approach
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
72. In _____ marketing, all marketing efforts are on one small,
narrow, well-defined market segment that has a unique, specific
set of needs.
A. niche
B. mass
C. differentiated
D. total
E. multisegment
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
73. If a company develops an advertising campaign exclusively
for a segment of consumers with a certain income and
education, which of the following segmentation variables is the
company using?
A. Behavioristic
B. Demographic
C. Psychographic
D. Geographic

34. E. Ethnographic
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
74. Which of the following is a basis for the psychographic
segmentation of markets?
A. Religion
B. Income
C. Education
D. Lifestyle
E. Gender
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
75. Gear Power Inc., an automobile company, manufactures
different cars for different market segments. It markets SUVs
for customers who live in the mountains, sedans for customers
in the coastal plains, and smaller hatchback cars for those in big
cities. In this scenario, Gear Power Inc. is primarily using
_____ variables of market segmentation.
A. demographic
B. psychographic
C. geographic
D. behavioristic
E. ethnographic
Hint: 11-04 Examine the development of a marketing strategy;

35. including market segmentation and marketing mix.
76. Which of the following is NOT one of the four marketing
activities of the marketing mix?
A. Price
B. Distribution
C. Promotion
D. Product
E. Profit
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
77. In businesses, the _____ is an important variable—often the
central focus—of the marketing mix, based on which the other
variables are adjusted.
A. price
B. distribution
C. promotion
D. product
E. process
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
78. Gift Nation Inc. is deciding whether to sell its products
through vending machines outside subway stations or in stores
at popular malls. Which of the following elements in the

36. marketing mix does this decision most relate to?
A. Price
B. Place
C. Promotion
D. Product
E. Process
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
79. Prism Phones Inc. is targeting college students and young
professionals. The company has therefore decided to advertise
its cell phones over social networking and other popular
websites. Relative to television advertising, this strategy will
help Prism Phones save costs, allowing the firm to sell its
phones at a more competitive price. Prism Phones' decision to
advertise via different vehicles than other firms illustrates the
_____ activities of the marketing mix.
A. price
B. distribution
C. promotion
D. product
E. profit
Hint: 11-04 Examine the development of a marketing strategy;
including market segmentation and marketing mix.
80. Jennifer is highly influenced by actresses in movies and

37. advertisements. She wishes to dress like them and adopt their
lifestyle. When she is shopping, these celebrities are her point
of comparison. In this scenario, actresses in movies and
advertisements are Jennifer's ____.
A. social class
B. focus group
C. reference group
D. social role
E. market segment
Hint: 11-05 Investigate how marketers conduct marketing
research and study buying behavior.
CHAPTER 12
81. During which of the following stages of the product
development process are most new product ideas rejected
because they seem inappropriate for an organization?
A. Idea development
B. Business analysis
C. Test marketing
D. Product development
E. Idea screening
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
82. If a nationwide sandwich shop introduces a new sandwich in
the Midwest to try out its marketing strategy before offering the
product across the country, it is in the _____ stage of the

38. product development process.
A. idea screening
B. commercialization
C. concept testing
D. business analysis
E. test marketing
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
83. During which stage of the product development process does
a firm gear up for full-scale production, distribution, and
promotions of its products?
A. Idea development
B. Commercialization
C. Product development
D. Test marketing
E. Idea screening
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
84. A gallon of milk is an example of a:
A. convenience product.
B. shopping product.
C. specialty product.

39. D. generic product.
E. difficult-to-obtain product.
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
85. Products such as furniture, audio equipment, bicycles, and
clothing are generally classified as:
A. convenience products.
B. specialty products.
C. capital products.
D. luxury products.
E. shopping products.
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
86. 7-UP, Cherry 7-UP Antioxidant, and Diet 7-UP are
products in Dr. Pepper Snapple Group's:
A. 7-UP product line.
B. 7-UP marketing mix.
C. 7-UP product position.
D. 7-UP product width.
E. 7-UP product innovation.
Hint: 12-01 Describe the role of product in the marketing mix;

40. including how products are developed; classified; and
identified.
87. During the _____ stage of the product life cycle, a product's
profits peak and then start to decline.
A. death
B. decline
C. maturity
D. growth
E. introduction
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
88. If a company is eliminating certain models of a product and
cutting back on expenditures, the product is most likely in the
_____ stage of the product life cycle.
A. growth
B. intermediate
C. introduction
D. decline
E. maturity
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
89. WD-40 spray lubricant is a:
A. generic brand.

