Question 1

When a large company downsizes, some of the middle-aged and older workers who are laid off find it difficult to get another job.When such workers decide to start their own businesses, they are known as _____.

Accepted Answer

The term for older workers who start their own businesses after being laid off is "necessity entrepreneurs." This term refers to the fact that these individuals are often forced to start their own businesses out of necessity due to difficulty finding employment elsewhere. Option A, welfare recipients, does not accurately describe these individuals as they may not necessarily be receiving welfare. Option C, post-retirement workers, does not accurately describe these individuals as they may not yet be at retirement age. Option D, baby boomers, is a broad term for a generation and does not specifically refer to older workers who start their own businesses.

Question 2

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 who live in low-income countries.

Accepted Answer

The Global Entrepreneurship Monitor (GEM) often shows that people in low-income countries have higher entrepreneurial intentions due to necessity-driven entrepreneurship, while those in high-income countries may have more opportunities but less necessity to start businesses.

Question 3

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, Xavi is said to be demonstrating _____.

Accepted Answer

Xavi is demonstrating vision by envisioning a new solution to a problem and being convinced that it can be successful, despite potential obstacles.

Question 4

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 own. Dominic's perceptions suggest that he has an external locus of control.

Accepted Answer

Dominic's belief that external forces (bad luck and unfair boss) are determining his life suggests that he has an external locus of control, meaning he feels that events are out of his control and caused by external factors rather than his own actions or decisions.

Question 5

Three downsides to buying a franchise include high initial costs, the ongoing percent-of-sales royalty fees, and the franchise requirements, which, in effect, reduce the owner's independence.

Accepted Answer

The statement accurately describes three downsides to buying a franchise.

Question 6

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 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.

Accepted Answer

Angel investors typically seek equity in exchange for their investment, which may dilute Ted's ownership and control over the company.

Question 7

Michael is a middle-aged professional who lost his job five months ago when his former employer downsized.He has been actively looking for work since then but has not been able to find a job that truly utilizes his abilities or that offers an income anywhere close to what he earned in his previous position. He is beginning to feel that the only way to survive his current situation is to start his own business. Michael might well become a:

Accepted Answer

Michael's situation of being unemployed and feeling the need to start his own business due to the lack of opportunities suggests that he is a necessity entrepreneur. This type of entrepreneur starts a business out of necessity due to a lack of other options for work.

Question 8

Entrepreneurs find new solutions to old problems and develop new products that people didn't even realize they needed.These entrepreneurs are said to have _____.

Accepted Answer

Entrepreneurs who find new solutions to old problems and develop new products that people didn't even realize they needed have a clear vision of what they want to achieve. They are able to see opportunities where others don't and have the foresight to make them a reality.

Question 9

Technological developments over the past two decades, such as the rise of the Internet and email, have:

Accepted Answer

Technological developments such as the rise of the internet and email have given small business owners more flexibility in business management. They can now communicate with customers and suppliers more easily, market their businesses more effectively, and manage their operations remotely. This has helped to level the playing field for small business owners and given them the ability to compete more effectively against larger businesses.

Question 10

David is a high school senior interested in starting his own computer repair business. David's interest in starting his own business will have no effect on the long-term recovery of the economy.

Accepted Answer

While David's individual business may have a small impact, collectively, small businesses contribute significantly to economic growth and recovery.

Question 11

The primary reason many people become entrepreneurs is to:

Accepted Answer

The primary reason many people become entrepreneurs is to make more money. While other reasons such as wanting to revolutionize business models or avoid difficult challenges may play a role, the desire for financial gain is often the main motivator. Avoiding risk uncertainty is not usually a reason people become entrepreneurs, as launching a new venture involves taking on significant risks.

Question 12

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 will enjoy when competing against larger firms will be a lesser burden of complying with government regulations.

Accepted Answer

While it is true that larger firms may have a greater burden of complying with government regulations due to their size and complexity, small businesses like Rudy's are not necessarily exempt from regulations. In fact, some regulations may be specifically designed to protect small businesses by creating a more level playing field with larger competitors. Additionally, Rudy's business may have unique regulations that apply to their specific industry or location.

Question 13

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

Accepted Answer

Small businesses are often perceived as more personal and approachable compared to large corporations. Foreign customers may prefer dealing directly with the top management of a small business, which can lead to stronger relationships and greater trust in the company. This advantage may not be as strong in domestic markets where customers are more familiar with larger companies.

Question 14

People with an external locus of control:

Accepted Answer

People with an external locus of control believe that the things that happen to them are due to external factors such as luck, fate, or other people's actions, rather than their own actions or abilities. They feel buffeted by these external forces and therefore have a lower sense of control over their lives.

Question 15

For entrepreneurs, there is usually a correlation between dollars earned and hours worked.

Accepted Answer

Entrepreneurs typically put in long hours to grow their business and increase their earnings. As they work more, they tend to earn more. However, this correlation may not always hold true, as factors such as market conditions, competition, and business strategy can also impact an entrepreneur's earnings.

Question 16

The Small Business Administration microloan program lends an average of $13,000 to start-up businesses through community nonprofit organizations.

Accepted Answer

The Small Business Administration microloan program does lend an average of $13,000 to start-up businesses through community nonprofit organizations.

Question 17

Marion 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, Marion tends to put in only six hours a day into building his business; some days, he finds it difficult to put in any time. Which of the following entrepreneurial characteristics does Marion lack?

Accepted Answer

Marion lacks energy, which is the willingness to put in time and effort into the business. His inconsistent working hours may prevent him from reaching his goals and hinder the progress of his business. He does have a vision, confidence, and tolerance of uncertainty as evident from his innovative idea and awareness of risks involved.

Question 18

Damien is a programmer in a software firm. He has recently received a promotion and an annual bonus. He believes that this is a result of random luck as he does not work very hard.Damien has _____.

Accepted Answer

Damien's belief that his promotion and bonus were a result of random luck indicates that he believes that external factors, rather than his own abilities and efforts, have control over his outcomes. This is characteristic of an external locus of control.

Question 19

Entrepreneurs usually view the world in black and white. They seldom consider the many shades of gray that other people see when they look at the same issues.

Accepted Answer

Entrepreneurs often consider various perspectives and complexities in decision-making, as they need to navigate uncertain and dynamic environments.

Question 20

Who among the following individuals is most likely to become a necessity entrepreneur?

Accepted Answer

Necessity entrepreneurs are those who start their own business due to lack of better employment options or because of circumstances like discrimination, as in Timo's case.

Quiz 7: Small Business and Entrepreneurship: Economic Rocket Fuel