Archives: Quiz

While market research is a sophisticated and complex process, the small business owner can conduct some of it for him/herself, but will need assistance interpreting it. Every risk can be insured. Answer: FALSE The primary purpose of building a business […]

Listening to customers and responding to what you hear from them is a highly effective way to achieve stellar customer service. A retailer who buys a product for $19.75 and has a desired markup of retail price of 55% should […]

One of the best ways to evaluate the effectiveness of an ethics system is to perform periodic audits. By choosing a radio station with the appropriate listener profile, a small business owner can reach almost any target market desired. Answer: […]

A master franchise is called a piggyback franchise. In start-ups, it is often safest to be a “me-too” business, follow the leaders in the market until sufficient cash flow develops to permit R & D into new and innovative products. […]

When evaluating an existing building’s interior, the entrepreneur should pay particular attention to the building’s structural components and the suitability for his/her business. Most of the time of a performance evaluation should be spent discussing the future and what can […]

A cash budget is a forecast of the firm’s cash inflows and outflows over a specific time period. Selling to a resident buying office is just like selling to domestic customers since the buying office handles all of the details […]

Some cities have put restrictions or outright bans on the use of outdoor ads. Usually, trade credit from vendors is expensive, and small business owners should avoid it. Answer: FALSE A straight business sale may be worst for a seller […]

The majority of loans provided by the SBA are direct. A well-prepared business plan helps determine the risks facing the venture. Answer: TRUE In the basic EOQ model, the higher the economic order quantity, the greater the number of orders […]

When a company makes a product available to the customer when he/she wants it, the company is providing place utility to the customer. If an owner or his/her relatives take the product home without properly logging it out, employees will […]

An established customer base is an example of structural capital. Web-based entrepreneurs often discover that the greatest challenge their businesses face is not necessarily attracting customers on the Web but creating a workable order fulfillment strategy. Answer: TRUE Because of […]

Small companies can no longer consider themselves to be strictly domestic businesses in this hotly competitive global environment. Impulse shoplifters steal on the spur of the moment when they succumb to temptation. Answer: TRUE Perhaps the most important feature of […]

The nice thing about a family business is that there is always a guaranteed successor within the family whenever the owner decides to step down. Business ethics consist of the fundamental moral values and behavioral standards that form the foundation […]

To begin an offering, the entrepreneur and the underwriter must negotiate a letter of intent. An “incubator” is a facility with low rent that permits start-up small businesses to share resources. Answer: TRUE Employers can be held responsible for third-party […]

Decisions based on assumptions are bound to be flawless. Generation X, made up of those people born between 1965 and 1980, is the most entrepreneurial generation in history. Answer: FALSE One advantage of the excess-earnings method is that it offers […]

The time gap between placing an order and receiving is called lead time. The most effective pricing strategy for small businesses is follow-the-leader pricing due to its simplicity and its ability to keep price parity for the small business. Answer: […]

In terms of ethical behavior, the law merely establishes the minimum standard of behavior. A free trial offer is an example of non-price competitive factor. Answer: TRUE Specialty advertising is an example of narrow casting in advertising. Answer: TRUE Only […]

Many incidents of employee theft go undetected, and only a small percentage of those employees who are caught stealing are prosecuted. Most of the start-up businesses that attract venture capital are technology companies. Answer: TRUE One element of the location […]

A penetration pricing strategy allows the business to build market share quickly. The average SBA loan guarantee is $150,000 and has an average duration of seven years. Answer: FALSE The Federal Trade Commission (FTC) enacted the Trade Regulation Rule, requiring […]

Unique selling proposition (USP) refers to akey customer benefit or a product or service that sets it apart from its competition. Profits generally are low and marketing cost high in the introductory stage of the product life cycle. Answer: TRUE […]

Outdoor ads tend to reach people who are older, poorer, and not as well educated as the average person. The current ratio can sometimes be misleading, because it does not show the quality of a company’s current assets. Answer: TRUE […]

Most SBIC loans are between $10,000 and $50,000 and the loan term is longer than most banks allow. One of the most important advertising decisions the small business manager must make is selecting the specific media to employ in disseminating […]

The key to a successful differentiation strategy is to build it on a distinctive competencesomething the small company is uniquely good at doing in comparison to its competitors. Leverage ratios are a gauge of the depth of a company’s debt. […]

Kleptomaniacs have a compulsive need to steal even though they have little, if any, need for the items they shoplift. The most common method of controlling inventory in a small business is the perpetual system. Answer: FALSE[/cpmembership] The key to […]

