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Business, Government,
and Society A
Managerial Perspective
12th Edition By George
Steiner, John Steiner
(Test Bank, All
Chapters
100% Original Verified,
A+ Grade)
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Chapter 01 - The Study of Business, Government and Society
Chapter 01
The Study of Business, Government and Society
True / False Questions
1. (p. 1) The U.S. Congress passed the Sherman Antitrust Act in 1890 in an attempt to prevent
monopoly in business.
TRUE
Difficulty: Medium
2. (p. 3) In the U.S., there are about 300 federal regulatory agencies.
FALSE
Difficulty: Easy
3. (p. 4) BCG is the study of business, government and society and its importance for
managers.
FALSE
Difficulty: Easy
4. (p. 4) The primary purpose of a business is to make a profit by providing products that satisfy
human needs.
TRUE
Difficulty: Easy
5. (p. 4) The structures and processes in a society that make and apply policies and rules are
called business.
FALSE
Difficulty: Medium
1-1
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Chapter 01 - The Study of Business, Government and Society
6. (p. 5) An enduring belief about which basic choices in a society are "correct" is called an
idea.
FALSE
Difficulty: Medium
7. (p. 5) A business uses society's resources to create new wealth.
TRUE
Difficulty: Easy
8. (p. 5) Institutions are formal patterns of relations that link people together to accomplish a
goal.
TRUE
Difficulty: Easy
9. (p. 7) A business needs to be responsive to its economic environment but not to its noneconomic environment.
FALSE
Difficulty: Medium
10. (p. 7) The broad duties of a business that are needed to obtain the support of society are
called its social contract.
TRUE
Difficulty: Medium
1-2
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Chapter 01 - The Study of Business, Government and Society
11. (p. 7) The public generally believes that a business has social responsibilities beyond merely
making a profit.
TRUE
Difficulty: Medium
12. (p. 8) The market capitalism model describes business as responding primarily to economic
forces.
TRUE
Difficulty: Medium
13. (p. 8) In the market capitalism model, the "market" acts as a buffer between business and
non-market forces.
TRUE
Difficulty: Medium
14. (p. 9) Karl Marx wrote "The Wealth of Nations".
FALSE
Difficulty: Easy
15. (p. 9) Adam Smith used the word "capitalism" often in his published writings.
FALSE
Difficulty: Hard
16. (p. 11) The dominance model represents business primarily based on the economic forces
that affect it.
FALSE
Difficulty: Medium
1-3
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Chapter 01 - The Study of Business, Government and Society
17. (p. 11) The dominance model states that corporations act primarily for the good of most of
the people in the society.
FALSE
Difficulty: Medium
18. (p. 12) The dominance model believes that society is democratic in its operations.
FALSE
Difficulty: Medium
19. (p. 14) The countervailing forces model states that society is governed primarily by
economic forces.
FALSE
Difficulty: Medium
20. (p. 14 - 15) The countervailing forces model reflects the BGS relationship in undemocratic
societies.
FALSE
Difficulty: Easy
21. (p. 15) The countervailing forces model is essentially the same as the market capitalism
model.
FALSE
Difficulty: Medium
1-4
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Chapter 01 - The Study of Business, Government and Society
22. (p. 16) The stakeholder model states that the immediate priority of a corporation is to benefit
its investors.
FALSE
Difficulty: Easy
23. (p. 17) In the stakeholder model, the interests of stakeholders are valued only to the extent
that they enrich the corporation's investors.
FALSE
Difficulty: Medium
24. (p. 17) The stakeholder model accepts the shareholder-centered view of the corporation as
stated in the market capitalism model.
FALSE
Difficulty: Hard
25. (p. 17) The combined ethical/economic performance of a business can be measured in an
objective way.
FALSE
Difficulty: Medium
1-5
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Chapter 01 - The Study of Business, Government and Society
Multiple Choice Questions
26. (p. 4) A profit-making activity that provides products that are intended to satisfy human
needs is called a(n):
A. Business.
B. Ngo.
C. Government.
D. Society.
Difficulty: Medium
27. (p. 4) The structures and processes in a society that authoritatively make and apply policies
and rules are called:
A. Ideas.
B. Ideologies.
C. Governments.
D. Institutions.
Difficulty: Easy
28. (p. 5) The network of human relations that consists of ideas, institutions and material things
is a(n):
A. Ideology.
B. Society.
C. Theory.
D. Government.
Difficulty: Medium
29. (p. 5) According to the text, an intangible object of thought is a(n):
A. Value.
B. Theory.
C. Theme.
D. Idea.
Difficulty: Easy
1-6
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Chapter 01 - The Study of Business, Government and Society
30. (p. 5) An enduring belief about what important choices in how we live are "correct" is a(n):
A. Value.
B. Institution.
C. Ideology.
D. Idea.
Difficulty: Medium
31. (p. 5) A set of values that create a specific view of the world is a(n):
A. Institution.
B. Ideology.
C. Society.
D. Idea.
Difficulty: Medium
32. (p. 5) These are essential to coordinate the work of individuals who have no personal
relationship with each other.
