Chapter 1 Understanding the Canadian Business Systems3.amazonaws.com/prealliance_oneclass_sample/WPGOLYDYX5.pdf · Chapter 1 Understanding the Canadian Business System 1) ... following

Chapter 1 Understanding the Canadian Business System1) In the story "Voisey's Bay", Inco bought controlling interest in the site upon discovery of one of the world'srichest nickel finds. There were delays in development of the site because:A) of a time-consuming and expensive environmental review process, along with difficult negotiationswith the government of Newfoundland

B) Inco found a richer nickel mine in MalaysiaC) the company could not make a profitD) Inco didn't have enough capitalE) Inco closed its Newfoundland office

Answer: ADiff: 2 Page Ref: 5

2) Examples of businesses include the following, except:A) large corporations like Canadian Pacific or Alcan AluminumB) local supermarketsC) non-profit organizationsD) one-person businesses, like barbershopsE) farms

Answer: CDiff: 1 Page Ref: 6

3) Deborah wants to set up a business, but also wants to be aware of the roles business should take. Which ofthe following would Deborah not consider to be a role of business firms in the Canadian economy?A) regulate the marketplace with trade barriersB) provide employment for citizensC) provide community leadershipD) provide profit incentive for business ownersE) support charitable organizations


4) Profit is:A) the level of expensesB) the amount of salesC) what remains after business expenses are subtracted from business revenuesD) the value of shares in a companyE) the taxes a company pays


5) This week, Mary's Variety had sales of $4 000, employees were paid$1 000, cost of goods was $1 500, and rentwas $500. Profit for the week was:A) $3 000B) $4 000C) $1 000D) $1 500E) $2 000


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6) Most of the goods and services consumed in Canada are produced by:A) the Canadian governmentB) overseas firmsC) business firmsD) countries of the Pacific RimE) the U.S. economy


7) An economic system is:A) the way in which a nation allocates its resources among its citizensB) a government decree that requires certain goods and services to be providedC) a large government department that oversees how the economy is runningD) a long standing agreement between citizens and governments on how an economy is runE) an agreement between countries that deal with free trade


8) Jose is from Guatemala. He is unsure about the nature of business in Canada. You point out that a typicalbusiness in Canada operates the same as a typical business in:A) JapanB) EnglandC) PeruD) FranceE) People's Republic of China

Answer: BDiff: 1 Page Ref: 7

9) All of the following are factors of production except:A) technologyB) natural resourcesC) capitalD) entrepreneursE) labour


10) Natural resources, as a factor of production for mining, is a practical consideration when a mining companyconsiders:A) the amount of capital required to build the mineB) the ease with which ore could be minedC) the number of miners available to mine the oreD) the number of customers who want to buy oreE) the profit that could be made from mining the ore


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11) Natural resources include:A) land, water, and gasolineB) the funds needed to start and operate a businessC) land, water, and mineral depositsD) a large number of people with entrepreneurial tendenciesE) the mental and physical capabilities of people


12) Labour includes:A) everyone in the businessB) only non-unionized employeesC) only workers who do physical workD) only managersE) only unionized employees


13) A factor that contributes directly to improving labour as a factor of production is:A) creation of more manual-labouring jobsB) better education for more of the populationC) free tuition at post-secondary educational institutionsD) increased purchasing power by employeesE) programs that decrease unemployment


14) Susan wants to set up a small business. She should know that a major source of capital for most businesses,especially small businesses, is:A) business revenueB) loans from banksC) investorsD) personal investmentE) short-term loans

Answer: DDiff: 1 Page Ref: 8

15) Marie owns a small restaurant and is thinking of expanding it to another location. She is best described asa(n):A) capitalistB) administratorC) entrepreneurD) venture capitalistE) employee


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16) Entrepreneurs are important because they:A) are good at making decisionsB) make lots of moneyC) take risks to start new businessesD) are richE) are good managers


17) Bruce is wondering if he has the characteristics to be a good entrepreneur. You indicate that all of thefollowing are characteristics of entrepreneurs except:A) an initiatorB) a profit seekerC) a calculated risk takerD) a desire for a low-risk jobE) someone who seeks opportunity


18) An individual who organizes the resources to produce goods and services to earn a profit, but also runs therisk of failure refers to:A) natural resourcesB) capitalismC) entrepreneursD) communismE) socialism


19) A command economy is:A) one in which the government controls all or most factors of productionB) one where there is a mix of government regulation and free enterpriseC) one in which the market directs what is made and in what quantityD) the type of economy found in RussiaE) one in which customers demand what new products are to be made


20) The economic system in which producers and consumers control production and allocation decisionsthrough supply and demand is called:A) socialismB) communismC) centrally planned economyD) market economyE) privatization


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21) You are involved in a debate about communism. You must know that a major drawback to communism asan economic system is that:A) communism is becoming less attractiveB) government operated enterprises are inefficient because of political considerationsC) individuals contribute according to their abilityD) government control of the factors of production is only temporaryE) individuals receive economic benefits according to their needs


22) Command economies are most likely to be found in:A) JapanB) communist and socialist nationsC) capitalistic societiesD) western EuropeE) the newly emerging Asian countries


23) Which of the following is not true in the communist economic system?A) the government owns and operates all the industriesB) communist nations often expand their overall production rapidly because of centralized planningC) there is limited or no free enterpriseD) most government-operated enterprises are inefficientE) centralized planning emphasis on capital equipment and military hardware has caused shortages ofconsumer goods

Answer: BDiff: 3 Page Ref: 9-11

24) Stanislav lives in a country where all the sources of production are owned by the government. The economysystem in his country is most likely:A) fascismB) socialismC) privatizationD) mixed marketE) communism

Answer: EDiff: 2 Page Ref: 9

25) Which of the following is not true?A) No country in the world has a purely communistic economy.B) The United States is not a purely capitalistic economy.C) No country in the world has a purely capitalistic economy.D) The People's Republic of China and Cuba are purely communistic economies today.E) No country in the world has a purely socialistic economy.

