Deck 7: Small Business and Entrepreneurship: Economic Rocket Fuel

Question 1

External locus of control is a deep-seated sense that the individual is personally responsible for what happens in his or her life.

Answer 1

False

Question 2

The U.S Small Business Administration (SBA) microloan program lends an average of $50,000 to start-up businesses through community nonprofit organizations.

Answer 2

False

Question 3

Mauve starts a business that specializes in procuring and selling antique items. Her business caters specifically to individuals who have high-income jobs and who like collecting unique artifacts. Mauve does not have much competition and can decide the prices of her products without any external influence. The opportunity of _____ is highlighted in the given scenario.

A)providing personal customer service
B)exploiting market niches
C)using technology
D)having lower overhead costs

Answer 3

B

Question 4

The U.S. Small Business Administration (SBA) gives free money to start-up businesses, grants interest-free loans, and fully guarantees loans from local commercial lenders.

Question 5

James is always keen on putting his ideas into action regardless of the outcome. He perfects his craft by trying out different possibilities. If he is dissatisfied with the result, he tries out a different method but does not give up. Which entrepreneurial characteristic is highlighted in the given scenario?

A)Docility
B)Self-reliance
C)Vision
D)Conformity

Question 6

In the event that a large company has to downsize, the middle-aged workers who are laid off find it difficult to find new jobs. When such workers decide to start their own businesses, they:

A)become welfare recipients.
B)are called necessity entrepreneurs.
C)become post-retirement workers.
D)are called baby boomers.

Question 7

People with an external locus of control:

A)are extremely self-reliant.
B)are more likely to take responsibility for their own failures.
C)feel that they have complete control over their lives.
D)feel buffeted by forces such as random luck.

Question 8

The primary reason people choose to become entrepreneurs is to:

A)avoid difficult challenges.
B)avoid uncertainty.
C)earn more money.
D)develop evolutionary business models.

Question 9

Felix lost his job at an investment firm because of downsizing during a period of recession. To keep himself financially stable, he opened a food truck that became a huge success. Which of the following advantages of entrepreneurship initially motivated Felix to start the food truck?

A)Survival
B)Independence
C)Flexibility
D)Challenge

Question 10

For entrepreneurs, there is no correlation between dollars earned and hours worked.

Question 11

Xavi develops a cell phone battery that can be charged by a solar panel and can run efficiently for up to three hours. His friends point out that it would be difficult to get cell phone manufacturers to adopt this new technology and that it could take a long time for people to start relying on it. However, Xavi is convinced that he can make his idea popular and successful. He plans to start a new company called EnerMob Inc. that would promote and sell the cell phone battery to the public. In this scenario, which of the following entrepreneurial characteristics is Xavi demonstrating?

A)Vision
B)Hindsight
C)Retrospection
D)Reflection

Question 12

Jenifer owns a bakery that specializes in preparing extravagant wedding cakes. She is a sought-after baker because of the quality and finesse of her products. Jenifer believes that the pressure of living up to the expectations of her customers and delivering quality products always keeps her on the edge and helps her to deliver her best. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

A)Challenge
B)Independence
C)Survival
D)Flexibility

Question 13

Ted's new company is experiencing a steady decline in profit. He needs external financing to prevent his company's profits from declining further. Considering the fact that he wants to exercise sole ownership and control over the firm for as long as possible, Ted is likely to find angel investors who are interested in helping him meet his financial needs.

Question 14

__________are local offices-affiliated with the U.S Small Business Administration-that provide comprehensive management assistance to current and prospective small business owners.

A)Small Business Development Centers
B)Small Business Incubation Offices
C)Small Business Advancement Stations
D)Small Business Creation Sites

Question 15

Dominic feels that an incredible string of bad luck has affected his personal life. He also feels that his boss is subjecting him to unfair treatment at work for no fault of his. Dominic's perceptions suggest that he has an internal locus of control.

Question 16

Which of the following statements is true of necessity entrepreneurship in high-income countries?

A)The rate of necessity entrepreneurship is low.
B)The risks of necessity entrepreneurship are low.
C)Necessity entrepreneurship is a major contributor to the nation's economy.
D)Necessity entrepreneurship occurs when there are several sources of income.