41. B. private distributor brand.
C. business product.
D. brand name.
E. specialty product.
Hint: 12-01 Describe the role of product in the marketing mix;
including how products are developed; classified; and
identified.
90. Which of the following elements is the most flexible
variable in the marketing mix?
A. Product
B. Production
C. Distribution
D. Promotion
E. Price
Hint: 12-02 Define price and discuss its importance in the
marketing mix; including various pricing strategies a firm might
employ.
91. Dynamix Computers initially charged a low price for its
new computer and then raised the price after gaining a large
market share. Which of the following pricing strategies did
Dynamix Computers use in this scenario?
A. Prestige pricing
B. Symbolic pricing
C. Psychological pricing

42. D. Price skimming
E. Penetration pricing
Hint: 12-02 Define price and discuss its importance in the
marketing mix; including various pricing strategies a firm might
employ.
92. If a cosmetics company is selling an eye shadow priced at
$11.99 rather than $12, it is using:
A. price skimming.
B. penetration pricing.
C. psychological pricing.
D. rational pricing.
E. discount pricing.
Hint: 12-02 Define price and discuss its importance in the
marketing mix; including various pricing strategies a firm might
employ.
93. If a company's goal is to develop an image of having very
high-quality luxury products, it should employ a(n):
A. penetration pricing strategy.
B. price discounting strategy.
C. even/odd pricing strategy.
D. prestige pricing strategy.
E. inclusive pricing strategy.
Hint: 12-02 Define price and discuss its importance in the

43. marketing mix; including various pricing strategies a firm might
employ.
94. The store 47 Avenue buys shoes for men, women, and
children from a large producer and sells them directly to end-
users. In this scenario, 47 Avenue is a(n) ____.
A. manufacturer
B. retailer
C. financier
D. wholesaler
E. customer
Hint: 12-03 Identify factors affecting distribution decisions;
such as marketing channels and intensity of market coverage.
95. If a company buys televisions from a manufacturer and then
sells them to department stores, it is probably a _____.
A. retailer
B. producer
C. consumer
D. wholesaler
E. marketer
Hint: 12-03 Identify factors affecting distribution decisions;
such as marketing channels and intensity of market coverage.
96. Which of the following distribution channels would most
likely be used for fruits and vegetables sold at a roadside stand
or farmer's markets?
A. Agent to wholesaler to retailer

44. B. Producer to consumer
C. Retailer to consumer
D. Merchant to wholesaler
E. Middleman to producer
Hint: 12-03 Identify factors affecting distribution decisions;
such as marketing channels and intensity of market coverage.
97. All of the following activities are associated with
warehousing, EXCEPT:
A. receiving.
B. identifying.
C. producing.
D. dispatching.
E. storing.
Hint: 12-04 Specify the activities involved in promotion as well
as promotional strategies and promotional positioning.
98. Colors, a company manufacturing cosmetics and body care
products, offers retailers a special incentive to carry its new
line of shower gels and body lotions. Which of the following
promotion strategies is being applied by Colors in this
scenario?
A. Pull strategy
B. Advertising
C. Publicity

45. D. Integrated marketing communications
E. Push strategy
Hint: 12-04 Specify the activities involved in promotion as well
as promotional strategies and promotional positioning.
99. When Energia, a soft drink company, seeks to use viral ads
on the Internet to introduce its new beverage to consumers
before introducing it to supermarkets, it uses a:
A. push strategy.
B. pull strategy.
C. publicity campaign.
D. point-of-purchase promotion.
E. skimming strategy.
Hint: 12-04 Specify the activities involved in promotion as well
as promotional strategies and promotional positioning.
100. Bart's Beer targets its 1964 beer at those who want to drink
beer without consuming many calories. This best exemplifies:
A. institutional advertising.
B. promotional positioning.
C. a push strategy.
D. a pull strategy.
E. publicity.
Hint: 12-04 Specify the activities involved in promotion as well
as promotional strategies and promotional positioning.