Answer: DDiff: 3 Page Ref: 9-13

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26) What do the nations of Cuba, North Korea, Vietnam, and the People's Republic of China have in common?A) socialismB) mercantilismC) mixed economyD) market economyE) communism


27) An economic system that permits private ownership and control of small businesses but where thegovernment is in control of large critical industries is known as:A) a mixed economyB) socialismC) mercantilismD) communismE) capitalism


28) Socialism is best described as:A) a market economy in which markets decide what, when, and how much to produceB) a kind of command economy in which the government owns and operates large critical industriesC) an economic system with elements of both a planned economy and a market economyD) an economy that is free from any regulation or planningE) a kind of command economy in which the government owns and operates all industries


29) Socialist economies can stifle economic growth because:A) they are actually command economiesB) management positions in state-controlled industries are often filled on the basis of politicalconsiderations

C) they encourage unionization of employeesD) they have too few regulations concerning product safetyE) socialist economies actually have the best record, and they do not stifle economic growth


30) Market economies have all of the following characteristics, except that they:A) allow businesses to charge whatever they want for their products and servicesB) require government intervention in order to prosperC) encourage entrepreneurship by offering profits as an incentiveD) allow customers free choiceE) rely on markets, not governments, to decide what, when, and for whom to produce


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31) Market economies are the best for small businesses because they:A) allow small businesses to failB) allow the business to do whatever it wantsC) provide small businesses with lots of government assistance and protectionD) provide a central plan in which small businesses can easily prosperE) protect small businesses from the power of large corporations


32) B2B has become popular in strategic business thinking. Which of the following statements is NOT true aboutB2B?A) B2B involves businesses joining together to create e-commerce companies.B) B2B stands for business-to-business electronic commerce.C) B2C transactions far exceed B2B transactions in dollar value.D) B2B activity is good news for consumers because it helps to make businesses more efficient, which willallow them to reduce their costs. That, in turn, will allow them to reduce prices.

E) B2B transactions exceed $200 billion.Answer: CDiff: 3 Page Ref: 11

33) Canada is home to a(n) ________ economy.A) commandB) mixedC) oligopolisticD) fairE) market


34) The role of government in our economic system includes all of the following except:A) taxation agentB) competitorC) regulatorD) customerE) innovator

Answer: EDiff: 2 Page Ref: 13-15

35) Sandy is responsible for monitoring compliance to regulations in her company. She needs to know that theimportant areas of regulation are:A) protecting shareholder rights and business lawB) protecting social goals, ecological regulations and shareholder rightsC) protecting competition, consumer protection, social goals and protecting the environmentD) protecting competition, consumer protection and environmental regulationsE) protecting competition and environmental regulations


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36) John is interested in preserving social goals in Canada. However, he is not certain which goals are subject toregulation. You point out that the social goals that governments regulate are the following except:A) a safe workplaceB) employment insuranceC) decent pensionsD) motor vehiclesE) public health-care system with wide access


37) Madeline is responsible for answering questions about what her company can do under the CompetitionAct. Which one of the following is allowed under the Act?A) pricing products unreasonably low to eliminate competitionB) forming a merger or a monopoly that lessens competitionC) refusal to sell to a retailer who, in turn, sells the product significantly below the suggested retail priceD) giving selective allowances and rebates to cover advertising expenses to specific retailersE) the return of surpluses by credit unions to its members


38) Why are income taxes called progressive taxes?A) the more one makes, the higher the income tax rate that is applied to one's entire incomeB) because poorer people spend proportionally more on necessitiesC) the more one makes, a greater proportion of additional amounts is paid in income taxesD) the more one progresses in a company, the more one pays in income taxesE) because it increases total consumption


39) Why are sales taxes called regressive taxes?A) because the more one makes, the lower the rate of sales tax that is applied to one's purchasesB) because it applies to sales taxesC) because they discourage the purchase of some productsD) because food and drugs are often exemptE) because poorer people pay a higher percentage of income than richer people


40) Incentive programs are designed to:A) create "corporate welfare bums"B) encourage families to have more babiesC) encourage businesses to locate in depressed parts of the countryD) encourage families to move to depressed parts of the countryE) encourage businesses to make unprofitable products


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41) The textbook describes three main ways in which business can influence government policy. They are:A) advertising, trade associations, political contributionsB) political contributions, letters to the editors of newspapers, advertisingC) lobbyists, political contributions, advertisingD) trade associations, lobbyists, letters to the editors of newspapersE) advertising, lobbyists, trade associations


42) A semiconductor firm is opening a new manufacturing facility in Canada and is looking for ways to betterinfluence government policy in their industry. It could:A) assure worker safety in business facilitiesB) obtain a government contract for supplies and equipmentC) keep manufacturing plants in CanadaD) obtain export business for the new facilityE) hire a lobbyist or join a trade association


43) As part of the Lobbyist Registration Act, lobbyists are required to:A) attend 50 percent of all sessions in the House of CommonsB) register with the Department of FinanceC) register with the Registrar of LobbyistsD) register with the Department of Consumer and Commercial RelationsE) register with the Department of Lobbyists


44) The microelectronics manufacturers want to set up a trade association. They need to know that tradeassociations do all but which one of the following?A) conduct training programs relevant to the industryB) act as an industry lobby to influence legislationC) publish newsletters featuring articles on new productsD) allocate markets for their membersE) arrange trade shows


45) The economic term "demand" refers to:A) the stock exchangeB) the willingness and ability of buyers to purchase a product or serviceC) the willingness of government to sell goods and servicesD) the willingness and ability of producers to purchase a product or serviceE) the willingness of sellers to sell goods


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46) The law of demand states:A) buyers will purchase more of a product as the price fallsB) producers will offer more of a product as the price risesC) producers will offer more of a product as the price fallsD) buyers will purchase more of a product as the price risesE) that demand and supply meet at an equilibrium point


47) The law of supply states:A) producers will offer more of a product as the price risesB) that demand and supply meet at an equilibrium pointC) producers will offer more of a product as the price fallsD) buyers will purchase more of a product as the price fallsE) buyers will purchase more of a product as the price rises


48) Ian, the owner of 5-for-1 Pizza, has noticed that when he increases the price of his pizzas by $2.00, thenumber of pizzas that he sells drops by 30 percent. Ian has discovered:A) the law of demandB) the law of supply and demandC) the demand curveD) the supply curveE) the law of supply


49) Kristine discovered that when she dropped the price of her paintings, more people were asking her to createpaintings for them. Kristine is experiencing:A) economic justiceB) market price variationsC) mercantilismD) the law of demandE) the law of supply


50) A demand and supply schedule:A) describes the supply for a productB) is the contractual agreement made between the buyer and sellerC) describes the demand for a productD) allows one to assess the relationship between different levels of demand and supply at different pricesE) is a formula by which one determines market equilibrium