The formula for calculating net profit margin is net profit/net sales (annual). A recent study concluded that American firms with global operations grew faster and earned more than purely domestic companies. Answer: TRUE A focus strategy recognizes that all markets […]

“Double taxation” refers to the fact that the corporation itself must pay taxes on its net profits, and the stockholders must also pay taxes on the portion of those same profits distributed to them as dividends. Research shows that for […]

Quality is so important in franchising that most franchisers retain the right to terminate the franchise contract and to repurchase the outlet if a franchisee fails to maintain quality standards. Creating a meaningful presence on the Web requires an ongoing […]

The key to successfully establishing an international location is properly screening for the right partner company with compatible goals and products/services. Due to the low cost, most small businesses rely almost solely on outdoor/billboard advertising. Answer: FALSE In the excess-earnings […]

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas? a. a decrease in both U.S. imports and exports b. an increase in both U.S. imports […]

The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist. Figure 11-15 Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing? a. Triangle bde b. Triangle […]

How did the Fed’s conduct of open market operations change during the economic crisis of 2008? a. Open market operations are no longer the most common tool that the Fed utilizes. b. The Fed now buys and sells a broader […]

The unemployment rate is defined as the number of a. unemployed individuals divided by the number of employed individuals. b. employed individuals divided by the number of individuals in the working-age population. c. unemployed individuals divided by the number of […]

Which of the following would cause prices to fall and output to rise in the short run? a. Short-run aggregate supply shifts right. b. Short-run aggregate supply shifts left. c. Aggregate demand shifts right. d. Aggregate demand shifts left. Data […]

When foreigners are making more “investments” in a country than the residents of the country are making abroad, which of the following is most likely to occur? a. Inflation. b. Rapid growth of the money supply. c. A balance of […]

If a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that a. the total expenditures (including those made by the third party) on the good will decline. b. the demand […]

Countries with more economic freedom tend to invest a ____ share of their GDP and the productivity of that investment is ____ than for countries that are less free. (Fill in the blanks.) a. larger; higher b. larger; lower c. […]

Which of the following most accurately states the function of middlemen? a. Middlemen add to the expense of buyers and sellers without providing any benefit. b. Our economy would work just as well without middlemen since they do not expand […]

When earnings differentials are adjusted for such factors as age, education, and marital status, the a. differential between the earnings of white males and those of minority males increases. b. differential between the earnings of white males and those of […]

Which of the following is a necessary condition for price discrimination to be profitable? a. All consumers must have an identical demand for the product. b. Groups of consumers with different demand elasticities must be easily distinguishable. c. The market […]

Figure 15-1 As shown in Figure 15-1, 80 percent of families earned a cumulative share of about ____ of income. a. 5 percent b. 15 percent c. 30 percent d. 50 percent Which of the following events will leave GDP […]

The demand and total cost schedules of a monopolist are presented in Table 11-2. What price should a profit-maximizing monopolist charge? a. $10 b. $9 c. $8 d. $7 Figure 9-1 Answer: B Use the table to answer the following […]

An expansionary monetary policy is most likely to produce an inflationary effect with little impact on output when the economy a. is near full employment and the short-run aggregate supply curve is flat. b. is near full employment and the […]

Which of the following will decrease the demand for coffee? a. the discovery that caffeine can cause heart problems b. an increase in the price of coffee c. an increase in the price of tea, a substitute for coffee d. […]

Use the figure below to answer the following question(s). Figure 4-9 Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. Which of the following states the actual […]

Figure 3-15 Refer to Figure 3-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers? a. BCE b. ACF c. DEF d. ABED Interest rates in the loanable funds market […]

Countries that persistently expand the supply of money at a rapid rate can expect to experience a. high rates of inflation b. rapid economic growth. c. lower interest rates. d. low rates of unemployment. A firm’s stock price will be […]

International trade does all the following except a. allow a country to specialize in producing certain goods and services. b. reduce world output. c. allow a country to move to higher consumption levels. d. increase world output. When the top […]

Which of the following would help control the future growth of healthcare prices and expenditures? a. an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts b. the substitution of catastrophic (high […]

A legal system that provides secure private property rights and unbiased enforcement of contracts a. is unnecessary for the smooth operation of markets. b. reduces the efficiency of markets. c. enhances the efficiency of markets. d. makes it easier for […]

U.S. GDP and U.S. GNP are related as follows: a. GNP = GDP  Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad. b. GNP = GDP + Income earned by foreigners in the U.S. […]

During a period of rapid growth in output, a. employment generally increases and unemployment decreases. b. employment generally decreases and unemployment increases. c. both employment and unemployment generally increase. d. both employment and unemployment generally decrease. For a monopolist that […]