Package Title: Chapter 18, Testbank
Course Title: Schermerhorn, Exploring 5e
Chapter Number: 18
Question type: Multiple Choice
1) A(n) ________ is someone who is willing to pursue opportunities that others see as problems
or threats.
a) capitalist
b) investor
c) entrepreneur
d) banker
2) People aged ________ are the most entrepreneurially active in the United States.
a) 25–34
b) 45–54
c) 55–64
d) 75–84
3) A(n) ________ comes from being first to exploit a niche or enter a market.
a) first-mover advantage
b) veteran’s advantage
c) government subsidized benefit
d) early entry disadvantage
4) Which of the following statements is true of entrepreneurs?
a) They avoid risk and pursue only safe business options.
b) They have inborn qualities that help them succeed in new ventures.
c) They use the talent gained from experience as the foundation for success.
d) They start with huge amounts of money and proceed to multiply it.
5) Which of the following personality traits and characteristics is most likely to be shared by
entrepreneurs?
a) An external locus of control
b) A low need for achievement
c) A discomfort with uncertainty
d) Self-confidence and self-reliance
6) A majority of entrepreneurs are characterized by a(n) ________.
a) external locus of control
b) high need for achievement
c) intolerance for ambiguity
d) desire for dependence
7) When people start new businesses because they have few or no other employment options, it
is called ________.
a) socialism-based entrepreneurship
b) capitalism-driven business
c) minority-based business
d) necessity-based entrepreneurship
8) Potential entrepreneurs often possess all of the following characteristics EXCEPT:
a) A high need for achievement
b) An intolerance for ambiguity
c) Flexibility
d) A high energy level
9) Minority entrepreneurs create almost ________ million jobs in the United States.
a) 2
b) 6
c) 10
d) 20
10) The fastest growing segment in minority entrepreneurship in the United States constitutes
businesses owned by ________.
a) Asian Americans
b) Hispanic Americans
c) African Americans
d) White Americans
11) Which of the following types of entrepreneurship is targeted at solving the problems of the
poor and disadvantaged?
a) Minority entrepreneurship
b) Social entrepreneurship
c) Disadvantaged entrepreneurship
d) Welfare entrepreneurship
12) Which of the following is the differentiating feature between social entrepreneurs and
general business entrepreneurs?
a) A high tolerance for ambiguity
b) A desire to take great risks
c) A high degree of self-motivation
d) A drive toward a social mission
13) The U.S. federal agency responsible for defining and supporting small businesses is the
________.
a) Small Business Administration (SBA)
b) National Security Agency (NSA)
c) Securities and Exchange Commission (SEC)
d) Limited liability corporation (LLC)
14) The vast majority of small businesses employ less than ________ people.
a) 5
b) 10
c) 15
d) 20
15) A ________ is when one business owner sells to another the right to operate the same
business in another location.
a) franchise
b) chain
c) start-up
d) branch
16) A ________ is a plan for making a profit by generating revenues that are greater than costs.
a) strategic model
b) business model
c) succession plan
d) business plan
17) A ________ is a new and temporary venture that is trying to discover a profitable business
model for future success.
a) franchise
b) branch
c) chain
d) start-up
18) According to the U.S. Small Business Administration, a small business is a(n) ________.
a) publicly held company
b) new venture
c) corporation
d) independently owned and operated business
19) In the United States, small businesses employ some ________ percent of private workers.
a) 55
b) 66
c) 75
d) 90
20) In which of the following life-cycle stages of small businesses does the business model begin
to work well, growth take place, and the complexity of the business expand significantly?
a) The maturity stage
b) The breakthrough stage
c) The post-maturity stage
d) The birth stage
21) In which of the following life-cycle stages of small businesses does an entrepreneur struggle
to get the new venture established and survive long enough to test the real marketplace?
a) The birth stage
b) The breakthrough stage
c) The maturity stage
d) The death stage
22) In which of the following life-cycle stages of small businesses does an entrepreneur face
competitive challenges in a dynamic environment?
a) The birth stage
b) The breakthrough stage
c) The maturity stage
d) The death stage
23) ________ represent the largest percentage of businesses operating worldwide.
a) Family businesses
b) Start-ups
c) Big corporations
d) Public sector industries
24) A small business in the birth stage of its life cycle requires _______.
a) diversified leadership
b) corporate leadership
c) entrepreneurial leadership
d) professional strategic leadership
25) In a family business, the ________ refers to the issue of who will run the business when the
current head leaves.
a) follow-through problem
b) succession problem
c) follow-up problem
d) resignation problem
26) According to the U.S. Small Business Administration, what percent of small businesses fail
in their first five years of operation?
a) 60%–80%
b) 70%
c) 80%–90%
d) 90%
27) The common reasons for small business failures include all of the following EXCEPT:
a) A lack of experience
b) A lack of strategy
c) A poor financial control
d) A moderate growth rate
28) A(n) ________ describes how the leadership transition and related financial matters will be
handled in a family business.
a) corporate plan
b) operations plan
c) succession plan
d) strategic plan
29) Only three percent of family businesses are expected to survive beyond the ________
generation.
a) first
b) second
c) third
d) fourth
30) Which of the following is a reason behind the failure of several small businesses?
a) Inability to find initial investment
b) Inferior product ideas
c) Lack of expertise
d) Failure to issue an initial public offering
31) A business plan should consist of all of the following EXCEPT:
a) An executive summary
b) Business fundamentals
c) A marketing strategy
d) A long and detailed analysis of goals
32) A ________ is an individual pursuing business for profit.
a) partnership
b) general partnership
c) sole proprietorship
d) corporation
33) A ________ is the most common form of U.S. small business ownership.
a) corporation
b) sole proprietorship
c) general partnership
d) limited partnership
34) When two or more people agree to contribute resources to start and operate a business
together, it is called a ________.
a) partnership
b) limited liability company
c) sole proprietorship
d) corporation
35) The two types of partnerships are ________ and ________.
a) proprietorship; corporation
b) specific; general
c) general; limited
d) limited; specific
36) A partnership in which owners share management and responsibility for debts and losses is
called a ________.
a) limited liability partnership
b) specific partnership
c) general partnership
d) limited partnership
37) In a ________, owners share profits, but responsibility for losses is limited to original
investments.
a) general partnership
b) limited partnership
c) proprietorship
d) limited liability corporation
38) A ________ is a business entity that exists separately from its owners.
a) corporation
b) general partnership
c) proprietorship
d) limited partnership
39) A ________ combines the advantages of the sole proprietorship, partnership, and
corporation.
a) partnership
b) limited liability corporation
c) proprietorship
d) limited liability partnership