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51) Which term is used to identify the willingness and ability of buyers to purchase a product?A) obligationB) prosperityC) demandD) profitsE) wealth


52) A major producer of automobile batteries notes that the price of batteries has risen over each of the past threeyears. The firm decides to expand its battery production. This illustrates:A) the law of market priceB) the law of demandC) the law of supplyD) the law of supply and demandE) the law of equilibrium


53) In the production of wheat, the law of demand:A) states that buyers will purchase more wheat as the price decreasesB) occurs when farmers produce a bumper crop of wheatC) refers to the exchange process between the farmer and the buyer of wheatD) reflects the farmer's desire to offer more wheat as demand increasesE) reflects the farmer's desire to increase wheat production


54) A major producer of televisions is experiencing difficulty in selling its products. A corporate decision ismade to lower the price, anticipating that sales will increase as a result of the lower price. This illustrates:A) the law of supply and demandB) the law of supplyC) the law of market priceD) the law of equilibriumE) the law of demand


55) The point at which the quantity of a product or service demanded is the same as the quantity supplied iscalled:A) the shortage pointB) the supply pointC) the surplus pointD) the demand pointE) the equilibrium point


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56) On a graph showing the supply curve and the demand curve, the point at which the two curves intersect iscalled:A) the crossoverB) the equilibrium priceC) the law of demandD) the junctionE) the break-even point


57) At the point where the supply curve crosses the demand curve on a graph, it could be said that:A) no profits will be madeB) all products offered for sale will be soldC) no sales will be madeD) a surplus will resultE) a shortage will result


58) The points on a curve showing the relationship between the price of a good or service and the quantity ofthat good or service willing to be produced is known as the:A) equilibrium curveB) variable price curveC) demand curveD) balance curveE) supply curve


59) The points on a curve showing the relationship between the price of a good or service and the quantity ofthat good or service which customers will purchase is known as the:A) variable price curveB) supply curveC) demand curveD) equilibrium curveE) balance curve


60) Equilibrium in the market is attained when:A) the laws of supply and demand interact to set the price and quantity of a product at which buyers andsellers agree

B) no single firm has more than 50 percent of the marketC) there are no dramatic changes in the market over timeD) suppliers are willing to produce the quantity demandedE) consumers are willing to pay the price being charged


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61) If the equilibrium point of 5-for-1 Pizza is 2 000 pizzas per week and $10.00 per pizza, and the ownerdecides to make 2 200 pizzas and sell them at the same price, what is the likely outcome?A) the business will have less expenses and also have greater profitB) the business will have a surplusC) the business will have less expensesD) the business will have shortageE) the business will make more profit


62) 5-for-1 Pizza is operating at the point where the supply curve intersects the demand curve. If the ownerdecides to increase the price and not change the production level, what will result?A) a shift in the supply curveB) a shortageC) a shift in the demand curveD) a surplusE) more profit

Answer: DDiff: 2 Page Ref: 19 - 20

63) The market research department estimated that 5 000 CDs would be purchased at a price of $8.00 each. As itturned out, the demand was 6 000. The company is in a(n) ________ condition.A) shortageB) depressionC) surplusD) growthE) inflation

Answer: ADiff: 1 Page Ref: 19 - 20

64) If the market for chocolate was at equilibrium point and suddenly half of the chocolate in the worlddisappeared, what would be the immediate effect?A) there would be no change in either price or demandB) the price would increase due to a surplusC) the price would decrease due to a surplusD) the price would increase due to a shortageE) the price would decrease due to market equilibrium


65) What basic argument did Adam Smith make in his book, The Wealth of Nations?A) national wealth was created fastest by the mercantile systemB) government should not interfere in the economy, but should let business function without regulationor restriction

C) someone will be more successful in business if he or she is a leader and true entrepreneurD) socialism is the best economic systemE) the government should own the means of production


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66) Adam Smith, author of The Wealth of Nations, argued that a society's interests would be best served by:A) the political partiesB) socialismC) monopoliesD) communismE) private enterprise


67) Private enterprise requires four elements:A) the right to product safety, consumer choice, freedom of information, and no government interventionin business

B) land, labour, capital, and entrepreneurshipC) private property rights, freedom of choice, profits and competitionD) supply, demand, equilibrium and monopolyE) communism, capitalism, socialism and privatization


68) The "Wealth of Nations" theory of laissez-faire was proposed by:A) the Disney InstituteB) Andrew CarnegieC) Henry FordD) Adam SmithE) Karl Marx


69) Private enterprise requires all of the following, except:A) competitionB) freedom of choiceC) private property rightsD) a demand and supply scheduleE) profits


70) In his book, The Wealth of Nations, Adam Smith maintained that the creation of wealth should be the concernof:A) studentsB) the governmentC) heavenly powersD) individuals and firmsE) all citizens


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71) A few years ago, General Motors decided to develop a new car, the Saturn. Sally checked it out at her localdealership and decided to buy one. We can conclude that:A) neither General Motors nor Sally exercised their freedom of choiceB) Sally exercised her freedom of choiceC) General Motors exercised its freedom of choiceD) this example doesn't relate to freedom of choiceE) both General Motors and Sally exercised their freedom of choice


72) The four degrees of competition include all of the following except:A) pure competitionB) pure monopolistic competitionC) monopoliesD) oligopoliesE) monopolistic competition


73) An outcome of competition is that business firms:A) have unrestricted access to natural resourcesB) must operate efficientlyC) can easily develop a monopolyD) can drop out of the pricing war unnoticedE) reduce their need for expansion capital


74) Which of the following motivates an entrepreneur to operate his or her business efficiently?A) competitionB) right to voteC) freedom of choiceD) private property rightsE) privatization


75) Brown Company wants to create an advantage over its competitors. To gain this advantage it must develop aproduct that must be either ________ or ________ competition.A) higher priced, equal the quality ofB) priced the same, have poorer quality thanC) lower priced, have better quality thanD) lower priced, equal the quality ofE) priced the same, equal the quality of


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76) Individual firms must be small and the number of such firms must be large. This describes which degree ofcompetition?A) monopolyB) perfect competitionC) selective competitionD) oligopolyE) monopolistic competition


77) Bob owns the St. Paul Street one-stop convenience store. He owns one of the 300 convenience stores in hisregion. Which degree of competition is Bob involved in?A) monopolistic competitionB) monopolyC) oligopolistic competitionD) perfect competitionE) oligopoly