Question 17

Rudy owns a small metal fabrication business that employs 23 workers. As the owner of a small business, one of the major advantages that Rudy enjoys while competing with larger firms is reduced burden of complying with government regulations.

Question 18

Loren LLC is a small bicycle store that competes effectively with much larger companies as its focus lies exclusively on selling bicycles for senior citizens and patients with orthopedic ailments. The company has been successful as it has:

A)exploited a small but profitable market niche.
B)worked to undercut larger competitors.
C)attracted the best talent in the bicycle market.
D)acquired a patent for its bicycles.

Question 19

The Global Entrepreneurship Monitor (GEM) shows that people living in high-income countries tend to be much more willing to start their own businesses than people living low-income countries.

Question 20

Small businesses often have an advantage in foreign markets where customers want to deal directly with a company's top management.

Question 21

In the context of funding options for small businesses, the__________assists entrepreneurs by partially guaranteeing loans from local commercial lenders.

A)Federal Reserve
B)Patent and Trademark Office
C)U.S.Small Business Administration
D)Department of the Treasury

Question 22

Nuno owns a recording studio with high-quality equipment. He allows artists to schedule sessions based on their flexibility, and he also allows them to bring their own sound engineer and work with him or her to achieve the desired result. As a result, his customers frequent his studio and recommend it to their friends and colleagues. The opportunity of _____ is highlighted in the given scenario.

A)using technology
B)exploiting market niches
C)providing personal customer service
D)having lower overhead costs

Question 23

Wendy quit her job as the regional manager of Rubicon Inc., a multinational company, and started her own fashion boutique. Within two years, she began earning more than what she earned during her tenure at Rubicon. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

A)Survival
B)Greater flexibility
C)Independence
D)Greater financial success

Question 24

A__________is a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives.

A)business warrant
B)business resource
C)business directory
D)business plan

Question 25

Lois wants to start an art gallery. However, because of lack of adequate funds, she decides to borrow money from a bank. The bank is hesitant to give money to Lois because it cannot verify whether her business would be able to earn enough profit to repay the borrowed amount within the stipulated period. However, after a thorough research, the bank grants her the money. In the given scenario, Lois uses _____ to fund her business.

A)crowdfunding
B)a loan
C)venture capital
D)a credit card

Question 26

Gemini Inc., a large conglomerate, offered Timothy's new logistics company the much required financial support in exchange for a 40% ownership in the company. It also provided Timothy with an experienced group of people to help him make crucial decisions for the company. In the given scenario, which of the following statements is true of Gemini Inc.?

A)It is an angel investor.
B)It is a venture capital firm.
C)It is a sole proprietor.
D)It provides commercial loans.

Question 27

Richard is a wealthy and successful businessman who is well known for financing many successful start-ups. He has earned a sizable amount of profit by providing capital to start-ups in return for a share of their profits. In the given scenario, which of the following statements is true of Richard?

A)He provides venture capital to start-ups.
B)He provides commercial loans to start-ups.
C)He is a general partner.
D)He is an angel investor.

Question 28

Lowell runs a unisex salon and has six 10-hour workdays. If a customer requests him to stay open on the seventh day, he always obliges. He also provides home services if requested. Which entrepreneurial characteristic is most likely highlighted in the given scenario?

A)Self-reliance
B)Docility
C)Energy
D)Vision

Question 29

Maurice wants to make a documentary film on the unequal distribution of money in the world and its effect on different social classes. Instead of approaching a production house, he creates a website for the project where he pitches his idea through a short video and requests the viewers to donate any amount of money to cover the production cost. In the given scenario, which of the following is Maurice using to get the capital for his film?

A)A venture capital firm
B)An angel investor
C)Crowdfunding
D)Seed money

Question 30

In the context of entrepreneurs, which of the following statements is a difference between an internal locus of control and an external locus of control?

A)An internal locus of control is an entrepreneurial trait, whereas an external locus of control is not.
B)An internal locus of control does not involve self-reliance, whereas an external locus of control does.
C)An internal locus of control involves personal responsibility, whereas an external locus of control does not.
D)An internal locus of control is not applicable in market niches, whereas an external locus of control is.

Question 31

Robert started his company in his parents' garage because he could not afford to rent an office space. Most of his finances were spent on procuring the essential items to set up his company. As a result, he was able to save funds for the future. The opportunity of _____ is highlighted in the given scenario.

