Question 1

A recent study sponsored by the SBA Office of Advocacy found that only ________ of all firms are "gazelles" or rapid growth firms at any given time.
A) 1 percent
B) 2 percent
C) 3 percent
D) 5 percent
E) 10 percent

Accepted Answer

C

Question 2

________ costs are the costs a company incurs as it makes sales.
A) Static
B) Irregular
C) Balanced
D) Variable
E) Flexible

Accepted Answer

Variable costs are costs that are directly proportional to the level of sales or production. As sales increase, variable costs also increase, and as sales decrease, variable costs decrease. These costs include expenses such as raw materials, manufacturing and packaging costs associated with producing a product or providing a service.

Question 3

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produced one computer keyboard a month or 10,000. Jeremy's lease payment is a:
A) variable cost
B) secondary cost
C) fixed cost
D) marginal cost
E) tangible cost

Accepted Answer

Jeremy's lease payments remain constant regardless of the level of production. This type of cost is known as a fixed cost.

Question 4

The What Went Wrong? feature in Chapter 13 focuses on Meetro, a location-aware instant messaging platform, that was launched on June 1, 2005, but eventually failed. The main lesson conveyed by the feature is that:
A) businesses don't always scale
B) it's difficult to achieve market leadership
C) businesses that don't "plan" for growth are at a significant disadvantage
D) a business can grow too fast
E) it's difficult to capture economies of scale

Accepted Answer

The answer of The What Went Wrong? feature in Chapter...

Question 5

Jessica Martin owns an entertainment company which has increased both its profits and revenues over an extended period of time. Jessica's firm is experiencing:
A) resolute growth
B) unrelenting growth
C) sustained growth
D) unbroken growth
E) moderate growth

Accepted Answer

Sustained growth is characterized by a consistent increase in profits and revenues over an extended period of time. This is exactly what is described in the scenario. Resolute, unrelenting, and unbroken growth all imply a constant and uninterrupted increase in growth, which may not be the case for Jessica's company. Moderate growth, on the other hand, suggests a slower rate of growth than what is described in the scenario. Therefore, the best choice is sustained growth.

Question 6

According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are:
A) not all businesses have the potential to be aggressive growth firms, business success scales, and business growth is a top priority of most entrepreneurial firms
B) business growth is a top priority of most entrepreneurial firms, a business can't grow too fast, and businesses that price their products aggressively grow the fastest
C) a business's valuation increases with its growth, a business can grow too fast, and business growth is a top priority of most entrepreneurial firms
D) the majority of businesses have the potential to be aggressive growth firms, a business can't grow too fast, and business success scales
E) not all businesses have the potential to be aggressive growth firms, a business can grow too fast, and business success doesn't always scale

Accepted Answer

The correct answer highlights the nuanced understanding of business growth: not all businesses are suited for aggressive growth, there can be such a thing as growing too fast, and success doesn't necessarily scale linearly with growth.

Question 7

Tiffany Smith owns a barbeque restaurant. One expense that Tiffany watches closely is the cost of propane, which she uses to heat her ovens. The more barbeque food Tiffany sells, the more it cost her for propane on a monthly basis. For Tiffany, the cost of propane is a:
A) variable cost
B) secondary cost
C) resultant cost
D) fixed cost
E) irregular cost

Accepted Answer

The cost of propane is directly related to the amount of barbeque food Tiffany sells, making it a variable cost. As sales increase, the cost of propane will also increase, and as sales decrease, the cost of propane will also decrease.

Question 8

According to the textbook, most entrepreneurial firms:
A) are ambivalent about growth
B) want to grow
C) do not want to grow
D) want to grow if the economy is strong but do not want to grow if the economy is weak
E) want to grow if they are a service firm but do not want to grow if they are a manufacturing firm

Accepted Answer

According to the textbook, most entrepreneurial firms want to grow. This is because growth is often seen as a way to increase profits, achieve economies of scale, and gain competitive advantages.