78) In a market with perfect competition:A) products have very few similaritiesB) there are very few sellersC) buyers and sellers do not know the price structure of the marketD) firms are relatively largeE) price is set by supply and demand


79) Which one of the following is the best example of perfect competition?A) utility industryB) clothing industryC) automobile industryD) agricultural industryE) soft drink industry


80) Which one of the following is not a characteristic of an oligopoly?A) great product differentiationB) prices differ greatlyC) many buyersD) few sellersE) swift response to price changes of a competitor


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81) McDonnell Douglas, a manufacturer of large commercial aircraft, raises its prices of aircraft by 10 percent.Boeing, another manufacturer of large commercial aircraft, raises its prices by 9 percent. Airbus, a thirdmanufacturer of large commercial aircraft, follows with an increase of 9.5 percent. Each of these companies ispractising a type of pricing strategy characteristic of:A) a monopolyB) an oligopolyC) perfect competitionD) controlled competitionE) monopolistic competition


82) In a given national market, only five firms make and distribute little red wagons. This illustrates whichdegree of competition?A) monopolyB) selective competitionC) perfect competitionD) oligopolyE) monopolistic competition


83) Competition like that between Tide and Cheer, Coke and Pepsi, and Sears and Ralph Lauren is:A) monopolyB) oligopolistic competitionC) monopolistic competitionD) oligopolyE) perfect competition


84) Which of the following businesses has a natural monopoly?A) Via RailB) Chapters BookstoreC) Your provincial electric companyD) KleenexE) De Beers Diamonds


85) Bailey Wear manufactures children's clothing. The company is able to set its prices higher than itscompetitors because of the fine material it uses and the attention it pays to the quality of the sewing. BaileyWear is operating in a competitive environment of:A) perfect competitionB) oligopolyC) oligopolistic competitionD) monopolyE) monopolistic competition


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86) Competition in which there are many buyers, a lot of product differentiation, and relative ease of entry orexit of the market is known as:A) perfect competitionB) oligopolistic competitionC) oligopolyD) monopolyE) monopolistic competition


87) The Industrial Revolution refers to:A) fur and fishing industry in Canada in the 1500sB) development of the Internet eraC) development of the Entrepreneurial eraD) a major change in the production of goods that began in England in the mid 1700sE) none of the above


88) Which of the following is NOT a characteristic of perfect competition?A) Easy to enter and leave the industry.B) Many firms in the industry.C) Firms are small.D) Very difficult for a firm to enter or leave the market.E) Great similarity among products offered by different firms.


89) Which of the following is NOT a characteristic of perfect competition?A) Firms are small.B) Easy entry into the industry.C) Products from different firms are easily differentiated from one another.D) Great similarity among products offered by different firms.E) Many firms in the industry.


90) Which of the following is NOT one of the principles underlying perfect competition?A) Products are perceived as being identical.B) It is easy for firms to enter and leave the market.C) Prices are set by the laws of supply and demand.D) Buyers and sellers know what the current market price is.E) The government will set prices at the optimal level.


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91) Which of the following is NOT a characteristic of monopolistic competition?A) Products are similar, but not identical to those of competitors,B) Easy entry to the industry.C) Many sellers, but less than perfect competition.D) Only a few sellers.E) Some control over price by sellers.


92) Of the following, which is a way in which monopolistic competition differs from perfect competition?A) In a perfectly competitive market, products are more dissimilar.B) In a market characterized by monopolistic competition, individual firms have some control over price.C) There are more sellers in a market characterized by monopolistic competition.D) It is easier for sellers to enter a market/industry characterized by monopolistic competition.E) none of the above


93) Which of the following is TRUE concerning monopolistic competition?A) Competitors can enter and leave the market easily.B) Products are differentiated.C) Competitors may be large or small.D) Many competitors in the industry.E) all of the above


94) Which of the following is TRUE concerning monopolistic competition?A) Prices and products are very similar.B) Prices are similar but products can be differentiated.C) Both products and prices differ from one competitor to the next.D) Prices vary from one competitor to the next, but products are very similar.E) none of the above


95) ________ exists when an industry has a handful of sellers, most of which are large.A) An oligopolyB) A monopolyC) Monopolistic competitionD) Perfect competitionE) none of the above


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96) Which of the following is the best definition of an oligopoly?A) An industry with many buyers and many sellers; sellers have some control over price.B) An industry with only a handful of sellers, most of which are large.C) An industry with many buyers, but only one seller.D) An industry with only one buyer, but many sellers.E) An industry with many buyers and many sellers; sellers have no control over price.


97) Competition in which there are a handful of very large sellers, market entry is difficult, and a company canhave a major impact on the product price is known as ________.A) perfect competitionB) oligopolyC) monopolistic competitionD) monopolyE) free market enterprise


98) Which type of competition is best represented by the airline industry, the automobile industry, or the steelindustry?A) monopolyB) oligopolyC) monopolistic competitionD) free market enterpriseE) perfect competition


99) General Motors lowers its price of cars by 10%. Ford matches GM's price decrease. Each of these companiesis practicing a type of pricing strategy characteristic of ________.A) a monopolyB) controlled competitionC) perfect competitionD) monopolistic competitionE) an oligopoly


100) In the market for breakfast cereals, a few large producers, such as General Mills, Post, Quaker, and Kellogg,dominate the market. This best describes which of the following?A) perfect competitionB) oligopolyC) limited cartelD) monopolistic competitionE) monopoly


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101) Which of the following is NOT true of an oligopoly?A) Entry into the industry is difficult.B) Prices differ greatly among sellers.C) The actions of one firm will significantly affect the sales of other firms.D) There are a few sellers.E) Competing firms have very similar prices for products.


102) Which of the following industries would not be considered an oligopoly?A) applianceB) steelC) agricultureD) airlinesE) automobiles


103) In an oligopoly, when one firm reduces its prices, how do the other firms of the industry react?A) Others may reduce there prices too, but very gradually over time.B) Others reduce theirs also?usually quite quickly.C) There is no reaction by any of the other firms.D) Other firms are not even aware that a change in price has taken place.E) none of the above


104) An industry in which one firm can most efficiently supply all the demand is ________.A) an illegal monopolyB) a controlled monopolyC) a legal oligopolyD) a natural monopolyE) a natural oligopoly


105) Of the following periods, which came first?A) Global EraB) Production EraC) Entrepreneurial EraD) Marketing EraE) Industrial Revolution


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106) Which of the following most accurately reflects the history of business in Canada, from earliest to mostrecent?A) Marketing Era, Entrepreneurial Era, Industrial Revolution, Marketing Era, Global Era, Internet EraB) Production Era, Industrial Revolution, Entrepreneurial Era, Marketing Era, Global Era, Internet EraC) Entrepreneurial Era, Industrial Revolution, Global Era, Marketing Era, Internet Era, Production EraD) Industrial Revolution, Production Era, Entrepreneurial Era, Marketing Era, Internet Era, Global EraE) Industrial Revolution, Entrepreneurial Era, Production Era, Marketing Era, Global Era, Internet Era


107) Which of the following is a NOT a characteristic of mass production?A) Reduce the cost of raw materials.B) Reduce duplication of equipment.C) Each worker performs a specialized task.D) Replace craftsmen with semiskilled workers.E) Allow producers to buy smaller quantities of raw materials.