A)exploiting market niches
B)using technology
C)having lower overhead costs
D)providing personal customer service

Question 32

_____ is a deep-seated sense that forces other than the individual are responsible for what happens in his or her life.

A)An external locus of control
B)Tolerance of uncertainty
C)An internal locus of control
D)Tolerance of failure

Question 33

Priscilla is a trader of silver and diamond jewelry. Due to a recessionary trend in the industry, her business has not been making any profits for a few months. As the end of this economic trend cannot be easily ascertained, she decides to get her house mortgaged so that she can add a new line of business of trading in semi-precious stones. This financial risk appetite of Priscilla illustrates her _____ as an entrepreneur.

A)high energy levels
B)tolerance of uncertainty
C)tolerance of failure
D)deep visionary sense

Question 34

Robert wants to start an independent recording studio. In order to finance his start-up, Robert seeks help from Esther, a successful business magnate. Esther agrees to fund Robert's venture as long as she receives a 20% share of the profits made by Robert. In the given scenario, Robert receives the financial resources to start his business:

A)from a venture capital firm.
B)through crowdfunding.
C)though a commercial loan.
D)from an angel investor.

Question 35

Which of the following is an intimidating obstacle that small businesses face?

A)Complications in technology
B)High health insurance costs
C)High overhead costs
D)Lack of personal customer service

Question 36

Rahul owns a guitar store that is famous for customizing guitars. From choosing the wood for the body to the type of pickups, everything can be selected by the customer. This feature attracts beginners and professionals alike to Rahul's store. The specific nature of the business makes it unique and results in fewer competitors. This allows Rahul to choose the prices for his services. The opportunity of _____ is highlighted in the given scenario.

A)exploiting market niches
B)having lower overhead costs
C)providing homogenous service
D)using technology

Question 37

Technological tools such as the Internet and email have:

A)decreased the importance of entrepreneurship in the national economy.
B)made it easy for small business owners to manage their firms on the go.
C)made it harder for small businesses to compete against large businesses.
D)increased the number of legal regulations that small businesses should comply to.

Question 38

David wants to open a new gymnasium with state-of-the-art equipment and qualified trainers. However, he can only afford either of the two. He decides to get the equipment first to start the gym. However, without qualified trainers to operate the equipment, David loses his customers and is forced to shut down the gym. Which of the following threats is most likely highlighted in the given scenario?

A)High risk of failure
B)Too little money
C)Lack of knowledge
D)Bigger regulatory burden

Question 39

Jacob is in urgent need of financing for his rapidly-growing online travel business Travelmunch. As Jacob does not usually pay off his loans on time, his credit score is very low. He feels overwhelmed and thinks that it would be ideal if he receives some guidance on how to run the business. Given his situation, which of the following key sources of funding would be ideal for Jacob?

A)A commercial bank loan
B)A venture capital firm
C)An initial public offering
D)A U.S.Small Business Administration loan

Question 40

Which of the following is a powerful contribution made by small businesses to the U.S. economy?

A)Mergers of billion-dollar corporations
B)Powering the stock market
C)Vitalizing inner cities
D)Accounting for all private sector output

Question 41

Howard is a young entrepreneur who is invested in creating a new form of social media. He is sure of his idea and believes that it will be successful in the long run. However, he is careful not to be overoptimistic about it and works on other ideas as well. In the given scenario, which of the following statements is true of Howard?

A)He has an external locus of control.
B)He is docile.
C)He is a conformist.
D)He is confident but not overconfident regarding his abilities.

Question 42

Suresh quits his nine-to-five job at a multinational company and starts his own event management company. In his new company, he does not practice a nine-to-five work regime. Instead, he organizes meetings with clients by making appointments that favor his schedule. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

A)Greater challenge
B)Survival
C)Greater financial success
D)Flexibility

Question 43

Herbert uses prominent social media websites to promote his newly opened restaurant. He constantly posts promotional offers and provides coupons that customers can redeem to avail discounts when they dine in the restaurant. The opportunity of _____ is highlighted in the given scenario.

A)providing personal customer service
B)using technology
C)having lower labor costs
D)exploiting market niches

Question 44

In low-income countries, a high percentage of entrepreneurs are considered__________.