A. Values.
B. Institutions.
C. Ideologies.
D. Ideas.
Difficulty: Easy
33. (p. 5) A formal pattern of relationships that links people together in order to accomplish a
goal is a(n):
A. Society.
B. Idea.
C. Institution.
D. Ideology.
Difficulty: Medium
1-7
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Chapter 01 - The Study of Business, Government and Society
34. (p. 6) The tangible artifacts of a society that are shaped by ideas and institutions are called:
A. Material things.
B. Markets.
C. Immaterial things.
D. Services.
Difficulty: Medium
35. (p. 7) The basic agreement between a business and its society that defines the broad duties
of the business that are needed to retain the support of society is called a(n):
A. Social contract.
B. Ideology.
C. Institution.
D. Idea.
Difficulty: Medium
36. (p. 7) Which of the following statements about social contracts is true?
A. It defines the broad duties that business must perform to retain society's support.
B. It resides completely in law.
C. It is as clear-cut as the economic forces a business faces.
D. It resides completely in social values.
Difficulty: Hard
37. (p. 8) Which model describes business as responding primarily to economic forces in
society?
A. The market capitalism model.
B. The stakeholder model.
C. The dominance model.
D. The countervailing forces model.
Difficulty: Medium
1-8
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Chapter 01 - The Study of Business, Government and Society
38. (p. 8) Which of the following is not one of the basic BSG models?
A. The market capitalism model.
B. The dominance model.
C. The collective business model.
D. The stakeholder model.
Difficulty: Medium
39. (p. 9) Who wrote "The Wealth of Nations"?
A. Karl marx.
B. John D. Rockefeller.
C. Adam smith.
D. Bill gates.
Difficulty: Easy
40. (p. 9) An economy in which private individuals and corporations own the methods of
production and compete in a free market within limited restraints by government is called:
A. Capitalism.
B. Socialism.
C. Communism.
D. Democracy.
Difficulty: Easy
41. (p. 10) All of the following statements about the laissez-faire concept are true EXCEPT:
A. It stands for the belief that government intervention in the market is undesirable.
B. It is costly because it lessens the efficiency with which free enterprise operates to benefit
consumers.
C. It is unnecessary because market forces are benevolent.
D. It represents primarily the perspective of business critics.
Difficulty: Hard
1-9
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Chapter 01 - The Study of Business, Government and Society
42. (p. 10) The perspective of the market capitalism model leads to all of the following
conclusions EXCEPT:
A. Government regulation should be limited.
B. Markets discipline private economic activity to promote social welfare.
C. The ethical duty of management is to promote the interests of society.
D. The proper measure of corporate performance is profit.
Difficulty: Hard
43. (p. 10) A market economy that contains large businesses that are managed by salaried
managers is called:
A. Socialism.
B. Managerial capitalism.
C. Marxism.
D. Democracy.
Difficulty: Medium
44. (p. 10) In the market capitalism model, the assumption that government should interfere with
the economy only in a limited way is called:
A. Laissez-faire.
B. Managerial capitalism.
C. Marxism.
D. Socialism.
Difficulty: Medium
45. (p. 10) The economic philosophy that rejects the intervention of government in the
operations of markets is called:
A. Socialism.
B. Laissez-faire.
C. Communism.
D. Democracy.
Difficulty: Medium
1-10
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Chapter 01 - The Study of Business, Government and Society
46. (p. 11) In which of the following models do business and government dominate the great
mass of people?
A. The countervailing forces model.
B. The stakeholder model.
C. The market capitalism model.
D. The dominance model.
Difficulty: Medium
47. (p. 12) Proponents of this model focus on the defects and inefficiencies of capitalism.
