Essentials of Marketing 16th Edition – Test Bank
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Sample Test
Essentials of Marketing, 16e (Perreault)
Chapter 3 Evaluating Opportunities in the Changing Market
Environment
1) The external market environment is shaped by these four
areas: economics, technology, politics/law, and culture/society.
Answer: TRUE
Explanation: The external market environment includes four
major areas: economic environment, technological environment, political/legal
environment, and cultural/social environment.
Difficulty: 1 Easy
Topic: The Market Environment
Learning Objective: 03-01 know the variables that shape
the environment of marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) The direct market environment includes customers,
competitors, and the IRS.
Answer: FALSE
Explanation: The direct market environment includes
customers, the company, and competitors.
Difficulty: 1 Easy
Topic: The Market Environment
Learning Objective: 03-01 know the variables that shape
the environment of marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) The marketing manager can control the variables in the market
environment.
Answer: FALSE
Explanation: Managers can’t alter the variables of the
market environment.
Difficulty: 2 Medium
Topic: The Market Environment
Learning Objective: 03-01 know the variables that shape
the environment of marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) Company objectives should shape the direction and operation
of the whole business.
Answer: TRUE
Explanation: The objectives of a company should shape the
direction and operation of the whole business.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) Objectives should set the firm’s course.
Answer: FALSE
Explanation: A company must decide where it’s going, or it
may fall into the trap expressed so well by the quotation, “Having lost sight
of our objective, we redoubled our efforts.” Company objectives should shape
the direction and operation of the whole business.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) A mission statement sets out the organization’s basic purpose
for being.
Answer: TRUE
Explanation: Many firms develop a mission statement, which
sets out the organization’s basic purpose for being.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) A mission statement should focus on just the key goals for
the organization.
Answer: TRUE
Explanation: A mission statement should focus on a few key
goals rather than embracing everything.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
8) A mission statement can help a manager decide which
opportunities to pursue and which to screen out.
Answer: TRUE
Explanation: A mission statement should supply guidelines
that help managers determine which opportunities to pursue.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
9) A mission statement sets out the strengths and weaknesses of
a firm as well as the opportunities and threats that it faces.
Answer: FALSE
Explanation: A mission statement is not a substitute for
more specific objectives that provide guidance in screening possible
opportunities.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
10) A mission statement substitutes for more specific
objectives.
Answer: FALSE
Explanation: A mission statement is not a substitute for
more specific objectives.
Difficulty: 2 Medium
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
11) Trying to maximize the short-run return on investment may
not be compatible with a company’s other objectives.
Answer: TRUE
Explanation: When there are a number of specific
objectives stated by top management, it is critical that they be compatible.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
12) Company objectives should lead to a hierarchy of marketing
objectives.
Answer: TRUE
Explanation: Firms need a hierarchy of objectives, moving
from company objectives to marketing department objectives.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
13) The objectives of a firm should direct the operation of the
marketing department but aren’t important to the rest of the business.
Answer: FALSE
Explanation: Firms need a hierarchy of objectives, moving
from company objectives to marketing department objectives. Firms also need
objectives for each of the Four Ps.
Difficulty: 1 Easy
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
14) Good marketing objectives should be ambitious and almost
impossible to achieve.
Answer: FALSE
Explanation: Marketing objectives should be realistic and
achievable. Overly ambitious objectives are useless if the firm lacks the
resources to achieve them.
Difficulty: 2 Medium
Topic: Objectives Should Set Firm’s Course
Learning Objective: 03-02 understand why company
objectives are important in guiding marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
15) Attractive opportunities should make use of a firm’s
resources and its unique strengths.
Answer: TRUE
Explanation: Every firm has some unique resources, and
opportunities come from making use of these strengths.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
16) A large producer with economies of scale always has a
competitive advantage over smaller firms.