108) The ________ philosophy says that the government should not interfere in the economy, but should insteadlet business function without regulation according to its own "natural" laws.A) invisible handB) market economyC) entrepreneurshipD) laissez-faireE) natural selection


109) During the Entrepreneurial Era, businesses were allowed to run without regulation under the philosophy of________.A) socialismB) laissez-faireC) specialization of laborD) antitrustE) mass production


110) Scientific management practices focus onA) increasing employee satisfaction.B) increasing efficiency.C) developing several ways of doing the same task.D) increasing job quality by adding flexibility.E) reducing absenteeism.


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111) Scientific management was given impetus when ________ introduced the moving assembly line and usheredin the production era.A) Andrew CarnegieB) Frederick TaylorC) Henry FordD) Eli WhitneyE) Cyrus McCormick


112) Who is MOST closely associated with the Production Era?A) Henry FordB) Andrew CarnegieC) John D. RockefellerD) Andrew MellonE) J.P. Morgan


113) Which of the following eras was prompted by increased consumer demand after World War II?A) Production EraB) Industrial RevolutionC) Entrepreneurial EraD) Global EraE) Marketing Era


114) Which of the following eras is tied to the prosperity of the 1950s and 1960s?A) Marketing EraB) Production EraC) Entrepreneurial EraD) Internet EraE) Industrial Revolution


115) During the ________ Era, businesses became less focused on production and sales and more focused onconsumers.A) GlobalB) ConsumerC) MarketingD) InternetE) Sales


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116) One of the most critical elements in the Global Era is theA) reduction in the dependence upon outsourcing.B) producers' expansion to a wider range of activities.C) importance of technology.D) willingness of companies to make more items in-house.E) All the items on this list are critical elements in the Global Era.


117) Technological advances, improved communication, and more efficient transportation networks contributedto the emergence of theA) Global Era.B) Production Era.C) Industrial Revolution.D) Entrepreneurial Era.E) Marketing Era.


118) The early years of business in Canada were motivated by:A) profits from loggingB) profits from fishingC) profits from miningD) a desire to find a way to ChinaE) a desire to settle in the Prairies


119) Why was Canadian manufacturing slow to develop in the 16th and 17th centuries?A) too few manufacturing managersB) policy of mercantilismC) most people were involved in trading of fursD) most people were involved in farmingE) too few buyers of manufactured goods


120) Which government(s) supported the mercantilism philosophy?A) English and FrenchB) CanadianC) no governments supported itD) Asian and North AmericanE) English and Asian


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121) All of the following is true about the Industrial Revolution except:A) it led to the decline of cottage industriesB) it led to the development of the factory systemC) it led to wide use of semi-skilled employeesD) it enabled mass productionE) it discouraged specialization of labour


122) During which period did mass production reduce duplication of equipment and allow firms to purchase rawmaterials at better prices?A) the marketing eraB) colonial periodC) Industrial RevolutionD) entrepreneurial eraE) the production era


123) Which of the following best illustrates specialization of labour?A) workers who learn new, specialized skills are rewarded with higher payB) highly skilled craftspeople who can do all the tasks required to make an itemC) semiskilled workers are trained to perform only one taskD) raw materials were provided to England in return for finished goodsE) each labour union represents only one type of worker


124) Which of the following occurred when the factory system began?A) factory workers became owners through ESOPsB) the size and economic power of some firms meant that other businesses had difficulty competingagainst them

C) it produced captains of industry who were interested in meeting the needs of the customerD) a laissez-faire management process developedE) all the materials and labour required to produce items in massive quantities were brought to one place


125) Which item in the following list was NOT typical of the entrepreneurial era?A) laissez-faire attitude by governmentB) increased number of monopoliesC) growing competitionD) price-fixingE) some individuals became immensely wealthy through their aggressive business dealings


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126) How did Adam Smith's ideas outlined in The Wealth of Nations lead to a policy of laissez-faire?A) the book outlined steps that could be taken to improve international tradeB) Smith's book was an inspirational book that motivated many entrepreneursC) there was no connection between Smith's book and a laissez-faire policyD) Smith argued that governments should be actively involved in the economyE)The Wealth of Nations argued that the government should not interfere in the economy, but should letbusinesses function without regulation or restriction


127) According to the textbook, the first manufacturing in Canada consisted of all of the following except:A) grist millsB) shoemakers' shopsC) breweriesD) shipbuildingE) sawmills


128) The entrepreneurial era contained all but one of the following:A) the Canadian government adopted a laissez-faire attitude toward businessB) the use of the assembly line was introducedC) some businesses had difficulty competing against the size and economic power of some firmsD) some business executives made over $25 000 per year in the late 1800sE) some business leaders decided to fix prices and manipulate the market system to their advantage


129) The entrepreneurial era in Canada occurred:A) in the last half of the 19th centuryB) in the first half of the 19th centuryC) in the first half of the 20th centuryD) in the last half of the 18th centuryE) in the first half of the 18th century


130) The Scientific Management Movement can be best characterized by the phrase:A) "empowerment to employees"B) "progress through technology"C) "cooperation between management and union"D) the "one best way"E) "quality is job 1"


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131) Which of the following best completes the following sentence? During the production era:A) Henry Ford introduced the first moving assembly line which brought automobile parts to the workerB) great emphasis was placed upon satisfying the customerC) the factory system brought together in one place all the materials and workers required to produceitems in large quantities

D) the improved production output resulting from assembly lines was obtained by increasing workerfreedom

E) the presence of big firms aided individuals who wished to go into business for themselvesAnswer: ADiff: 3 Page Ref: 26

132) The development of labour unions and collective bargaining agreements were major elements of the:A) industrial revolutionB) entrepreneurial eraC) production eraD) colonial periodE) global era


133) The marketing era involved:A) the production of the same type of goodsB) the identification of the customer's needsC) the production of items within the existing factoriesD) the hiring of the right salespeopleE) an emphasis on efficiency so that the selling price may be lowered


134) What are the three countervailing powers in today's society?A) consumers, government, businessB) government, business, labourC) consumers, government, public opinionD) consumers, business, public opinionE) government, business, public opinion


135) Which era held the philosophy "use market research to determine what customers want and then make it forthem"?A) scientificB) productionC) salesD) marketingE) finance


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136) Why did businesses move from a production orientation to a sales orientation?A) Businesses experienced greater competition.B) Businesses were able to develop niche marketing schemes.C) Businesses were becoming very good at creating new products.D) Businesses were able to keep their production costs low.E) Businesses discovered the power of advertising.


