2000 Entrepreneurship Page 1 1. Telemarketing and selling on the Internet are both a. True b. False examples of direct marketing. 2. Business-to-business salespeople sell to wholesalers, a. True b. False retailers, and manufacturers. 3. An advantage of an S Corporation over a a. True b. False conventional corporation is that the profits of the business are taxed as regular personal income of the owners, thus avoiding the problem of double taxation. 4. In a merger, two firms combine to form one company. a. True b. False 5. Today, franchising accounts for about 40 percent of a. True b. False the national retail sales in the United States. 6. The franchisee often must pay the franchiser a share a. True b. False of profits or a percentage commission on sales known as a royalty. 7. Although entrepreneurs frequently earn huge profits a. True b. False for themselves, their impact on society as a whole is quite small, 8. American history illustrates many cases in which a. True b. False entrepreneurs started small businesses that grew into major corporations employing thousands of workers. 9. In general, entrepreneurs are more interested in a. True b. False personal achievement than in power. 10. To encourage more entrepreneurs in the United a. True b. False States, the government passed the Immigration Act of 1990. 11. To be classified as a small business, a firm must have a. True b. False fewer than 100 employees. 12. Sharon decided to work for a floral design shop a. True b. False before opening her own shop. This was a poor decision because she used her labor to make someone else successful. 13. Because it is written before the business even begins a. True b. False to operate, a business plan by its very nature is vague. 14. Venture capitalists can be excellent sources of capital a. True b. False for small business since they provide financing in exchange for a very small stake in the company. 15. ISO 9000 refers to a set of international standards for a. True b. False quality management and assurance. 16. The total value of a country's output in a given year a. True b. False is known as the nation's gross domestic product (GDP). 17. Efforts by the Federal Reserve System to control the a. True b. False money supply and interest rates are known as monetary policy. 2000 Entrepreneurship Page 2 18. A patent gives inventors exclusive rights to their a. True b. False inventions for 20 years. 19. The intent of the Sherman Antitrust Act of 1890 was a. True b. False to encourage the growth of large business organizations in the U.S. in order to compete with more established firms in Europe. 20. Theory Y assumes that all workers are motivated a. True b. False more by money than any other factor. 21. A basic difference between businesses and a. seek to earn a profit. b. produce tangible goods c. have a limited life. d. must have a board of organizations such as charities and government agencies is rather than providing directors. that businesses services. 22. Entrepreneurs are characterized mainly by their a. willingness to accept b. high level of scientific c. personal wealth. d. experience in running the risks involved in and technical expertise. large, complex starting and managing a organizations. business. 23. In the United States, the level of taxes and a. influences where b. is the same in all areas c. seems to have no effect d. is so high that the government regulations entrepreneurs locate of the country. on the creation of wealth. American economy is now their businesses. classified as pure socialism. 24. The population of the United States is diverse, a. multiculturalism. b. ethnocentrism. c. macrocentrism. d. social Darwinism. including people from many different racial and ethnic groups. Optimizing the contributions of these various cultural groups is known as 25. Which of the statements about demography is most a. are important for the b. suggest that the number c. provide business and d. are an important source accurate. Demographic studies government, but not for of two-income families individuals key insights of information about private businesses. will decline in the future. into business and career weather and climate. opportunities of the future. 26. The agreement between the United States, Canada, a. NAFTA. b. OPEC. c. NATO. d. the Trilateral and Mexico to remove barriers that restricted trade among Agreement. these nations is known as 27. Given the current state of global competition, a. U.S. firms that produce b. consumers now expect c. the U.S. government d. U.S. firms should be quality products are able to high quality products must subsidize American able to dominate most charge premium prices for and good service at low farmers and foreign markets because their products. prices. manufacturers, as well as the U.S. is the only nation foreign producers, if they where high quality is are to survive. achieved in most industries. 28. Under capitalism a. most of the means of b. distribution of wealth is c. utilities, health care, d. the market can only production and the primary function of education, and other operate within a system of distribution are privately government. services are totally strict regulations and owned and operated for controlled by the state. central planning. profit. 