A)necessity entrepreneurs
B)rational entrepreneurs
C)social entrepreneurs
D)voluntary entrepreneurs

Question 45

Michael is a middle-aged professional who lost his job five months ago when his former employer downsized. He has actively been looking for work ever since but has not been able to find a job that utilizes his abilities or offers an income similar to his previous position. He is beginning to realize that the only way for him to survive his current situation is to start his own business. In this scenario, Michael will most likely become a(n) _____.

A)venture capitalist
B)angel investor
C)necessity entrepreneur
D)baby boomer worker

Question 46

Deborah dreams of owning a pub in the heart of the city that she lives in. Deborah has the music, ideas, and menu in place, and the funds required to start the pub. Which of the following suggestions is most likely to help Deborah realize her dream?

A)Deborah should buy a pub that is already established.
B)Deborah should start from scratch.
C)Deborah should buy a franchise of a well-known pub.
D)Deborah should sell her ideas to wealthy pub owners.

Question 47

Brian had started a new business venture using majority of his savings. However, his divorce affected him monetarily because of which he had to shut down his business. Which of the following threats is highlighted in the given scenario?

A)Bigger regulatory burden
B)High risk of failure
C)Too little money
D)Lack of knowledge

Question 48

According to small business experts, while raising start-up funds from friends and relatives, it is:

A)acceptable to not repay them.
B)essential to involve them in company dealings.
C)acceptable to not document the financing.
D)essential to keep the relationship as professional as possible.

Question 49

Samuel has an innovative idea for better disposal of garbage. Hence, he starts a business to implement this idea that he believes will succeed. He is also aware of the risks involved in starting the business. However, Samuel puts in only six hours a day into building his business. Some days, he finds it difficult to put in any time at all. Which of the following entrepreneurial characteristics does Samuel lack?

A)Energy
B)Confidence
C)Tolerance of uncertainty
D)Self-reliance

Question 50

Buying an established business is a better plan than starting your business from scratch because:

A)you have more creative freedom.
B)you can choose your stakeholders.
C)the organizational structure is in place.
D)the chance of first-year failure is zero.

Question 51

Rachel runs a fashion boutique. She employs five seamstresses to help her in her work. She gives them flexible work hours and usually allows them to work from their respective homes. However, Rachel does not provide health-care facilities to her employees, and instead, she uses the financial resources to buy high-quality fabrics. The opportunity of _____ is highlighted in the given scenario.

A)exploiting market niches
B)using technology
C)having lower overhead costs
D)providing personal customer service

Question 52

Charles owns a restaurant that is thematically modeled into representing the pop culture of the 1980s. While setting up the restaurant, Charles took care of everything himself, from interior decoration to menu and music. He even got the permit for the restaurant himself. Which entrepreneurial characteristic is highlighted in the given scenario?

A)Conformity
B)Subservience
C)Vision
D)Self-reliance

Question 53

Luis runs a bakery that offers only takeaway service. His customers visit his residence and watch him prepare their order. They also get an opportunity to bring their cake designs and help Luis prepare the desired cake. As a result, he knows most of his customers well. The opportunity of _____ is highlighted in the given scenario.

A)providing personal customer service
B)having lower overhead costs
C)using technology
D)exploiting market niches

Question 54

Mabel has a business idea of starting a store that would only sell hair products. Although she needs to raise capital to start her business, she does not want to share the ownership of her firm with anyone else. With a good appetite for risk, which of the following financing resources would be most ideal for her to start her business?

A)Personal credit cards
B)Angel investors
C)Venture capital firms
D)Microloan program from the U.S.Small Business Administration

Question 55

Rudy, a food truck owner, has sizable followers on his website where he personally interacts with them and thanks them for their support. He also lets his followers know his location and the menu for a day in advance. The opportunity of _____ is highlighted in the given scenario.

A)having lower overhead costs
B)providing personal customer service
C)exploiting market niches
D)using technology

Question 56

Lester owns a small law firm and has a 10-hour workday. Despite keeping long hours, he is open to working on weekends and holidays if required. He also responds to late-night calls from clients. Which of the following entrepreneurial characteristics is highlighted in the given scenario?

