Question 1

In the past, the SBA could guarantee loans up to $5 million.

Accepted Answer

A) True 
 B)False

Question 2

Before seeking financial backing for his new business, Tyler puts together a concise document explaining the nature, mission, and goals of his new business and its expected costs and potential. Tyler has constructed a(n)

Accepted Answer

A)  marketing plan. 
B)  organizational mission statement. 
C)  business policy. 
D)  business plan. 
E)  organizational guide. 
A)  marketing plan. 
B)  organizational mission statement. 
C)  business policy. 
D)  business plan. 
E)  organizational guide.

Question 3

For those who like dealing with people, small business is the place to be.

Accepted Answer

A) True 
 B)False

Question 4

Economically, the U.S. government is not concerned with whether or not small businesses make it.

Accepted Answer

A) True 
 B)False

Question 5

What is a franchise? What are the major types of franchising arrangements?

Accepted Answer

A franchise is a business arrangement in

Question 6

Small businesses operate only in the service industry, not in manufacturing.

Accepted Answer

A) True 
 B)False

Question 7

Penicillin, airplanes, and air conditioning were all

Accepted Answer

A)  invented in the nineteenth century. 
B)  invented by Russians. 
C)  created through government-sponsored research. 
D)  created by individual inventors and small companies. 
E)  created by large corporations. 
A)  invented in the nineteenth century. 
B)  invented by Russians. 
C)  created through government-sponsored research. 
D)  created by individual inventors and small companies. 
E)  created by large corporations.

Question 8

About one-third of franchised businesses fail during the first two years of operation.

Accepted Answer

A) True 
 B)False

Question 9

In a franchise, the franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others.

Accepted Answer

A) True 
 B)False

Question 10

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. Which of the following would not be an advantage of a franchise?

Accepted Answer

A)  He gains fast and well-controlled distribution. 
B)  He has more capital available to expand. 
C)  Outlets are maintained and operated according to a set plan. 
D)  He has the opportunity to start a business with limited capital. 
E)  Success will cause another outlet to be opened nearby. 
A)  He gains fast and well-controlled distribution. 
B)  He has more capital available to expand. 
C)  Outlets are maintained and operated according to a set plan. 
D)  He has the opportunity to start a business with limited capital. 
E)  Success will cause another outlet to be opened nearby.

Question 11

What do small businesses as a group contribute to the U.S. economy?

Accepted Answer

Small businesses as a group play a cruci

Question 12

Many entrepreneurs lack the management skills required to run a business.

Accepted Answer

A) True 
 B)False

Question 13

What do franchisees typically have to pay to the franchisor?

Accepted Answer

A)  One-time franchise fee 
B)  Monthly royalties based on sales 
C)  Nominal fee for business knowledge 
D)  Approximately half of the franchise's profits each month 
E)  One-time franchise fee and monthly royalties based on sales 
A)  One-time franchise fee 
B)  Monthly royalties based on sales 
C)  Nominal fee for business knowledge 
D)  Approximately half of the franchise's profits each month 
E)  One-time franchise fee and monthly royalties based on sales

Question 14

What are the disadvantages of owning a small business?

Accepted Answer

Owning a small business can be a fulfill

Question 15

An agreement between two franchisors in which the two franchisors offer their products together is called double franchising.

Accepted Answer

A) True 
 B)False

Question 16

John and Ruby Couch just opened a computer store in a small community. Before opening the store, they listened to their SBA counselor's warnings about the importance of having balanced experience―that is, marketing, finance, and personnel experience―in the computer-store business because

Accepted Answer

A)  their business is unlikely to grow and earn large business profits. 
B)  the computer-store business is a fad. 
C)  management know-how is insignificant to small-business success. 
D)  small businesses survive large businesses by three years. 
E)  about two out of three small firms close within five years of their founding. 
A)  their business is unlikely to grow and earn large business profits. 
B)  the computer-store business is a fad. 
C)  management know-how is insignificant to small-business success. 
D)  small businesses survive large businesses by three years. 
E)  about two out of three small firms close within five years of their founding.

Question 17

You have decided to open a pet store and have engaged in a contract with Dog & Cat Centers, Inc. You and the company have drawn up an agreement that allows you to use the company's name and its proven method of doing business, to receive training, and to use its advertising materials. In this agreement, Dog & Cat is the ____ and you are the ____.

Accepted Answer

A)  entrepreneur; corporation 
B)  franchisor; franchisee 
C)  employee; employer 
D)  entrepreneur; local chain 
E)  corporation; manager 
A)  entrepreneur; corporation 
B)  franchisor; franchisee 
C)  employee; employer 
D)  entrepreneur; local chain 
E)  corporation; manager

Question 18

Which of the following would most likely be classified as a distribution industry?

Accepted Answer

A)  Subassembly plant 
B)  TV repair shop 
C)  Insurance agency 
D)  Grocery store 
E)  Medical office 
A)  Subassembly plant 
B)  TV repair shop 
C)  Insurance agency 
D)  Grocery store 
E)  Medical office

Question 19

A small business is all of the following except

Accepted Answer

A)  independently owned. 
B)  operated for profit. 
C)  dominant in its field. 
D)  difficult to manage. 
E)  demanding of the owner's time and attention. 
A)  independently owned. 
B)  operated for profit. 
C)  dominant in its field. 
D)  difficult to manage. 
E)  demanding of the owner's time and attention.

Question 20

Nathan's business constructs storage sheds for new housing developments as requested by the builders. Nathan's business would best be classified as a

Accepted Answer

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

Exam 5: Small Business, Entrepreneurship, and Franchises

In the past, the SBA could guarantee loans up to $5 million.

Before seeking financial backing for his new business, Tyler puts together a concise document explaining the nature, mission, and goals of his new business and its expected costs and potential. Tyler has constructed a(n)

For those who like dealing with people, small business is the place to be.

Economically, the U.S. government is not concerned with whether or not small businesses make it.

What is a franchise? What are the major types of franchising arrangements?

Small businesses operate only in the service industry, not in manufacturing.

Penicillin, airplanes, and air conditioning were all

About one-third of franchised businesses fail during the first two years of operation.

In a franchise, the franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others.

What do small businesses as a group contribute to the U.S. economy?

Many entrepreneurs lack the management skills required to run a business.

What do franchisees typically have to pay to the franchisor?

What are the disadvantages of owning a small business?

An agreement between two franchisors in which the two franchisors offer their products together is called double franchising.

John and Ruby Couch just opened a computer store in a small community. Before opening the store, they listened to their SBA counselor's warnings about the importance of having balanced experience―that is, marketing, finance, and personnel experience―in the computer-store business because

Which of the following would most likely be classified as a distribution industry?

A small business is all of the following except

Nathan's business constructs storage sheds for new housing developments as requested by the builders. Nathan's business would best be classified as a

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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