137) Why did businesses adopt the marketing approach to business?A) There was pent-up demand after World War II.B) Production costs got to be about as low as they were going to get, thus profit would not improve.C) Mass markets required mass advertising, which is what marketing does.D) Competition between businesses became greater than ever.E) The competition for sales representatives increased as employees became very intense.


138) Able Manufacturing is very good at making kitchen utensils. However, it wants to ensure that its productswill always be profitable. What should it do?A) try charging a lot of money for its products in the hope that it will result in snob appealB) hire the finest sales representatives to sell what it makesC) lower the costs of production so the products are always profitableD) determine customer needs and focus its product lines to fill those needsE) change its product lines to fit what its management thinks customers want


139) The 1980s are called the "decade of greed" because:A) a lot of people had extra money that they could spend on themselvesB) most people received high wage increasesC) a few people enriched themselves through corporate takeoversD) banks had lots of money to spendE) many people did not care for the poor


140) A global economy means:A) that Canadian companies can never prosper in a global environmentB) individuals cannot buy things from all over the worldC) that technological changes will occur more rapidlyD) domestic companies now have to compete with other companies located overseasE) that North America is the only place affected by a global economy


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141) The growth of the Internet affects business in many ways, including:A) the Internet will give a slight boost to trade in selected sectors of the economyB) the Internet will increase the number of dot-coms that go bankruptC) the Internet holds considerable potential as an effective and efficient networking mechanism amongbusinesses

D) the Internet will be dominated by the larger companiesE) the growth rate of the Internet will grow to over 900 users per 1000 people by 2005


142) Which of the following are effects of Internet business?A) It will serve to level the playing field between large and small companies.B) It will give a dramatic boost to trade in all sectors of the economy.C) It holds considerable potential as an efficient networking mechanism among businesses.D) all of the aboveE) none of the above


143) Profits from business are used to support government and charities as well as business owners andstockholders.Answer: TRUEDiff: 2 Page Ref: 7

144) A business is an organization that seeks to earn profits by providing goods and services.Answer: TRUEDiff: 1 Page Ref: 6

145) The reward that the owners of a business receive for taking the risks of investing their money and time iscalled capital.Answer: FALSEDiff: 2 Page Ref: 6

146) The term "business" typically includes large organizations such as General Motors, which seek a profit, butdoes not include individuals who are self-employed, e.g., a carpenter, or a beautician who operates a shop inher home.Answer: FALSEDiff: 2 Page Ref: 6

147) An economic system allocates a nation's resources among its citizens.Answer: TRUEDiff: 1 Page Ref: 7

148) Labour is a factor of production.Answer: TRUEDiff: 1 Page Ref: 7

149) Capital is needed only to start up a business.Answer: FALSEDiff: 1 Page Ref: 8

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150) Natural resources include land, mineral deposits as well as crops that are grown.Answer: TRUEDiff: 2 Page Ref: 9

151) The natural resources component of the factors of production includes the physical and mental capabilities ofpeople in the work force.Answer: FALSEDiff: 1 Page Ref: 9

152) In a command economy, a centralized government controls all, or most, of the factors of production andmakes most decisions involving production of goods and services.Answer: TRUEDiff: 2 Page Ref: 9

153) Communism is an example of a market economy where a central government controls most factors ofproduction.Answer: FALSEDiff: 2 Page Ref: 9

154) Communism and socialism are both types of command economies.Answer: TRUEDiff: 2 Page Ref: 9

155) Although workers in socialist countries are usually allowed to choose their occupations, a large proportiongenerally work for the government.Answer: TRUEDiff: 2 Page Ref: 11

156) Capitalism relies on the factors of demand and supply in the marketplace to determine what, when, and forwhom to produce.Answer: TRUEDiff: 1 Page Ref: 13

157) A mixed market economy has elements of both a command economy and a market economy.Answer: TRUEDiff: 1 Page Ref: 13

158) The government plays several different roles in the Canadian economy, including the roles of customer,competitor and regulator.Answer: TRUEDiff: 1 Page Ref: 13-14

159) Crown corporations only exist at the federal level and account for a significant and wide variety of economicactivity in Canada.Answer: FALSEDiff: 1 Page Ref: 14

160) The reasons why the government regulates many aspects of business activity include: protectingcompetition, protecting consumers, achieving social goals, and protecting the environment.Answer: TRUEDiff: 1 Page Ref: 14-15

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161) Revenue taxes are levied to control certain activities that legislative bodies believe should be controlled.Answer: FALSEDiff: 2 Page Ref: 15

162) Government incentive programs always have the desired effect of stimulating the economy.Answer: FALSEDiff: 1 Page Ref: 16

163) If the Canadian Auto Workers (CAW) want to bring their interests to government officials they would hire alobbyist.Answer: TRUEDiff: 1 Page Ref: 16

164) A demand and supply schedule is derived from market research and other systematic studies of the market.Answer: TRUEDiff: 1 Page Ref: 19

165) The law of demand states that buyers will purchase more of a product as its price drops.Answer: TRUEDiff: 2 Page Ref: 18

166) In economic terms, the exchange process between buyers and sellers is called "supply."Answer: FALSEDiff: 2 Page Ref: 18

167) In economic terms, "market" refers to a specific place like a supermarket.Answer: FALSEDiff: 1 Page Ref: 11

168) The economic term "market" refers to a place of trade.Answer: FALSEDiff: 1 Page Ref: 11

169) The law of supply states that producers will offer more of a product for sale as its price rises.Answer: TRUEDiff: 1 Page Ref: 18