A)Energy
B)Confidence
C)Vision
D)Self-reliance

Question 57

Ruben owns an astronomy-themed restaurant. The entire restaurant resembles a planetarium. He has also installed a projector that transforms the ceiling into a night sky. Ruben used most of his savings to fund this venture and also borrowed funds from his friends and family. In the given scenario, Ruben used _____ to fund his business.

A)crowdfunding
B)commercial loans
C)personal resources
D)venture capital

Question 58

Richard, an employee in an investment firm, was dissatisfied with the way his superiors handled business dealings. For that reason, he quit his job and started his own business so that he is able to make all management decisions without interference from anyone. Which advantage of entrepreneurship is highlighted in the given scenario?

A)Greater financial success
B)Independence
C)Uniformity
D)Greater challenge

Question 59

The nation of Rhodasia has the lowest entrepreneurship rate globally. A new government, headed by President Harold David Wengerd, aims to make the country's business environment more supportive toward burgeoning entrepreneurs. Which of the following measures should be taken to increase the entrepreneurship rate in Rhodasia?

A)Increasing unemployment insurance available to employees
B)Eliminating complex regulations placed on businesses
C)Mandating that all businesses must provide employee health insurance
D)Initiating employment protection laws

Question 60

Nestor wants to open a new event management company. Deveon, a multinational company, agrees to fund his business on the condition that Deveon be given 50% ownership in the company. In the given scenario, Deveon is most likely a(n) _____.

A)commercial lender
B)sole proprietor
C)venture capital firm
D)angel investor

Question 61

Olivia runs a spa for women. She employs only two helpers and one receptionist. This enables her to focus most of her resources on procuring products required to provide comfort and high-quality services to customers. The opportunity of _____ is highlighted in the given scenario.

A)providing personal customer service
B)using technology
C)exploiting market niches
D)having lower overhead costs

Question 62

Margie dropped out of college to pursue her passion for cooking. With personal resources to fund her initial capital, she started a food truck in one of the busiest streets of her hometown. After a month of running the food truck, Margie realized that she was not getting enough customers because there were several other similar food trucks in the area. In this scenario, which of the following threats did Margie's business face?

A)Narrow market niche
B)Weak internal locus of control
C)Lack of knowledge and experience
D)Lack of funds

Question 63

Timothy wanted to start a coffeehouse. However, he could not buy a space to start his business because of lack of funds. Which of the following threats is highlighted in the given scenario?

A)Bigger regulatory burden
B)High risk of failure
C)Too little money
D)Lack of knowledge

Question 64

Ethan is in the process of launching his new business venture that specializes in electronic waste recycling. During this period, he has been in constant touch with Lois Inc., who has seen success in this niche market. In this scenario, which of the following entrepreneurial development strategies is Ethan utilizing?

A)Developing a business plan
B)Accessing the U.S.Small Business Administration resources
C)Fueling innovation
D)Learning from others

Question 65

Angela runs a fashion boutique for women. Her customers can use an online editing software to create a rough image of the design and style they want Angela to use. The opportunity of _____ is highlighted in the given scenario.

A)using technology
B)having lower overhead costs
C)providing homogenous service
D)exploiting market niches

Question 66

In the context of various funding options for small businesses, which of the following statements is a difference between angel investors and venture capital firms?

A)Angel investors fund only nonprofits, whereas venture capital firms do not fund nonprofits.
B)Angel investors include private organizations, whereas venture capital firms include only government organizations.
C)Angel investors focus on start-ups in their later stages, whereas venture capital firms focus on low-potential start-ups.
D)Angel investors are wealthy individuals, whereas venture capital firms are companies.

Question 67

Michael wants to launch a new product. He creates a website specifically for this on the Internet and uploads a short video demonstration of his product on the website. He also appeals to the viewers to make donations to help him start production. People respond well to his idea and help him collect enough financial resources to start his business. The opportunity of _____ is highlighted in the given scenario.

A)exploiting a market niche
B)providing personal customer service
C)having lower overhead costs
D)using technology

Question 68

Small business start-ups are likely to find that getting commercial loans are:

A)difficult because lenders are reluctant to give loans to firms that do not have a track record.
B)one of the most flexible ways of obtaining financing because local bankers are usually eager to establish relationships with new companies.
C)the most difficult because start-ups require higher financing than what banks can offer.
D)the best way to obtain all the financing they need as lenders usually get an ownership stake in the companies.