Answer: FALSE
Explanation: Smaller firms can be at a great cost
disadvantage if they try to win business from larger competitors. On the other
hand, new or smaller firms sometimes have the advantage of flexibility.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
17) If the cost of production per unit goes down as the quantity
produced increases, small producers can be at a great cost disadvantage.
Answer: TRUE
Explanation: Smaller firms can be at a great cost
disadvantage when the cost of producing and selling each unit decreases as the
quantity increases.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
18) As compared to larger competitors, smaller firms benefit
from lower unit costs, which they achieve with lower sales volumes.
Answer: FALSE
Explanation: Smaller firms can be at a great cost
disadvantage if they try to win business from larger competitors when the cost
of producing and selling each unit decreases as the quantity increases.
Difficulty: 2 Medium
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
19) Smaller producers always have a great advantage in competing
with larger producers because of their flexibility.
Answer: FALSE
Explanation: Sometimes but not always, new or smaller
firms have the advantage of flexibility.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
20) The opportunities a firm decides to pursue may depend on its
resources and capabilities.
Answer: TRUE
Explanation: The opportunities a firm decides to pursue
may depend on its resources and capabilities.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
21) Good relations with intermediaries, good locations, and good
salespeople are some of the many resources of a firm that should be evaluated
when searching for new opportunities.
Answer: TRUE
Explanation: When introducing new products, good relations
with wholesalers and retailers can also be an important resource.
Difficulty: 1 Easy
Topic: Company Resources May Limit Search for
Opportunities
Learning Objective: 03-03 see how the resources of a firm
affect the search for opportunities.
Bloom’s: Remember
AACSB: Reflective Thinking; Analytical Thinking
Accessibility: Keyboard Navigation
22) The competitive environment has no relationship with the
number and types of competitors the marketing manager must face and how they
may behave.
Answer: FALSE
Explanation: The number and types of competitors the
marketing manager must face and how they may behave is affected by the
competitive environment.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
23) Although the marketing manager cannot control the
competitive environment, he or she can choose strategies that will avoid
head-on situations.
Answer: TRUE
Explanation: Although marketing managers usually can’t
control the competitive environment factors, they can choose strategies that
avoid head-on competition.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
24) When the competitive environment moves toward pure
competition, producers offer very different products that consumers do not
perceive as substitutes for each other.
Answer: FALSE
Explanation: When most product-markets head toward pure
competition, competitors offer very similar products that consumers see as
close substitutes.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
25) Over the long run, most product-markets tend toward
monopolistic competition.
Answer: FALSE
Explanation: Many product-markets head toward pure
competition—or oligopoly—over the long run.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
26) In market-directed economies, unregulated monopolies are
rare.
Answer: TRUE
Explanation: Monopoly situations, in which one firm
completely controls a broad product-market, are rare in market-directed
economies.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking; Analytical Thinking
Accessibility: Keyboard Navigation
27) In monopolistic competition, one firm completely controls a
broad product-market.
Answer: FALSE
Explanation: In monopolistic competition, each competitor
tries to get control in its own target market. But competition still exists
because some customers see the various alternatives as substitutes.
Difficulty: 2 Medium
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
28) In monopolistic competition, managers sometimes try to
differentiate very similar products by relying on promotion or other elements
of the marketing mix.
Answer: TRUE
Explanation: In monopolistic competition, marketing
managers sometimes try to differentiate very similar products by relying on
other elements of the marketing mix.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
29) In a competitor analysis, a current (or planned) target
market and marketing mix is compared with what competitors are currently doing
(or are likely to do).
Answer: TRUE
Explanation: The basic approach to competitor analysis is
to compare the strengths and weaknesses of the current (or planned) target
market and marketing mix with what competitors are currently doing or are
likely to do.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
30) Competitor analysis is an organized approach for evaluating
the strengths and weaknesses of current or potential competitors’ marketing
strategies.
Answer: TRUE
Explanation: The basic approach to competitor analysis is
to compare the strengths and weaknesses of the current target market.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
31) The major shortcoming of competitor analysis is that it
focuses on the weaknesses of competitors but ignores their strengths.