170) If the market for diamonds is at equilibrium and De Beers increased its prices, people would still demandthe same quantity of diamonds.Answer: FALSEDiff: 2 Page Ref: 19

171) A demand curve shows the amount of goods and services a producer will create at different prices.Answer: FALSEDiff: 2 Page Ref: 19

172) The point on a demand and supply schedule where supply and demand are equal is known as thebreak-even point.Answer: FALSEDiff: 1 Page Ref: 19

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173) The equilibrium price occurs where the supply of a particular product is equal to the number of customerswho wish to purchase that product.Answer: TRUEDiff: 1 Page Ref: 19

174) A surplus in the market is good news for the firm selling a product or service because there are additionalcustomers still trying to purchase the product.Answer: FALSEDiff: 2 Page Ref: 19

175) If a hot dog vendor cooked 14 too many sausages, those 14 sausages would not sell. The excess supply ofsausages can also be referred to as surplus.Answer: TRUEDiff: 1 Page Ref: 19

176) Adam Smith argued that a society's interests are best served by a command economy.Answer: FALSEDiff: 1 Page Ref: 26

177) Private property rights are an essential element of a communist economic system.Answer: FALSEDiff: 1 Page Ref: 9

178) The private enterprise system guarantees a profit for each business firm.Answer: FALSEDiff: 2 Page Ref: 21

179) Freedom of choice refers to just buyers of goods and services.Answer: FALSEDiff: 2 Page Ref: 21

180) What a company chooses to produce will, by definition, be affected by the profits it hopes to make.Answer: TRUEDiff: 1 Page Ref: 21

181) The private enterprise system guarantees that competition among business firms will be fair.Answer: FALSEDiff: 2 Page Ref: 21

182) In monopolistic competition, sellers try to make their products at least appear to be slightly different fromthose of other competitors by tactics such as brand names, design or styling, and advertising.Answer: TRUEDiff: 1 Page Ref: 22

183) Coke and Pepsi represent oligopolistic competition.Answer: FALSEDiff: 2 Page Ref: 23

184) In an oligopoly only a handful of sellers compete mainly through product differentiation.Answer: TRUEDiff: 2 Page Ref: 23

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185) An oligopoly features many sellers and products, which may be similar or different.Answer: FALSEDiff: 2 Page Ref: 23

186) A natural monopoly exists when a single company can fill the needs of all customers in a specific area.Answer: TRUEDiff: 1 Page Ref: 23

187) What are profits and why are they important to the economic system in Canada?Answer: ∙ revenues minus expenses

∙ they are rewards for taking risks∙ used to support government and charities, pay wages∙ needed to continue producing goods and services

Diff: 2 Page Ref: 5

188) Explain the terms, "command economy" and "market economy." Give an illustration of each.Answer: ∙ command: government dominated, government controls the factors of production, people often work

for the government, share the wealth equally, one class society, example - China∙ market: the people have a say in what the government does, individuals control factors of production,independent wealth, rich/middle class/poor, example - Canada∙ no economy is purely command or market, even China and Canada

Diff: 2 Page Ref: 9-13

189) What are the factors of production? Explain each briefly.Answer: ∙ natural resources: items used in the production of goods and services in their natural state, including

land, water, minerals, and trees∙ labour: the mental and physical training and talents of people; sometimes called human resources∙ capital: the funds needed to operate an enterprise∙ entrepreneur: an individual who organizes and manages natural resources, labour, and capital toproduce goods and services to earn a profit, but who also runs the risk of failure∙ newer perspectives tend to broaden the idea of "natural resources" to include all physical resources∙ while the production of tangible goods once dominated most economic systems, today informationresources play a major role-information resources refers to information such as market forecasts,economic data, and specialized knowledge of employees that is useful to a business and that helps itachieve its goals


190) What is an entrepreneur?Answer: ∙ an individual who organizes and manages labour, capital and natural resources to produce goods

and services to earn a profit, but who also runs the risk of failure∙ business person∙ manager∙ initiator∙ leader∙ risk taker

Diff: 1 Page Ref: 9

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191) There are three major types of economic systems in existence. Identify and briefly describe them.Answer: ∙ command economies: a type in which the government controls all or most factors of production and

makes all or most production decisions∙ market economies: a type in which individuals control all or most factors of production and make all ormost production decisions∙ mixed economies: a type with elements of both a command economy and a market economy

Diff: 1 Page Ref: 8 - 13

192) What is the difference between capitalism and socialism?Answer: ∙ capitalism: an economic system in which markets decide what, when and for whom to produce

∙ capitalist market economy: citizens run businesses, more efficient, choose your own job∙ socialism: a kind of command economy in which the government owns and operates the mainindustries, while individuals own and operate less crucial industries∙ less efficient, large proportion of people end up working for government


193) Describe the law of demand.Answer: Buyers will purchase (demand) more of a product as its price drops and less of a product as its price

increases.Diff: 2 Page Ref: 18

194) What does the supply curve reflect?Answer: The supply curve shows how much of a product will be supplied at different prices.Diff: 2 Page Ref: 19

195) List the four required elements for a private enterprise system.Answer: Private property, freedom of choice, profits, and competition.Diff: 2 Page Ref: 21

196) List the four degrees of competition that can exist in a private enterprise system.Answer: Perfect competition, monopolistic competition, oligopoly, and monopoly.Diff: 2 Page Ref: 21-23

197) Briefly describe the concept of laissez-faire.

Answer: The concept of laissez-faire refers to the idea that the government should not interfere in the economy.Diff: 2 Page Ref: 26

198) Discuss the government's role as: (a) a competitor, (b) a regulator, (c) a taxation agent, and (d) a provider ofincentive programs.Answer: ∙ competitor: the government competes with business through Crown corporations (energy, Royal

Canadian Mint, St. Lawrence Seaway Authority).∙ regulator: federal and provincial governments in Canada still regulate many aspects of businessactivity. Government regulates business through many administrative boards, tribunals orcommissions (CRTC, CTC, Canadian Wheat Board).∙ taxation agent: taxes are imposed to fund government services and programs, and to regulate andcontrol certain activities. There are revenue taxes and restrictive taxes.∙ provider of incentive programs: through programs like the Industrial Regional Development Program,federal assistance is delivered to industries, particularly those in disadvantaged regions. Otherprograms include tax and duty rebates.