A. The countervailing forces model.
B. The dominance model.
C. The market capitalism model.
D. The stakeholder model.
Difficulty: Medium
48. (p. 12) This is a recurrent spectacle in which common people who feel oppressed or
disadvantaged in some way seek to take power from a ruling elite that thwarts fulfillment of
the collective welfare.
A. Populism.
B. Collectivism.
C. Laissez-faire.
D. Capitalism.
Difficulty: Medium
49. (p. 14) Which of the following is a model of multiple or pluralistic forces?
A. The countervailing forces model.
B. The stakeholder model.
C. The market capitalism model.
D. The dominance model.
Difficulty: Medium
1-11
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Chapter 01 - The Study of Business, Government and Society
50. (p. 14 - 15) Which of the following statements about the countervailing forces model is true?
A. It represents primarily the perspective of business critics.
B. It reflects the BGS relationship in industrialized nations with democratic traditions.
C. It stands for the belief that government intervention in the market is undesirable.
D. It assumes that individuals can own private property and freely risk investments.
Difficulty: Hard
51. (p. 15) An entity that is either benefited or burdened by the actions of a corporation is called
a(n):
A. Stockholder.
B. Customer.
C. Stakeholder.
D. Supplier.
Difficulty: Easy
52. (p. 15) Which of the following is an example of a secondary stakeholder in a corporation?
A. Customers.
B. Trade associations.
C. Employees.
D. Stockholders.
Difficulty: Easy
53. (p. 15) Which of the following is an example of a primary stakeholder in a corporation?
A. Schools.
B. Customers.
C. Trade associations.
D. Activist groups.
Difficulty: Easy
1-12
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Chapter 01 - The Study of Business, Government and Society
54. (p. 15) The entities that have a relationship with a corporation in such a way that they are
affected immediately and powerfully by the actions of the corporation are called:
A. Primary stakeholders.
B. Activist groups.
C. Secondary stakeholders.
D. Trade associations.
Difficulty: Medium
55. (p. 16) Which of the following statements about the stakeholder model is true?
A. It reorders the priorities of management away from those in the market capitalism model.
B. Its immediate priority is to benefit the society.
C. It is a model of multiple or pluralistic forces.
D. It focuses on the defects and inefficiencies of capitalism.
Difficulty: Hard
56. (p. 17) According to the text, critics of the stakeholder model argue that it:
A. Creates prosperity only at the cost of rising inequality.
B. Represents primarily the perspective of the business and government.
C. Seeks to give power to the powerless by replacing force with ethical duty.
D. Represents a series of recurrent attacks that wind through the Western philosophical
tradition.
Difficulty: Hard
57. (p. 18) The actions taken by the managers of a business that are intended to adapt the
business to changes in the marketplace are called:
A. Theories.
B. Strategic management.
C. Diffusion.
D. The moral imperative.
Difficulty: Medium
1-13
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Chapter 01 - The Study of Business, Government and Society
58. (p. 18) A set of statements that describes patterns of relationships in a complex subject is
a(n):
A. Idea.
B. Value.
C. Theory.
D. Postulate.
Difficulty: Easy
59. (p. 18) All of the following are true about theories EXCEPT:
A. They simplify and organize areas of knowledge.
B. They integrate entire fields of knowledge.
C. They are statements or visions that create insight.
D. They are important in every field.
Difficulty: Medium
60. (p. 19) The study of phenomena that move through time is called:
A. History.
B. Ideology.
C. Idea.
D. Theory.
Difficulty: Easy
Fill in the Blank Questions
61. (p. 4) _____ is a profit-making activity that provides products and services to satisfy human
needs.
Business
Difficulty: Easy
1-14
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Chapter 01 - The Study of Business, Government and Society
62. (p. 4) The _____ refers to structures and processes in a society that makes and applies
policies and rules.
government
Difficulty: Easy
63. (p. 5) A _____ is a network of human relations that consists of ideas, institutions and
material objects.
society
Difficulty: Medium
64. (p. 6) _____ are tangible objects that shape ideas and institutions.
Material things
Difficulty: Medium
65. (p. 9) _____ is an economic system wherein private individuals and corporations own
production methods and attempt to make a profit in a free market with limited interference by
government.
Capitalism
Difficulty: Easy
66. (p. 10) _____ is an economy in which the dominant businesses are large companies run by
managers who are on salary.
Managerial capitalism
Difficulty: Medium
1-15
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Chapter 01 - The Study of Business, Government and Society
67. (p. 15) A _____ is an entity that is either benefited or burdened by the actions of a
corporation.
stakeholder
Difficulty: Medium
68. (p. 15) _____ are entities that have a relationship with a corporation and who are affected
immediately, continuously and powerfully by this corporation.