Answer: FALSE
Explanation: Competitor analysis is an organized approach
for evaluating the strengths and weaknesses of competitors’ marketing
strategies.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
32) The first step in a competitor analysis is to identify
potential competitors.
Answer: TRUE
Explanation: The initial step in competitor analysis is to
identify potential competitors.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
33) Competitive rivals are always easy to identify.
Answer: FALSE
Explanation: Competitive rivals offering similar products
are usually easy to identify, but not always.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
34) Market share is an important marketing metric used by
marketing managers to track how well their product is doing in a particular
market.
Answer: TRUE
Explanation: Market share is the portion of total sales in
a product category accounted for by a particular brand. Marketing managers
often track market share over time to monitor how well a product is doing in a
particular market.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
35) Many people think that it is unethical to spy on competitors
to obtain their trade secrets, but it is perfectly legal.
Answer: FALSE
Explanation: Beyond the moral issues, spying on
competitors to obtain trade secrets is illegal.
Difficulty: 1 Easy
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Ethics
Accessibility: Keyboard Navigation
36) Spying on competitors to obtain trade secrets raises moral
issues, but it is not illegal.
Answer: FALSE
Explanation: Beyond the moral issues, spying on
competitors to obtain trade secrets is illegal.
Difficulty: 2 Medium
Topic: Analyzing Competitors and the Competitive
Environment
Learning Objective: 03-04 know how to conduct a competitor
analysis and how different types of competition affect strategy planning.
Bloom’s: Remember
AACSB: Ethics
Accessibility: Keyboard Navigation
37) The technological environment includes such things as national
income, economic growth, and inflation.
Answer: FALSE
Explanation: The economic environment refers to
macro-economic factors that include national income, economic growth, and
inflation.
Difficulty: 2 Medium
Topic: The Economic Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
38) Interest rates usually decrease during periods of inflation.
Answer: FALSE
Explanation: Interest rates usually increase during
periods of inflation.
Difficulty: 2 Medium
Topic: The Economic Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
39) The inflation rate experienced by the United States in
recent years was just about the highest in the world.
Answer: FALSE
Explanation: In some Latin American countries, inflation
has exceeded 400 percent a year in recent years. In contrast, recent U.S.
levels, 3 to 20 percent, seem low.
Difficulty: 1 Easy
Topic: The Economic Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
40) Compared to some countries in Latin America, the rate of
inflation in the U.S. is low.
Answer: TRUE
Explanation: In some Latin American countries, inflation
has exceeded 400 percent a year in recent years. In contrast, recent U.S.
levels, 3 to 20 percent, seem low.
Difficulty: 1 Easy
Topic: The Economic Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
41) Technology is the application of science to convert an
economy’s resources to output.
Answer: TRUE
Explanation: Technology is the application of science to
convert an economy’s resources to output.
Difficulty: 1 Easy
Topic: The Technological Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
42) Technology affects marketing through new products and new
processes.
Answer: TRUE
Explanation: Technology affects marketing in two basic
ways: opportunities for new products and the development of new processes.
Difficulty: 1 Easy
Topic: The Technological Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
43) Technology provides new opportunities and new challenges for
marketers.
Answer: TRUE
Explanation: Marketing managers that anticipate changes in
technology will be in a better position to take advantage of the opportunities
that come from new technology and the ethical challenges new technologies may
represent.
Difficulty: 1 Easy
Topic: The Technological Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
44) When a machine operates like a human with respect to
learning and decision making, it is referred to as artificial intelligence.
Answer: TRUE
Explanation: Artificial intelligence (AI) refers to having
machines operate like humans with respect to learning and decision making.
Difficulty: 1 Easy
Topic: The Technological Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
45) Artificial intelligence and intelligent agents are two
separate and distinct technologies.
Answer: FALSE
Explanation: Artificial intelligence is implemented by an
intelligent agent, which is a device that observes an environment and acts to
achieve a goal.