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199) Discuss the two reasons that the government uses to justify regulation of business activities. Do you believeregulation of business is justified as an owner or manager? As a consumer?Answer: ∙ to encourage and protect competition by seeking to eliminate restrictive trade practices

∙ to provide consumer protection∙ owner/manager: government regulations create a fair and honest business world in the best interests ofeveryone∙ consumer: government creates fair business for corporations and consumers


200) Explain how demand and supply work in a capitalistic economy.Answer: ∙ demand is the willingness and ability of buyers to purchase a product or service

∙ supply is the willingness and ability of producers to offer a good or service for sale∙ supply and demand equilibrate such that buyers pay a fair price and sellers obtain a fair price fortheir goods and services


201) Inaccuracies in forecasting an exact supply-demand schedule create surpluses and shortages. Describe whatsurpluses and shortages are using the concepts of supply and demand and indicate the probable impact ofeach upon price.Answer: ∙ surpluses occur when the quantity supplied exceeds the quantity demanded, prices will decrease

∙ shortages occur when the quantity demanded exceeds the quantity supplied, prices will increaseDiff: 2 Page Ref: 19

202) Describe the potential impact if a company underestimates demand.Answer: ∙ too few products produced

∙ potential profits lost∙ angry customers cannot buy what they want∙ knowledge of the shortage attracts more competition

Diff: 2 Page Ref: 19

203) Explain the four essential elements of private enterprise.Answer: ∙ private property: right to buy, own, use, and sell an item

∙ freedom of choice: the right to choose what to buy or sell, including one's labour∙ profits: we earn what we work for, and thus work hard and efficiently∙ competition: rivalry between firms in a specific market to best satisfy consumer demands and earnprofits


204) Identify and explain the four basic degrees of competition. Provide an example of each.Answer: ∙ perfect competition: a market or industry characterized by a very large number of small firms

producing an identical product so that none of the firms has any ability to influence price; completelyrun by the law of supply/demand, e.g., shoe store∙ monopolistic competition : a market or industry characterized by a large number of firms supplyingproducts that are similar but distinctive enough from one another to give firms some ability toinfluence price; severe competition, e.g., soda pop producers∙ oligopoly: a market or industry characterized by a small number of very large firms that have thepower to influence the price of their product and/or resources; slightly competitive, look todifferentiation, e.g., breakfast cereals∙ monopoly: a market or industry with only one producer, who can set the price of its product and/orresources; watched very closely by government, e.g., basic cable service


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205) Discuss the reasons why the Canadian government permits certain "natural" monopolies while forbiddingattempts by business firms to create a monopoly in other parts of the economy.Answer: ∙ natural monopolies are industries in which one economy can most efficiently supply all the product

or service that is needed∙ natural economies eliminate unnecessary costs and waste∙ competition, which is the root of why business works so well in capitalistic society∙ no competition, firm run less efficiently and quality is not as high and society does not benefit asmuch


206) Discuss the development of business in Canada from the early colonial years to the present day.Answer: ∙ business activity and profit from commercial fishing in the late 1400s motivated European

involvement in Canada∙ French and British adventurers began trading with the native peoples in the 1500s∙ by the late 1600s coureurs de bois travelled west in search of new sources of furs∙ European settlers arrived in Canada in the 16th and 17th centuries∙ Canadian manufacturing slowly developed under mercantilism∙ industrial revolution brought about mass production∙ entrepreneurial era saw the emergence of people willing to take risks in hope of profits∙ production era refined concepts of specialization and mass production∙ sales and marketing era focused on sales forces, advertising and supply∙ finance era focused on the buying and selling of business enterprises∙ global era noted for the emergence of a truly global economy∙ internet era of business


207) Describe perfect competition in terms of the number of competitors, ease of entry into the market, similarityof goods/services offered by competing firms, and level of control over price by individual firms. Give anexample of a purely competitive market or industry.Answer: For perfect competition to exist, all of the firms in an industry must be small and the number of the

firms in the industry must be large. Under these conditions, no single firm is powerful enough toinfluence the price of its product. The products of each firm are so similar that buyers will perceivethem as identical to those of other firms. Because each firm is small, it is easy for firms to enter orleave the market. U.S. agriculture is a good example of perfect competition.


208) Describe monopolistic competition in terms of the number of competitors, ease of entry into the market,similarity of goods/services offered by competing firms, and level of control over price by individual firms.Give an example of a market or industry characterized by monopolistic competition.Answer: In a market characterized by monopolistic competition, there are fewer sellers than in perfect

competition. Sellers will attempt to differentiate their product from those of their competitors. Productdifferentiation gives sellers some control over prices. While monopolistically competitive businessescan be large or small, they can enter and exit the market easily. There are many examples ofmonopolistically competitive markets, particularly in the retail market (the market for jeans, themarket for laundry detergents, the market for soft drinks, etc.).


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209) Describe oligopoly in terms of the number of competitors, ease of entry into the market, similarity ofgoods/services offered by competing firms, and level of control over price by individual firms. Give anexample of a market or industry that is an oligopoly.Answer: When an industry has only a few sellers, an oligopoly exists. While there are only a few sellers, they

tend to be large. The entry of new competitors is difficult because of the large capital investmentneeded. As with monopolistic competition, sellers will attempt to differentiate their product fromthose of their competitors and each seller will have some control over price. However, when one firmcuts prices, others will tend to do the same. Therefore, the prices of comparable products are usuallysimilar. The automobile, airline, and steel industries are all oligopolies.


210) Describe monopoly in terms of the number of competitors, ease of entry into the market, and level of controlover price by individual firms. Give an example of a market or industry that is a monopoly.Answer: A monopoly exists when an industry or market has only one producer. The sole supplier enjoys

complete control over the prices of its products. Its only constraint is a decrease in consumer demanddue to increased prices. In the United States, the Sherman Antitrust Act and the Clayton Act forbidmany monopolies and regulate prices charged by natural monopolies.


211) What was the Industrial Revolution?Answer: The Industrial Revolution began in the middle of the eighteenth century with advances in technology

and the development of the factory system. Prior to the Industrial Revolution, cottage workersproduced products one item at a time. The factory system brought together materials and workers toproduce items in large quantities and the new machines needed for mass production. In turn, massproduction reduced duplication of equipment and allowed firms to buy materials at better prices bybuying in larger lots. It also encouraged the specialization of labor. Mass production replaced a systemof highly skilled craftspeople who performed all the different tasks required to make a single item.Instead, a series of semiskilled workers each trained to perform only one task and aided by specializedequipment, greatly increased output.


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