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Entrepreneurship: Starting & Operating a Small Business, 4e (Mariotti)
Chapter 1 Entrepreneurs Recognize Opportunities
1) Products are tangible, meaning ________.
A) you can’t actually touch them
B) you can sell them
C) you can touch them
D) you can see them
Learning Object.: 1.1 Summarize what entrepreneurs do.
AACSB Category: Reflective thinking
2) Entrepreneurs are often both owners and ________.
A) creditors
B) employees
C) customers
D) suppliers
Learning Object.: 1.1 Summarize what entrepreneurs do.
AACSB Category: Reflective thinking
3) An entrepreneur is a person who assumes the risks of organizing and managing a business for
the sake of reducing stress from the “rat race.”
Learning Object.: 1.1 Summarize what entrepreneurs do.
AACSB Category: Reflective thinking
4) Explain how entrepreneurs can add value to scarce resources, and what signal they use to
determine whether or not they are succeeding in doing so.
Learning Object.: 1.1 Summarize what entrepreneurs do.
AACSB Category: Analytical thinking
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5) In the United States nearly half of the private workforce is represented by ________.
A) small business owners and their employees
B) entrepreneurs
C) corporations and their employees
D) women and minorities
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
6) A(n) ________ is the wealth and resources of a country or region, including its financial
structure.
A) economy
B) government
C) justice system
D) free enterprise
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
7) Entrepreneurs have more control over more aspects of their working lives than employees. Of
which aspect of their working lives do employees have more control?
A) financial uncertainty
B) working conditions
C) time
D) encroachment on personal time
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
8) Cash or goods invested to generate income and wealth is called ________.
A) profit
B) capital
C) debt
D) liability
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
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9) The United States economy is a free enterprise system. It is also referred to as a “free trade
system” because it is based on ________.
A) voluntary exchange
B) gambling and chance
C) involuntary exchange
D) government cooperation
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
10) Entrepreneurship can be very challenging. Which is not a typical challenge of being an
entrepreneur?
A) loneliness
B) financial reward
C) long hours
D) financial insecurity
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
11) When making an investment, always consider the ________, which is the cost of your next-
best investment.
A) next-investment cost
B) cost of goods sold
C) opportunity cost
D) marginal cost
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
12) The free-market system is also called ________.
A) volunteerism
B) socialism
C) capitalism
D) dogmatism
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
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13) Most of the world’s businesses are ________ businesses.
A) small
B) medium-sized
C) large
D) family-owned
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
14) A company that has more than ________ employees and sales of more than $________
million per year is considered to be a “big” business.
A) 100/$5 million
B) 100/$10 million
C) 500/$5 million
D) 500/$10 million
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
15) Some of the world’s greatest entrepreneurs have overcome challenges from their childhood
and youth, including all of these except one.
A) learning disabilities
B) abuse
C) extreme poverty
D) financial prosperity
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
16) The corporate equivalent of paying owners a portion of the business’s profits is called a
________.
A) bonus
B) dividend
C) capital
D) revenues
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
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17) Which of the following is not a characteristic that is helpful for an entrepreneur to have?
A) self-confidence
B) caution
C) self-esteem
D) drive
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
18) How does the free-enterprise system discourage entrepreneurs who waste resources?
A) The government penalizes them.
B) They run into regulations that make it too difficult for them to operate.
C) They can’t make a profit and are forced out of business.
D) They limit competition.
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
19) Why do consumers benefit from free trade and the resulting competition between
businesses?
A) Competition drives away the entrepreneurs who use resources most wisely.
B) Competition tends to drive down prices and improve quality.
C) Competition offers consumers fewer choices and makes the marketplace less confusing.
D) Competition reduces the choices to consumers.
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
20) A for-profit enterprise with the dual goals of achieving profitability and attaining beneficial
returns for society is called ________.
A) venture capitalism
B) serial entrepreneurship
C) social entrepreneurship
D) portfolio entrepreneurship
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
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21) Entrepreneurs that participate in activities to avoid harm to the environment or help protect it
in some ways are engaged in ________.
A) venture philanthropy
B) green entrepreneurship
C) social entrepreneurship
D) corporate responsibility
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Reflective thinking
22) Benefits of becoming an entrepreneur include independence, satisfaction, financial reward,
self-esteem, and contributions to society.
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking
23) The economy of the United States is a free-enterprise system.
Learning Object.: 1.2 Examine how free-enterprise economies work and how entrepreneurs fit
into them.
AACSB Category: Analytical thinking