Difficulty: 2 Medium
Topic: The Technological Environment
Learning Objective: 03-05 understand how the economic and
technological environments can affect strategy planning.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
46) Nationalism may affect marketing strategy planning by
determining to whom and how much a firm may sell.
Answer: TRUE
Explanation: Nationalism can affect macro-marketing
systems and how marketing managers work. It can reduce sales, or even block all
marketing activity.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
47) Placing the interests of individual consumers before the
interests of business is nationalism.
Answer: FALSE
Explanation: Nationalism is placing a country’s interests
before everything else.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
48) Nationalism—or the emphasis on a country’s interests before
anything else—may affect the work of some marketing managers.
Answer: TRUE
Explanation: Nationalism can affect how marketing managers
work as well.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
49) Strong sentiments of nationalism facilitate growth in
importing and exporting.
Answer: FALSE
Explanation: Strong sentiments of nationalism can reduce
sales, or even block all marketing activity, in some international markets.
Difficulty: 3 Hard
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
50) Marketers no longer encounter differences among European
countries.
Answer: FALSE
Explanation: Although Europe is becoming a large unified
market, marketers may still encounter differences among European countries.
Difficulty: 2 Medium
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the political
and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
51) The elimination of separate barriers to inter-European trade
is making Europe a large unified market.
Answer: TRUE
Explanation: Important dimensions of the political
environment are likely to be similar among nations that have banded together to
have common regional economic boundaries—one such example being the unification
of Europe.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
52) Many European Union member countries use the same currency,
the euro.
Answer: TRUE
Explanation: Many of the member countries of the EU use
the euro.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the political
and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
53) The political environment may either block or promote new
marketing opportunities.
Answer: TRUE
Explanation: The political environment can affect
opportunities at a local or international level.
Difficulty: 1 Easy
Topic: The Political Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
54) A basic idea in the legal environment in the United States
is that attempts by business to limit competition are considered contrary to
the public interest.
Answer: TRUE
Explanation: American economic and legislative thinking is
based on the idea that attempts by business to limit competition are considered
contrary to the public interest.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
55) Businesses and individual managers are subject to both
criminal and civil laws.
Answer: TRUE
Explanation: Businesses and individual managers are
subject to both criminal and civil laws.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
56) A manager could be fined for violating the antimonopoly
laws, but he or she could not be sent to jail.
Answer: FALSE
Explanation: Managers are subject to both criminal and
civil laws, and where criminal law applies, jail sentences can be imposed.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the political
and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
57) The Sherman Act deals with tying contracts, exclusive
dealing contracts, and price discrimination by manufacturers.
Answer: FALSE
Explanation: As stated in Exhibit 3–3, the Sherman Act
deals with monopoly or conspiracy to control a product, distribution channels,
or prices.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
58) The Clayton Act deals with tying contracts, exclusive
dealing contracts, and price discrimination by manufacturers.
Answer: TRUE
Explanation: As stated in Exhibit 3–3, the Clayton Act
deals with tying contracts, exclusive dealing contracts, and price
discrimination by manufacturers.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
59) The Clayton Act focuses on practices that may substantially
lessen competition, such as tying contracts, exclusive dealing contracts, and
price discrimination by manufacturers.
Answer: TRUE
Explanation: As stated in Exhibit 3–3, the Clayton Act
focuses on practices that may substantially lessen competition, such as tying
contracts, exclusive dealing contracts, and price discrimination by
manufacturers.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
60) The Magnuson-Moss Act regulates product warranties.
Answer: TRUE
Explanation: As stated in Exhibit 3–3, the Magnuson-Moss Act
regulates product warranties.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
61) Deceptive packaging and branding are prohibited by the
Magnuson-Moss Act.
Answer: FALSE
Explanation: As stated in Exhibit 3–3, the Wheeler-Lea
Amendment (1938) deals with deceptive packaging or branding, deceptive ads or
selling claims, and deceptive pricing.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
62) Before the Pure Food and Drug Act was passed, it was assumed
that common law and the warning “let the buyer beware” would take care of
consumers.