Question 69

Maude worked as a lead animator in an animation company. However, she could not exercise her freedom while working on projects because she was bound by the decisions made by the company. Fed up with this, Maude quit her job and started an independent animation firm where she accepts only those projects that allow her a free rein in terms of creativity. In the given scenario, Maude most likely started her own firm because it offered _____.

A)independence
B)uniformity
C)greater challenge
D)greater financial success

Question 70

Rosa has several creative ideas for organizing events and starts an event management company. However, with little knowledge about running a business, she is unable to handle the finance and marketing sides of the business. As a result, she faces huge losses and eventually shuts down the company. Which of the following threats is highlighted in the given scenario?

A)Lack of knowledge
B)Too little money
C)Bigger regulatory burden
D)Higher health insurance costs

Question 71

James employs an apprentice in his guitar store who gets firsthand knowledge of craftsmanship and the process involved in becoming a professional luthier. This allows James to have a reliable hand who can assist him in his work without requiring him to hire a professional luthier. It also enables him to use his financial resources on procuring high-quality materials to make the guitars. The opportunity of _____ is highlighted in the given scenario.

A)having lower overhead costs
B)exploiting market niches
C)using technology
D)providing personal customer service

Question 72

In the context of opportunities and threats, overhead costs for small businesses:

A)tend to be much higher than large businesses.
B)are about the same as big companies.
C)are often lower than big companies.
D)tend to decrease as they grow bigger in size.

Question 73

Tina owns a workshop that specializes in making intricate wooden decorative items. She makes scale models of most of the existing objects around the world. She faces virtually no competition in her business and thus enjoys a stable growth. The opportunity of _____ is highlighted in the given scenario.

A)providing personal customer service
B)having lower overhead costs
C)using technology
D)exploiting market niches

Question 74

Raoul is an illiterate who does not have proper skills for any job. As a result, he is unable to find permanent employment. As a last resort, Raoul starts a diner in his home to earn a regular income for his family. In the given scenario, Raoul most likely started the diner because it offered _____.

A)greater flexibility
B)a challenge
C)a chance of survival
D)independence

Question 75

Runion Bank is well-known for providing funds to start-ups. The bank lends money to an entrepreneur at an interest rate of 5%, which is to be repaid only after the business earns a sizable profit. If the business fails, then only the primary amount needs to be returned. In the given scenario, which of the following statements is true of Runion Bank?

A)It is a venture capital firm.
B)It is an angel investor.
C)It provides loans to entrepreneurs.
D)It helps entrepreneurs in the process of crowdfunding.

Question 76

Paul worked as an artisan at a furniture company where a set of artisans were required to produce a specific part of a product, and the product was later assembled. Paul quit his job and started a small furniture business where he crafts unique products based on the demands of his customers. He feels that the constant need to adapt and outperform himself keeps him focused and motivated to improve his craft. Which advantage of entrepreneurship is highlighted in the given scenario?

A)Greater financial success
B)Survival
C)Greater tractability
D)Challenge

Question 77

Julian wants to open a bakery. He uses his savings and borrows some funds from his family to start his business. In the given scenario, Julian uses _____ to fund his business.

A)venture capital
B)crowdfunding
C)commercial loans
D)personal resources

Question 78

Mohit is very passionate about music and opens a recording studio of his own. However, he does not know much about running a business and within a short period, starts running into losses. Therefore, he shuts down the business. Which of the following threats is highlighted in the given scenario?

A)Too little money
B)Higher health insurance costs
C)Bigger regulatory burden
D)Lack of knowledge

Question 79

Vincent runs a small company that manufactures hand-stitched custom leather shoes for men. His products generally attract young, wealthy entrepreneurs who care about their comfort and style. Being a unique business, it does not have much competition and enjoys monopoly. The opportunity of _____ is highlighted in the given scenario.

A)using technology
B)having lower overhead costs
C)exploiting market niches
D)providing homogenous service

Question 80

In the context of the U.S. economy, small businesses:

A)do not create a significant percentage of new jobs.
B)do not contribute significantly to gross domestic products.
C)are often the first to contract when times are tough.
D)have an insignificant impact on the state of the economy.