2000 Entrepreneurship Page 3 29. The quantity of a good or service that manufacturers a. supply of that product. b. demand for that product. c. equilibrium function for d. production possibilities or owners are willing to sell at different prices during a that product. curve for that product. specific time period is known as the 30. A typical demand curve suggests that a. as people earn more b. as supply increases, the c. people tend to buy d. people tend to buy more income, they buy more of amount purchased more of a good as its of a good than they really a good. decreases. price decreases. need. 31. One advertising strategy used by McDonald's is to a. product b. an equilibrium price. c. a perfectly competitive d. quantity supplied that is convince potential buyers that their products are different differentiation. market. greater than the quantity from those of their competitors. The goal of this strategy is demanded. to achieve 32. The primary objective of monetary policy is to a. help the federal b. keep interest rates low. c. keep the value of the d. keep the economy government finance its dollar high in international growing without causing deficit. currency markets. inflation. 33. Which theory states that a nation should produce and a. Comparative b. Absolute advantage c. Factor advantage d. Bilateral advantage sell goods that it produces most efficiently to other advantage countries, and buy goods produced more efficiently by other countries? 34. The president of the American Auto Parts a. dumping. b. reverse exporting. c. free trade. d. bilateral trade surplus. Corporation recently testified before members of Congress, urging them to limit the flow of imported automobile parts into the United States. She contended that these imports were priced lower than the foreign producers were charging in their own countries. She believes these foreign producers are guilty of 35. Pepsi Cola has entered into a long-term contract with a. licensing. b. a joint venture. c. a foreign subsidiary. d. countertrading. a South African beverage business. The contract calls for the South African firm to produce and market Pepsi Cola in South Africa. Pepsi will receive a royalty on each case of soda sold. This is an example of 36. U.S. business people have been described as having a. feel that they cannot b. are very open to new c. believe our culture is d. take pride in the many ethnocentric views in their dealings with other countries. compete in foreign ideas. superior to all others. ethnic groups that make This means that American business people countries without behaving America a "melting pot." unethically. 37. Kwantum Computers attempts, where possible, to a. international b. global marketing. c. multinational selling. d. countertrading. communicate the same promotional message about their foolishness. product everywhere in the world their product is sold. This is an example of 38. The U.S. government has announced a 5 million- a. embargo. b. revenue tariff. c. import quota. d. export cap. pound annual limit on beef imported from the country of Argentina. This type of trade restriction is called a/an 39. A major concern voiced by U.S. critics of the North a. higher prices for b. loss of jobs in the U.S. c. loss of national identity. d. a trade war between the American Free Trade Agreement (NAFTA) is that it would consumer goods. economy. United States and Mexico. result in 2000 Entrepreneurship Page 4 40. Adam's Apple Corporation ships all of the apples a. is a clear example of a b. is not a multinational c. is contributing to the d. will benefit greatly from from its orchards in Washington to a single buyer in Japan. multinational corporation. corporation. U.S. balance of trade the establishment of The firm's entire profits are derived from this international deficit. NAFTA. transaction. Adam's Apple Corporation 41. Obeying the law is ______ ethical behavior. a. the same as b. the first step towards c. the opposite of d. the last step towards 42. Considering the impact on other involved individuals a. legal b. anti-social c. ethical d. self-motivated before making decisions is consistent with _______ behavior. 43. Attempting to misrepresent your firm's income when a. a good business b. tax accountants at their c. illegal behavior. d. profit maximization. calculating your tax liability is an example of practice. best. 44. The most basic step in an ethics-based management a. "Is it legal?" b. "Is it balanced?" c. "How will it make me d. "Is it ethical?" system is the question feel about myself?" 45. All of the following would be considered ethical a. overstating an expense b. forecasting sales for c. withholding product d. ignoring unsafe working matters in a business, except report. the next year. safety information. conditions. 46. Which of the following describes charitable donations a. Corporate b. Corporate responsibility c. Corporate policy d. Corporate structure and by corporations to nonprofit organizations? philanthropy function 47. The position a firm takes on issues that affect the a. corporate philanthropy. b. corporate policy. c. corporate ethnicity. d. corporate philosophy. corporation as well as society is known as its 48. _______ encompasses various issues such as setting a. Corporate b. Corporate philanthropy c. Corporate ethnocentrism d. Corporate structure and minority hiring practices, manufacturing safe products, and responsibility function minimizing pollution. 49. People who can affect or are affected by the a. lienholders. b. stockholders. c. stakeholders. d. leaseholders. achievement of an organization's objectives are referred to as 50. ______ refers to rules, statutes, codes, and a. Common law b. Statutory law c. Bankruptcy law d. Business law regulations established to provide a legal framework within which business may be conducted. 51. The body of law created by court decisions rendered a. business b. statutory c. common d. tort by judges is called ______ law. 52. A patent gives inventors exclusive rights to their a. 20 months. b. 17 years. c. 20 years. d. the lifetime of the inventions for inventor plus 50 years. 53. The NBC peacock and the Golden Arches of a. trademark b. submarine patent c. copyright d. copy protection McDonald's are examples of a _______. 