Answer: TRUE
Explanation: Before the Pure Food and Drug Act, it was
assumed that common law and the old warning “let the buyer beware” would take
care of consumers.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
63) Laws such as the Pure Food and Drug Act were passed because
pro-competition legislation did not protect consumers very well in some areas.
Answer: TRUE
Explanation: Focusing only on competition didn’t protect
consumers very well in some areas.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
64) The Consumer Product Safety Act provides for the creation of
safety standards but has no power to set penalties for failure to meet these
standards.
Answer: FALSE
Explanation: The Consumer Product Safety Act set up the
Consumer Product Safety Commission, which has the power to set safety standards
and can impose penalties for failure to meet these standards.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
65) The Consumer Product Safety Commission tries to encourage
safe product design, but the commission has almost no power to deal with unsafe
products.
Answer: FALSE
Explanation: The Consumer Product Safety Act set up the
Consumer Product Safety Commission, which has the power to set safety standards
and can impose penalties for failure to meet these standards.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
66) In the United States, the Consumer Product Safety Commission
sets and enforces product safety standards.
Answer: TRUE
Explanation: The Consumer Product Safety Act set up the
Consumer Product Safety Commission, which has the power to set safety
standards.
Difficulty: 2 Medium
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
67) Because the Consumer Product Safety Commission has no power
to force a product off the market, safety is not a very important consideration
in product design.
Answer: FALSE
Explanation: The commission has the power to force a
product off the market or require expensive recalls to correct problems, so it
is obvious that safety must be considered in product design.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
68) Marketers should be aware of federal legislation, as well as
state and local laws, when planning marketing strategy.
Answer: TRUE
Explanation: Besides federal legislation, marketers must
be aware of state and local laws.
Difficulty: 1 Easy
Topic: The Legal Environment
Learning Objective: 03-06 know how elements of the
political and legal environment affect marketing strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
69) The cultural and social environment affects how and why
people live and behave as they do.
Answer: TRUE
Explanation: The cultural and social environment affects
how and why people live and behave as they do.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Diversity
Accessibility: Keyboard Navigation
70) The cultural and social environment refers to where people
live and their income.
Answer: FALSE
Explanation: The cultural and social environment affects
how and why people live and behave as they do.
Difficulty: 2 Medium
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and social
environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Diversity
Accessibility: Keyboard Navigation
71) The rate of growth of the U.S. population is lower than the
rate of growth of some other countries’ populations.
Answer: TRUE
Explanation: The world’s population is growing fast, but
that population growth varies dramatically. For example, between 2013 and 2025,
population is projected to grow 39 percent in Ethiopia and 35 percent in Nigeria.
During this same time, growth will be about 9 percent in the United States.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
72) There are over 316 million people living in the United
States.
Answer: TRUE
Explanation: The United States has a current population of
over 316 million people.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
73) The U.S. population is over 316 million people, and the
world population is more than 7 billion people.
Answer: TRUE
Explanation: With a current population of over 316
million, the United States makes up only 4.9 percent of the world’s population
of over 7 billion people.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
74) India has more people than the United States, and China has
more people than India.
Answer: TRUE
Explanation: As stated in Exhibit 3–4, India has more
people than the United States, and China has more people than India.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
75) Less-developed countries usually experience the slowest
population growth.
Answer: FALSE
Explanation: The world’s population is growing fast, but
that population growth varies dramatically from country to country. For
example, between 2013 and 2025, the population is projected to grow more than
35 percent or more in both Ethiopia and Nigeria.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
76) In Argentina, Israel, and Singapore, for example, less than
20 percent of people live in urban areas.
Answer: FALSE
Explanation: More than 90 percent of the population in
Japan, Singapore, Israel, and Argentina live in urban areas.
Difficulty: 2 Medium
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
77) The concentration of people in major cities often simplifies
Place and Promotion decisions.
