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Chapter 6 Quiz

A market consists of potential buyers of a good or service. However, for a market to exist…

A. one firm must dominate in sales and product development

B. the business requires wholesalers and retailers

C. people must have unsatisfied wants and needs as well as a willingness and ability to buy

D. the product must be laboratory tested and approved by the Food and Drug Administrative (FDA)

C. people must have unsatisfied wants and needs as well as a willingness and ability to buy
Historically entrepreneurs in the U.S. …

A. experiences success only when they worked in partnership with the federal government.

B. played an important role, but are less important now in creating jobs and wealth.

C. created wealth for themselves, but have had a minor impact on the economy as a whole.

D. started many small firms that later became major corporations employing thousands or workers.

D. started many small firms that later became major corporations employing thousands of workers
Which of the following statements is characteristic of entrepreneurs?

A. They look at problems and see opportunities.

B. They prefer to be inventive rather than worry about whether the invention solves a customer need.

C. They like certainty.

D. They have the ability to visualize a clear path.

A. They look at problems and see opportunities.
One reason we have seen continued growth in home-based businesses is…

A. affordable computer and information technology makes it easier to compete.

B. people need something to do while they wait to return to work for a large corporation.

C. it is less risky to start a home-based business than other types of entrepreneurial ventures.

D. the location offers a more secure operational environment.

A. affordable computer and information technology makes it easier to compete.
Which of the following best describes the difference between an intrapreneur and an entrepreneur?

A. Intrapreneurs limit their effors to financial investments, while entrepreneurs are involved in the management of all areas of a business.

B. Intrapreneurs are practical while entrepreneurs are creative.

C. Intrapreneurs start nonprofit organizations while entrepreneurs start profit-seeking businesses.

D. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business.

D. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business
Intrapreneurs make use of _________ to develop and launch new products and generate new profits.

A. old ideas abandoned by entrepreneurs.

B. their own personal financial resources.

C. their employer’s existing human, financial, and physical resources.

D. government-supplied physical and financial resources.

C. their employer’s existing human, financial, and physical resources.
Small businesses…

A. deal with similar management issues that large companies face.

B. do not seek government funding due to the fact that the federal government has made it very clear that it must support large operations before small operations.

C. deal with very different management issues due to the very different management challenges experienced by small businesses.

D. concern themselves with state-of-the-art information and accounting technology but not employee relations due to their challenge to financially support employee benefit programs.

A. deal with similar management issues that large companies face.
The Small Business Administration defines a small business as a firm that…

A. has fewer than 100 partners

B. is independently owned but not dominant in its industry.

C. has annual receipts of more than a specified amount depending upon the industry

D. is dominant in its industry, but small in the number of workers it employs.

B. is independently owned but not dominant in its industry
Which of the following will NOT help your small business succeed?

A. Your product is not easily mass produced, like professional photography.

B. You provide a unique service that requires a significant amount of personal attention such as a service that provides in-home care for seniors,

C. Investing in a franchise

D. Services you perform are easily replicated by larger companies, such as online banking.

D. Services you preform are easily replicated by larger companies, such as online banking.
Small businesses are important to the U.S. economy because…

A. they pay most of the tax revenue collected by the U.S. government

B. banks and other financial services companies would not have borrowing customers, because small businesses borrow more than large businesses

C. they fill-in the gaps when large businesses want to let workers go on vacation; or when large businesses want to temporarily cease production.

D. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP

D. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP
A review of small business successes and failures indicates that the…

A. restaurant industry offers the least risk for entrepreneurs

B. reason the service sector is rapidly growing is that these firms are easy to start and keep going, and offer high levels of security and growth potential

C. businesses with potential of high profit levels tend to be difficult to start and hard to keep going

D. businesses that are easiest to start offer the greatest potential for long term growth and profits.

C. businesses with potential of high profit levels tend to be difficult to start and hard to keep going
Two key management functions that need particular attention when starting a business are…

A. marketing and public relations

B. staffing and controlling

C. planning and financing

D. human relations and accounting

C. planning and financing
A _________ is a written document that details the business idea, the target market and the business’s competitive advantage, financial resources available for the business, and the qualification of the management.

A. statement of intent

B. mission plan

C. business plan

D. marketing plan

C. business plan
Bankers and potential investors are likely to read _________ first.

A. the analysis of the competition

B. the executive summary

C. the qualifications of the management team

D. the marketing plan

B. the executive summary
_________ are private individuals who invest their own money in potentially hot new companies before these firms become larger, publicly traded companies.

A. Venture capitalists

B. Leveraged buyout specialists

C. Corporate raiders

D. Angel investors

D. Angel investors
A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is called a(n)…

A. takeover specialist

B. corporate raider

C. venture capitalist

D. financial analyst

C. venture capitalist
A good business plan will…

A. focus on the nature of the business and the target market, omitting personal information about the owner in order to avoid personality issues.

B. focus on the big picture and omit the small details of operating the business.

C. be purposefully vague, since specifics can restrict creativity and flexibility.

D. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner’s qualifications.

D. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner’s qualifications
When seeking financial backing from a venture capitalist, a small business owner should realize that the venture capitalist will…

A. demand that the money be repaid within 90 days

B. charge an interest rate that is much higher than any other lender

C. expect an ownership stake in the company in exchange for financial backing.

D. not be interested in the management of the business

C. expect an ownership stake in the company in exchange for financial backing

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