54. A set of laws designed to eliminate differences a. common law. b. statutory law. c. standardized d. the uniform among state regulations affecting business and to simplify comprehensive rules. commercial code. interstate commerce is called 55. The warranty you receive in the box with a new a. implied warranty. b. express warranty. c. uniform warranty. d. commercial warranty. toaster or VCR is a/an 56. Which of the following prohibited monopolies' a. Clayton Act b. Sherman Act c. Robinson-Patman Act d. Wheeler-Lea attempts to monopolize, or restrain any part of trade or Amendment commerce? 57. The social movement designed to increase and a. environmentalism. b. capitalism. c. socialism. d. consumerism. strengthen the rights and powers of buyers in business transactions is called 2000 Entrepreneurship Page 5 58. The legal process by which an individual is relieved a. financial discharge. b. bankruptcy. c. debtor relief. d. creditor discharge. of his or her financial obligations by a court of law is called 59. Johnson Products charges larger firms a lower price a. discrimination. b. reversal. c. cutting. d. maintenance. for goods than it charges small firms. This practice is called price 60. In the United States today, the most common form of a. partnership. b. corporation. c. joint venture d. sole proprietorship. business ownership is the 61. A business organization that is owned, and usually a. closed corporation. b. subchapter S c. sole proprietorship. d. limited partnership. managed, by one person is a corporation. 62. All of the following are considered advantages of a. ease of starting and b. retention of profits. c. no special taxes. d. limited liability. being a sole proprietorship except ending the business. 63. One of the primary disadvantages of owning a sole a. possibility of limited b. heavy tax liability that c. often overwhelming d. None of the above proprietorship is the liability. must be assumed. time commitment required of the owner. 64. Any debts or damages incurred by a firm organized a. the sole responsibility b. limited to the amount c. paid for out of a reserve d. normally covered by as a sole proprietorship are of the owner. the owner has invested in contingency fund that sole liability insurance. the firm. proprietors are required by law to set up. 65. Eiroy Hatchard is the sole proprietor of a gift shop in a. totally tax-free. b. taxed only once, as c. taxed twice, once as d. taxed only if and when a small shopping center. Because he is a sole proprietor, Eiroy's personal income. business income, then it is distributed to Eiroy's profit from the business is again as Eiroy's personal investors. income. 66. A partner who invests money in a business, but who a. implied partner. b. limited partner. c. partial partner. d. corporate partner. does NOT take an active role in management or assume liability for the firm's losses is known as a/an 67. When entering into a new partnership, the partners a. avoid putting their b. put the partnership c. plan to incorporate as d. agree to put the first should agreement in writing since agreement in writing. soon as possible. year's profits back into the this would limit the partnership. flexibility of the partnership. 68. When comparing partnerships to sole proprietorships, a. are less risky, because b. are easier to terminate. c. cost less to organize. d. give the firm a an advantage of partnerships is that they each partner is responsible stronger financial for only a specified foundation. fraction of the firm's debts. 69. Which of the following is an advantage of the a. Ease of formation b. Lower taxes c. Simplified paperwork d. Limited liability of corporate form of business when compared to sole owners proprietorships and partnerships? 70. Marie Lively recently invested $4,000 that her aunt a. owner b. manager c. creditor d. partner had left her in stock in the McBun Development Corporation. Marie has become a/an _______ of McBun Corporation. 71. The result of two firms forming one company is a. joint tenancy. b. tenancy in common. c. merger. d. voluntary directorship. called a 2000 Entrepreneurship Page 6 72. When one company buys the property and a. cooperative. b. hostile takeover. c. leveraged buyout. d. acquisition. obligations of another company, the purchase is known as a/an 73. A/An _______ is an arrangement whereby someone a. conditional grant b. franchise agreement c. trade contract d. extended ownership with a good idea for a business sells the rights to use the agreement business name and sell a product or service to others in a given territory. 74. A _______ is the share of profits or percentage of a. royalty b. dividend c. premium d. co-pay sales a franchisee pays to a franchiser. 75. An entrepreneur is someone who a. manages a business for b. owns controlling c. manages a businesses d. accepts the risk of someone else. interest in the stock of a that operates in more than starting and running a major corporation. one country. business. 76. All of the following are characteristics of successful a. self-directed. b. tolerant of uncertainty. c. willingness to accept d. action-oriented. entrepreneurs except failure. 77. One feature of the Immigration Act of 1990 was the a. creation of "investor b. establishment of a c. establishment of d. exchange program that visas" to attract more government program to guidelines to help allows American immigrants with teach American workers entrepreneurs recruit legal entrepreneurs to live in entrepreneurial ability. displaced by immigration aliens as a source of low Europe temporarily in how to start their own cost labor. order to open up foreign businesses. branches for their businesses. 