Question 9

Andy Dungy owns a company that makes iPod and iPhone accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:
A) economies of scope
B) market leadership
C) influence, power, and survivability
D) need to accommodate the growth of key customers
E) economies of scale

Accepted Answer

The reason for growth illustrated in the example is economies of scale. By increasing production, the cost of each unit produced would decrease, resulting in lower average cost. This is a classic example of economies of scale, which refers to the cost advantages a business gains by increasing its scale of production.

Question 10

The rate at which a firm is growing on an annual basis is referred to as its:
A) level of growth
B) range of growth
C) pace of growth
D) iterations of growth
E) sequence of growth

Accepted Answer

The rate at which a firm is growing on an annual basis is referred to as its "pace" of growth, making option (C) the best choice. Option (A) "level" of growth does not convey the annual rate of growth, and options (B), (D), and (E) are not commonly used terms in discussing a firm's growth rate.

Question 11

Which of the following options was not identified in the textbook as an appropriate reason for growth?
A) need to accommodate the growth of key customers
B) influence, power, and survivability
C) economies of scale
D) economies of scope
E) maintain the appearance that the firm is successful

Accepted Answer

Maintaining the appearance that the firm is successful was not identified in the textbook as an appropriate reason for growth. The other options were identified as appropriate reasons for growth.

Question 12

According to the textbook, there are three are three important things that a business can do to prepare for growth:
A) plan for growth, adopt a growth-oriented business model, and stay committed to a core strategy
B) appreciate the nature of business growth, stay committed to a core strategy, and plan for growth
C) develop a viral marketing campaign, stay committed to a core strategy, and adopt a growth-oriented business model
D) develop business partnerships, diversity beyond the company's core strategy, and appreciate the nature of business growth
E) retain or hire one or more business growth consultants, diversify beyond the company's core strategy, and plan for growth

Accepted Answer

The textbook states that businesses should appreciate the nature of business growth, stay committed to a core strategy, and plan for growth in order to prepare for growth. While the other options may be helpful strategies for growth, they are not the top three recommended by the textbook.

Question 13

Only ________ of the businesses that make Inc. magazine's list of the 500 fastest growing private firms in America repeats the following year.
A) 1 in 20
B) 1 in 12
C) 1 in 5
D) 1 in 3
E) 50 percent

Accepted Answer

The answer of Only ________ of the businesses that make...

Question 14

________ costs are costs that a company incurs whether it sells something or not.
A) Fixed
B) Consistent
C) Steady
D) Variable
E) Regular

Accepted Answer

Fixed costs are costs that a company incurs regardless of whether it sells something or not. These costs do not vary as sales volume changes. Examples of fixed costs include rent, salaries, and insurance premiums.

Question 15

________ are(is) generated when increasing production lowers the average cost of each unit produced.
A) Business scalability
B) Economies of scale
C) Reaching for scale
D) Market leadership
E) Economies of scope

Accepted Answer

Economies of scale occur when a company can increase production and lower the cost of each unit produced, leading to greater efficiency and cost savings. This can be achieved through production volume discounts, specialization, and improved technology.

Question 16

Which of the following is not one of the 10 warning signs that a business is growing too fast?
A) the business's accountants are starting to worry
B) productivity is falling
C) e-mail starts going unanswered
D) borrowing money to pay for routine expenses
E) comfortable profit margins

Accepted Answer

The other four choices are all warning signs that a business is growing too fast, according to common business advice. However, comfortable profit margins are not typically seen as a warning sign of fast growth. In fact, some businesses may experience increased profits as a result of rapid growth, especially if they are able to scale their operations efficiently.