Answer: TRUE
Explanation: The extent of urbanization varies widely and
the concentration of people in major cities often simplifies Place and
Promotion decisions, prompting increased interest in international markets.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
78) When considering international markets, income is often one
of the most important demographic dimensions.
Answer: TRUE
Explanation: Income is often one of the most important
demographic dimensions when considering international markets.
Difficulty: 2 Medium
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking; Analytical Thinking
Accessibility: Keyboard Navigation
79) When considering international markets, income is usually
not an important demographic dimension.
Answer: FALSE
Explanation: Income is often one of the most important
demographic dimensions when considering international markets.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
80) Both GDP and GNI are measures of national income.
Answer: TRUE
Explanation: There are a variety of different measures of
national income. The most widely used are GDP and GNI.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
81) Gross domestic product is the total dollar value of a
country’s exports during a one-year period.
Answer: FALSE
Explanation: Gross domestic product (GDP) is the total
market value of all goods and services provided in a country’s economy in one
year.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
82) Gross domestic product includes foreign income earned in a
country.
Answer: TRUE
Explanation: Gross domestic product includes income earned
by foreigners who own resources in that nation.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
83) GNI is the total market value of all goods and services
provided in a country’s economy in a year by both residents and nonresidents of
that country.
Answer: FALSE
Explanation: Gross domestic product (GDP) is the total
market value of all goods and services provided in a country’s economy in a
year by both residents and nonresidents of that country.
Difficulty: 2 Medium
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
84) GDP income measures can give the impression that people in
less-developed nations have more income than they really do.
Answer: TRUE
Explanation: Using GDP income measures can give the
impression that people in less-developed countries have more income than they
really do.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
85) GNI income measures can give the impression that people in
less-developed nations have less income than they really do.
Answer: FALSE
Explanation: Using GDP income measures can give the
impression that people in less-developed countries have more income than they
really do.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
86) Generally, the nations with the fastest growth in GDP are
not the nations with the largest GDPs.
Answer: TRUE
Explanation: Exhibit 3–4 gives an estimate of GDP for each
country listed. The more developed industrial nations, including the U.S.,
Germany, and Japan, have the largest GDPs; but it is the developing nations who
have the fastest rate of growth in GDP.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
87) The fastest rate of growth in GDP is occurring in the
nations with the largest current GDP.
Answer: FALSE
Explanation: Exhibit 3–4 gives an estimate of GDP for each
country listed. The fastest rate of growth in GDP is occurring in the
developing nations, not the more developed industrial nations.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
88) Even though the more developed industrial nations don’t have
the largest populations, they do have the biggest share of the world’s GDP.
Answer: TRUE
Explanation: The more developed industrial nations
(including the United States, Japan, and Germany) do not have the largest
populations, but they account for the biggest share of the world’s GDP.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
89) Countries where gross national income (GNI) per capita is
low do not offer any opportunities for marketers.
Answer: FALSE
Explanation: Many managers, however, see great potential
and less competition where GNI per capita is low.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
90) Because almost all of the world’s population can read and
write, international marketers have no problems in communicating with potential
customers, no matter where they live.
Answer: FALSE
Explanation: The United Nations estimates that 16 percent
of adults (age 15 or older) in the world cannot read and write.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and social
environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
91) Adoption of the Internet and cell phones is having its
greatest impact in developing countries.
Answer: TRUE
Explanation: Adoption of cell phone and Internet usage
varies across the globe. While penetration is still low in many of the poorest
nations, those countries are experiencing very fast adoption rates.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Understand
AACSB: Technology
Accessibility: Keyboard Navigation
92) California is the U.S. state with the largest population.
Texas is a distant second.
Answer: TRUE
Explanation: As shown in Exhibit 3–5, California is the
state with the largest population, and Texas is a distant second.
Difficulty: 1 Easy
Topic: The Cultural and Social Environment
Learning Objective: 03-07 understand the cultural and
social environment and how demographic trends affect strategy planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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