78. Enterprise zones are areas which a. the government has set b. feature low taxes and c. the government has d. are characterized by aside for use by major government support in recognized as having the government ownership of corporations that promise an effort to encourage fastest growth rates in the small businesses. to spend at least $10 entrepreneurship. country. million to create new jobs. 79. A creative person who works within a corporation to a. arbitrator. b. arbitrageur. c. extrapolator. d. intrapreneur. develop new products and generate new profits is known as a/an 80. A look at the history of the United States suggests a. often have created great b. have started many c. have been successful d. played an important role that entrepreneurs personal wealth for small firms that later only when they worked in in the U.S. when the themselves, but have had a became major partnership with the economy was small but are minor impact on the U.S. corporations employing federal government. less important now that the economy as a whole. thousands of workers. U.S. is the world's dominant economic power. 81. Which of the following elements are generally found a. Creative, marketing, b. Venture financing, tax c. Scientific abilities, d. Reliance on risk, debt to be a part of entrepreneurial teams? and production skills benefits, and production capital investment, and financing, and economies marketing skill international experience 82. A detailed written statement that describes the nature a. business plan. b. ratio analysis. c. profit and loss d. professional plan. of the business, the target market, the advantages the statement. business will have in relation to competition, and the resources and qualifications of the owner is referred to as the 2000 Entrepreneurship Page 7 83. Other than personal savings, the largest source of a. large banks. b. the Small Business c. state governments. d. individual investors. capital to entrepreneurs comes from Administration. 84. A participation loan from the SBA is a a. low cost loan that is b. combination of a c. low interest loan made d. loan made to a firm in only made to direct loan from the SBA to firms that agree to financial difficulty with entrepreneurs who have and a loan guarantee participate in a minority the provision that a participated in the SBA's from a financial hiring program. manager appointed by the training programs. institution. SBA consultant can participate in the firm's management until the financial performance improves. 85. When preparing the executive summary section of a a. computer software b. it must grab the c. you should list all the d. a perfect business plan business plan, it is important to remember that programs will provide you attention of bankers who qualifications and starts in this section. with the information receive many business education of the executive needed to complete this plans every day. entrepreneur. section. 86. _______ is the process used to accomplish a. Socialization b. Justification c. Preparation d. Management organizational goals through planning, organizing, leading, and controlling people and other resources. 87. Which of the following activities is part of the a. Assigning a particular b. Looking at market c. Talking to an employee d. Conducting a job planning function of a manager? worker to do a specific forecasts to identify whose job performance interview with a potential task. future business has been unsatisfactory. new employee. opportunities and challenges. 88. A _______ is an overall explanation of why an a. tactical plan b. prime directive c. corporate charter d. vision organization exists and where it is trying to head. 89. Employees often work with managers to design a/an a. objective function b. priority hierarchy c. mission statement d. corporate blue book _______ which outlines the fundamental purposes of the organization. 90. Douglas McGregor described two very different a. the positive view and b. the macro perspective c. Theory X and Theory d. individualism and managerial attitudes about workers, which he called the negative view. and the micro perspective. Y. collectivism. 91. Theory ______ sees workers as being lazy and a. A b. X c. Y d. Z unwilling to accept responsibility. 92. An attempt by marketers to persuade consumers to a. promotion. b. market research. c. unilateral sales. d. benefit segmentation. participate in an exchange is called 93. An event where many marketers set up displays to be a. promotional event. b. direct marketing show. c. public relations event. d. trade show. seen by potential customers is called a 94. The most important internal sales promotion efforts a. customers. b. salespeople. c. virtual trade shows. d. accountants. are directed at 95. The most selective advertising medium for reaching a. radio. b. newspapers. c. television. d. direct mail. a specific target market is 96. All of the following are components of an a. public relations. b. sales promotions. c. personal selling. d. company trademarks. organization's promotional mix except 2000 Entrepreneurship Page 8 97. The technology revolution has a. not really affected b. not had as much impact c. put more control in the d. empowered customers advertising. on advertising as it has on hands of the with greater involvement other areas of business. businessperson. and control. 98. What are the "4 P's of Marketing"? a. Product, promotion, b. Position, product, c. Promotion, price, place, d. Price, product, place, position promotion, price position promotion, place 99. The letters GE in a circle is General Electric's a. generic name. b. label. c. trademark. d. brand. 100. Knockoff brands are _______ copies of national a. exact b. clever c. illegal d. licensed brand name goods.
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