Primary stakeholders
Difficulty: Easy
69. (p. 18) Actions taken by management to adapt their company to changes in the marketplace
are called _____ management.
strategic
Difficulty: Medium
70. (p. 18) A _____ is a statement that describes relationships in a diffuse subject matter.
theory
Difficulty: Medium
Short Answer Questions
71. (p. 4) What is the definition of a "business?"
Business is defined as a profit-making activity that provides products and services to satisfy
human needs. It is a broad term encompassing a range of actions and institutions. It covers
management, manufacturing, finance, trade, service, investment and other activities.
Difficulty: Medium
1-16
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Chapter 01 - The Study of Business, Government and Society
72. (p. 5) What are values and how do they impact our life in important ways?
Values are enduring beliefs about which fundamental choices in personal and social life are
correct. Cultural habits and norms are based on values.
Difficulty: Easy
73. (p. 5) Explain what is meant by an "ideology" and give two examples of this concept.
Ideologies are bundles of values that create a certain world view. They establish the broad
goals of life by defining what is considered good, true, right, beautiful and acceptable.
Democracy and capitalism are examples of ideologies.
Difficulty: Medium
74. (p. 6) What is meant by the "material things" in a society and why are they important?
Material things are tangible artifacts of a society that shape and are shaped by ideas and
institutions. They include land, natural resources, infrastructure and manufactured goods.
Economic institutions, together with the extent of resources, largely determine the type and
quantity of society's material goods.
Difficulty: Medium
75. (p. 7) What is the "social contract" that exists between a business and the society in which it
operates?
A social contract is an underlying agreement between business and society on basic duties and
responsibilities business must carry out to retain public support. It may be reflected in laws
and regulations. It defines the broad duties that business must perform to retain society's
support. It is partly expressed in law, but it also resides in social values.
Difficulty: Medium
1-17
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Chapter 01 - The Study of Business, Government and Society
76. (p. 8 - 12) Discuss the market capitalism model and explain how it differs from the
dominance model.
The market capitalism model depicts businesses as operating within a market environment,
responding primarily to powerful economic forces. It is substantially sheltered from direct
impact by social and political forces. The market acts as a buffer between business and nonmarket forces. The model incorporates important assumptions. One is that government
interference in economic life is slight. This is called laissez-faire. Another assumption is that
individuals can own private property and freely risk investments.
The dominance model is a basic way of seeing the BGS relationship. It represents primarily
the perspective of business critics. In it, business and government dominate the great mass of
people. Proponents of the dominance model focus on the defects and inefficiencies of
capitalism. They believe that corporations are insulated from pressures holding them
responsible, that regulation by a government in thrall to big business is feeble and that market
forces are inadequate to ensure ethical management.
Difficulty: Hard
77. (p. 9) What is meant by capitalism?
Capitalism is economies in which private individuals and corporations own the means of
production and, motivated by the desire for profit, compete in free markets under conditions
of limited restraint by government.
Difficulty: Easy
78. (p. 10) What is meant by "managerial capitalism?"
Managerial capitalism is a market economy in which the dominant businesses are large firms
run by salaried managers, not smaller firms run by owner-entrepreneurs.
Difficulty: Easy
1-18
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Chapter 01 - The Study of Business, Government and Society
79. (p. 10) How does the term "laissez-faire" describe the market capitalism model?
Laissez-faire is an economic philosophy that rejects government intervention in markets. It
stands for the belief that government intervention in the market is undesirable. It is costly
because it lessens the efficiency with which free enterprise operates to benefit consumers. It is
unnecessary because market forces are benevolent and, if liberated, will channel economic
resources to meet society's needs.
Difficulty: Medium
80. (p. 14 - 15) What is meant by the countervailing forces model in the BGS relationship?
The countervailing forces model depicts the BGS relationship as a flow of interactions among
the major elements of society. It suggests complex exchanges of influence among them,
attributing dominance to none. This is a model of multiple or pluralistic forces. Their strength
waxes and wanes depending on factors such as the subject at issue, the power of competing
interests, the intensity of feeling and the influence of leaders. This model reflects the BGS
relationship in industrialized nations with democratic traditions. It differs from the market
capitalism model, because it opens business directly to influence by non-market forces.
Difficulty: Hard
1-19
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