Question 17

________ are costs that a company incurs whether it sells something or not. ________ are the costs a company incurs as it generates sales.
A) Preset costs, marginal costs
B) Variable, fixed costs
C) Set costs, marginal costs
D) Fixed costs, variable costs
E) Marginal costs, set costs

Accepted Answer

Fixed costs are the costs that a company incurs regardless of whether they sell anything or not, while variable costs are the costs that are tied to sales and increase as sales increase, which are also known as marginal costs. Therefore, the correct answer is D) Fixed costs, variable costs.

Question 18

Economies of scale occur when:
A) increasing production lowers the average cost of each unit produced
B) increasing production increases the average cost of each unit produced
C) decreasing production lowers the average cost of each unit produced
D) decreasing production increases the average cost of each unit
E) increasing production increases the fixed cost of doing business

Accepted Answer

Economies of scale occur when increasing production lowers the average cost of each unit produced. This is because fixed costs, such as rent and equipment, are spread out over a larger number of units, decreasing the per-unit cost. Additionally, efficiency increases with increased production as workers become more specialized and production processes become more streamlined, further reducing costs per unit.

Question 19

According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that:
A) solve a significant problem or have a major impact on their customers' productivity or lives
B) are cost leaders and are promote themselves aggressively
C) have a major impact on their customers' lives and sell high quality products
D) take advantage of environmental trends and are cost leaders
E) solve a significant problem or sell high quality products

Accepted Answer

Businesses that solve significant problems or have a major impact on their customers' productivity or lives are ideal for sustained growth because they provide a unique value proposition that customers are willing to pay for. These businesses are more likely to have repeat customers and to benefit from positive word-of-mouth marketing, helping them to grow over time. Cost leadership and environmental trends are important factors to consider, but they are not sufficient on their own to ensure sustained growth. High-quality products and strong customer impact are also important factors, but solving a significant problem is more likely to create a sustained growth opportunity.

Question 20

JGoods, the company profiled in the opening feature for Chapter 14, sells customized shoes and kits for customizing shoes. JGoods would like to sell its kits through boutiques and craft stores, but will have to convince the retailers to sign on. One thing JGoods has learned is that the trick to getting boutiques and retailers to sign on is to:
A) prove the kits will sell
B) package the kits attractively
C) price the kits below the market price
D) promote the kits aggressively
E) cobrand the kits with proven product

Accepted Answer

JGoods needs to demonstrate that the kits will sell well to convince boutiques and craft stores to carry them.

Quiz 13: Preparing for and Evaluating the Challenges of Growth

A recent study sponsored by the SBA Office of Advocacy found that only ________ of all firms are "gazelles" or rapid growth firms at any given time.

________ costs are the costs a company incurs as it makes sales.

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produced one computer keyboard a month or 10,000. Jeremy's lease payment is a:

The What Went Wrong? feature in Chapter 13 focuses on Meetro, a location-aware instant messaging platform, that was launched on June 1, 2005, but eventually failed. The main lesson conveyed by the feature is that:

Jessica Martin owns an entertainment company which has increased both its profits and revenues over an extended period of time. Jessica's firm is experiencing:

According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are:

Tiffany Smith owns a barbeque restaurant. One expense that Tiffany watches closely is the cost of propane, which she uses to heat her ovens. The more barbeque food Tiffany sells, the more it cost her for propane on a monthly basis. For Tiffany, the cost of propane is a:

According to the textbook, most entrepreneurial firms:

Andy Dungy owns a company that makes iPod and iPhone accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:

The rate at which a firm is growing on an annual basis is referred to as its:

Which of the following options was not identified in the textbook as an appropriate reason for growth?

According to the textbook, there are three are three important things that a business can do to prepare for growth:

Only ________ of the businesses that make Inc. magazine's list of the 500 fastest growing private firms in America repeats the following year.

________ costs are costs that a company incurs whether it sells something or not.

________ are(is) generated when increasing production lowers the average cost of each unit produced.

Which of the following is not one of the 10 warning signs that a business is growing too fast?

are costs that a company incurs whether it sells something or not. are the costs a company incurs as it generates sales.

Economies of scale occur when:

According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that: