Question 1

Mary's cleaning business has several customers but is not dominant in its field. This is an example of a(n) ____ business.

Accepted Answer

A)  entrepreneurship 
B)  unsuccessful 
C)  small 
D)  manufacturing 
E)  large corporate 
A)  entrepreneurship 
B)  unsuccessful 
C)  small 
D)  manufacturing 
E)  large corporate

Question 2

The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of

Accepted Answer

A)  employment. 
B)  competition. 
C)  technical innovation. 
D)  capital. 
E)  quality products. 
A)  employment. 
B)  competition. 
C)  technical innovation. 
D)  capital. 
E)  quality products.

Question 3

Because of small-business competition, large companies must become more efficient and responsive to consumers' needs.

Accepted Answer

A) True 
 B)False

Question 4

Many small firms seek to establish a particular niche in the market, realizing that they cannot afford to operate on a larger scale without exposing themselves to considerable risk of retaliation from larger companies. When a number of small businesses are operating in this manner, they are forcing the larger businesses to recognize and account for their influence on the market. In this way, small businesses are primarily

Accepted Answer

A)  fostering competition. 
B)  providing technical innovation. 
C)  creating jobs. 
D)  satisfying the needs of other businesses. 
E)  avoiding competition. 
A)  fostering competition. 
B)  providing technical innovation. 
C)  creating jobs. 
D)  satisfying the needs of other businesses. 
E)  avoiding competition.

Question 5

Dana owns and operates a catering business. This is an example of a

Accepted Answer

A)  distribution business. 
B)  production business. 
C)  service business. 
D)  retailer. 
E)  manufacturer. 
A)  distribution business. 
B)  production business. 
C)  service business. 
D)  retailer. 
E)  manufacturer.

Question 6

One reason small businesses fail is that their research and development investments are less productive than those of the largest firms.

Accepted Answer

A) True 
 B)False

Question 7

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
-Refer to Mc-King Chicken. When Brian opens the Mc-King Chicken restaurant in his town, he would be known as the

Accepted Answer

A)  franchisor. 
B)  franchising. 
C)  franchise. 
D)  franchisee. 
E)  franchises. 
A)  franchisor. 
B)  franchising. 
C)  franchise. 
D)  franchisee. 
E)  franchises.

Question 8

According to the Census Bureau and Federal Reserve surveys, about 50 percent of all new businesses begin with less than ____ in total capital.

Accepted Answer

A)  $1,000 
B)  $25,000 
C)  $30,000 
D)  $50,000 
E)  $100,000 
A)  $1,000 
B)  $25,000 
C)  $30,000 
D)  $50,000 
E)  $100,000

Question 9

Small businesses are prone to failure.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a franchise establishment?

Accepted Answer

A)  Hertz Corporation 
B)  AAMCO Transmissions 
C)  Avis 
D)  JCPenney 
E)  KFC 
A)  Hertz Corporation 
B)  AAMCO Transmissions 
C)  Avis 
D)  JCPenney 
E)  KFC

Question 11

What is a common mistake that small-business owners make when their businesses begin growing?

Accepted Answer

A)  They sell more goods and services. 
B)  They put too much money in advertising. 
C)  They move beyond their local area. 
D)  They overexpand without proper planning. 
E)  They invest too much of their own money. 
A)  They sell more goods and services. 
B)  They put too much money in advertising. 
C)  They move beyond their local area. 
D)  They overexpand without proper planning. 
E)  They invest too much of their own money.

Question 12

It is rare that managers of small businesses lack the management skills necessary to run their businesses.

Accepted Answer

A) True 
 B)False

Question 13

Mustaffah always knew he wanted to start his own business. He was very passionate and wanted to create something new. Mustaffah's primary motivation for starting his own business is

Accepted Answer

A)  his need for independence. 
B)  his entrepreneurial spirit. 
C)  his desire to determine his own destiny. 
D)  the lack of good jobs in other companies. 
E)  his background with his family. 
A)  his need for independence. 
B)  his entrepreneurial spirit. 
C)  his desire to determine his own destiny. 
D)  the lack of good jobs in other companies. 
E)  his background with his family.

Question 14

Beau works for a small pest-control company that has a total of five employees. From his point of view, the primary disadvantage of a small business is the

Accepted Answer

A)  risk of failure. 
B)  limited ability to raise capital. 
C)  limited potential for him to advance. 
D)  personal relationship with his employer. 
E)  complicated management structure. 
A)  risk of failure. 
B)  limited ability to raise capital. 
C)  limited potential for him to advance. 
D)  personal relationship with his employer. 
E)  complicated management structure.

Question 15

Which statement best characterizes the relationship between franchisor and franchisee in recent years?

Accepted Answer

A)  Disagreements between the two parties have increased, and contract disputes are the cause of many lawsuits. 
B)  The relationship between franchisor and franchisee has become so hostile that it is threatening the continued existence of franchised businesses. 
C)  Occasional disputes arise between franchisor and franchisee, but legal action is rarely taken. 
D)  The relationship between these two parties is good because both parties benefit when the franchisee is successful. 
E)  Once the franchise agreement is finalized, these two parties have very little to do with one another. 
A)  Disagreements between the two parties have increased, and contract disputes are the cause of many lawsuits. 
B)  The relationship between franchisor and franchisee has become so hostile that it is threatening the continued existence of franchised businesses. 
C)  Occasional disputes arise between franchisor and franchisee, but legal action is rarely taken. 
D)  The relationship between these two parties is good because both parties benefit when the franchisee is successful. 
E)  Once the franchise agreement is finalized, these two parties have very little to do with one another.

Question 16

Franchising is a win-win combination; both franchisees and franchisors are guaranteed success.

Accepted Answer

A) True 
 B)False

Question 17

A new business is built around the entrepreneur.

Accepted Answer

A) True 
 B)False

Question 18

Small businesses are typically managed by people who started and own them.

Accepted Answer

A) True 
 B)False

Question 19

Entrepreneurial spirit is the desire to create a new business.

Accepted Answer

A) True 
 B)False

Question 20

An investor who is considering investing in Moriah's Burger Bar would not likely want to see her business plan.

Accepted Answer

A) True 
 B)False

Exam 5: Small Business, Entrepreneurship, and Franchises

Mary's cleaning business has several customers but is not dominant in its field. This is an example of a(n) ____ business.

The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of

Because of small-business competition, large companies must become more efficient and responsive to consumers' needs.

Dana owns and operates a catering business. This is an example of a

One reason small businesses fail is that their research and development investments are less productive than those of the largest firms.

According to the Census Bureau and Federal Reserve surveys, about 50 percent of all new businesses begin with less than ____ in total capital.

Small businesses are prone to failure.

Which of the following is not a franchise establishment?

What is a common mistake that small-business owners make when their businesses begin growing?

It is rare that managers of small businesses lack the management skills necessary to run their businesses.

Mustaffah always knew he wanted to start his own business. He was very passionate and wanted to create something new. Mustaffah's primary motivation for starting his own business is

Beau works for a small pest-control company that has a total of five employees. From his point of view, the primary disadvantage of a small business is the

Which statement best characterizes the relationship between franchisor and franchisee in recent years?

Franchising is a win-win combination; both franchisees and franchisors are guaranteed success.

A new business is built around the entrepreneur.

Small businesses are typically managed by people who started and own them.

Entrepreneurial spirit is the desire to create a new business.

An investor who is considering investing in Moriah's Burger Bar would not likely want to see her business plan.

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Choosing a Form of Business Ownership

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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