Introduction to Entrepreneurship Practice Exam
Course Introduction
Introduction to Entrepreneurship is an engaging course that explores the foundational principles, processes, and challenges of launching new ventures. Students will examine the mindset of successful entrepreneurs, identify and assess viable business opportunities, and learn how to develop innovative ideas into business models. The course covers key concepts such as market research, resource acquisition, business planning, risk management, and funding strategies. Through case studies, interactive discussions, and practical projects, learners will gain critical skills needed to navigate the entrepreneurial landscape and transform creative ideas into sustainable enterprises.
Recommended Textbook
Understanding Business 11th Edition by William Nickels
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Page 2
Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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Sample Questions
Q1) Businesses provide goods, jobs, and services to others.
A)True
B)False
Answer: True
Q2) Technology can help businesses become more efficient and productive.
A)True
B)False
Answer: True
Q3) Entrepreneurs weigh the differences between the benefits of starting a business and those things that they are likely to forego because they choose to work for themselves. Such things they are likely to pass-up on are:
A) the freedom to make their own decisions.
B) local government benefits such as enterprise zone tax credits.
C) employer paid benefits such as paid vacation and health insurance.
D) tickets to sporting events that trading partners may provide.
Answer: C
Q4) The number of U.S. jobs in manufacturing has increased in the past five years.
A)True
B)False
Answer: False
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Chapter 2: Understanding Economics and How It Affects Business
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Sample Questions
Q1) Resource development is:
A) the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
B) the study of how to increase the amount of available resources and create conditions that will make better use of these resources.
C) the part of economics that looks at the operation of a nation's economy as a whole.
D) the part of economics that looks at particular markets.
Answer: B
Q2) Productivity of workers in the U.S. is helped by the use of better machinery.
A)True
B)False
Answer: True
Q3) An oligopoly is a market that is characterized by:
A) one firm that totally dominates the supply of the product.
B) a large number of small firms all producing very similar products.
C) a few large sellers who dominate the market.
D) several small firms that compete primarily by differentiating their products.
Answer: C
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Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) France, Italy, Denmark, and Luxembourg are all members of the EU. Which of the following statements is an accurate description of trade between these nations?
A) France and Italy are permitted to engage in free trade due to their proximity to each other, however, Luxembourg only has free trade with Belgium, and Denmark only has free trade with Switzerland, Sweden, and Germany.
B) The EU has abolished customs duties at internal borders for these and other member nations and put in place a uniform system for taxing imports. Internal border controls subsequently disappeared.
C) Customs officers that collect tariffs are now found at the internal borders of all EU member nations.
D) France, Italy, Denmark, and Luxembourg are four nations strongly considering abandoning the EU common market. The global trading bloc has proved inefficient in these nations' attracting global business.
Answer: B
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Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) When managers disregard ethical concerns, the likely result is:
A) a reduction in employee turnover.
B) an improvement in overall manager morale.
C) a reduction in lawsuits.
D) a general mistrust between workers and management.
Q2) The Enron scandal illustrates the difference between unethical behavior and illegal behavior.
A)True
B)False
Q3) Given the ethical lapses that are prevalent today in our businesses, which of the following can be done to restore trust in the free-market system and leaders in general?
A) Business leaders that have broken the law should be given another chance.
B) New laws making accounting records transparent may help restore trust.
C) Making the government accountable for business leader behavior will restore trust.
D) It's up to the government to pass laws requiring ethical behavior of all leaders, business and otherwise.
Q4) Explain the difference between a compliance-based ethics code and an integrity-based ethics code.
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Chapter 5: How to Form a Business
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Sample Questions
Q1) Ted and Mark are partners in a dry cleaning business. They would like their brother Todd to join them. Unfortunately, partnership law states that only two partners can participate in a partnership.
A)True
B)False
Q2) Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in Cleveland, Ohio. With the franchise fee behind her, she can look forward to using her creative talents to make her print shop different and more attractive than other Fontmaster shops in the Cleveland area.
A)True
B)False
Q3) A limited partnership refers to a partnership set up for a temporary purpose, such as a real estate development project.
A)True
B)False
Q4) The limited liability company requires a minimum of 10 members.
A)True
B)False
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Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) The position of our government is to restrict foreign entrepreneurs from operating within the U.S.
A)True
B)False
Q2) One reason why many U.S. small businesses are not involved in exporting is:
A) there is a limited market for their products.
B) the government's new homeland security programs limit opportunities for small businesses.
C) many of these firms do not know how to get started.
D) U.S. products are perceived as inferior.
Q3) Entrepreneurs take calculated risks.
A)True
B)False
Q4) Peppy has inquired about the possibility of obtaining a microloan from the SBA. This type of loan is awarded primarily on the basis of the:
A) borrower's integrity and the soundness of the business idea.
B) amount of collateral the borrower can pledge.
C) borrower's credit history and record of previous business success.
D) age of the borrower, since only senior citizens qualify.
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Chapter 7: Management and Leadership
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Sample Questions
Q1) Knowledge management involves finding the right information, keeping the information accessible, and making the information known to everyone in the firm.
A)True
B)False
Q2) ____________ skills include the ability to perform tasks of a specific department or job, such as selling (marketing) or bookkeeping (accounting)
A) Conceptual
B) Departmental
C) Technical
D) Tactical
Q3) Planning is a continuous process.
A)True
B)False
Q4) Management carries out of the vision created by leadership.
A)True
B)False
Q5) Without clear standards, the control process is impossible to implement.
A)True
B)False
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Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) Which of the following is considered to be a disadvantage of functional departmentalization?
A) There may be a lack of communication among the different departments.
B) Employees must develop skills in depth.
C) The company must achieve economies of scale.
D) Top management has to direct and control department activities.
Q2) Introducing change into an organization is an easy task for a manager.
A)True
B)False
Q3) Inverted organizations empower employees by adding multiple layers of management and long lines of communication.
A)True
B)False
Q4) A(n) ________________ is a visual device which shows relationships among people and divides the organization's work
A) organization chart
B) Venn diagram
C) corporate tree
D) Gantt chart
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) Six Sigma is a quality measure that allows only 3.4 defects per million opportunities.
A)True
B)False
Q2) One way to compete with cheap labor is to use robots.
A)True
B)False
Q3) The U.S. is still manufacturing intensive. Only 25% of U.S. jobs come from the service sector.
A)True
B)False
Q4) Most new manufacturing facilities use:
A) continuous processes.
B) intermittent processes.
C) traditional processes.
D) synthetic processes.
Q5) The Internet is a very popular place to locate your business today.
A)True
B)False
Q6) How are MRP and ERP similar? How do they differ?
Page 11
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Chapter 10: Motivating Employees
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Sample Questions
Q1) Mark successfully completed a very challenging assignment given to him by his supervisor at work. The feeling of accomplishment and satisfaction Mark experienced is an example of an extrinsic reward.
A)True
B)False
Q2) _________________ was the father of scientific management.
A) Elton Mayo
B) Frank Gilbreth
C) Henry Gantt
D) Frederick Taylor
Q3) The findings of the Hawthorne studies led researchers to look more closely at how ____________ could lead to better productivity.
A) changes in salary and benefits
B) disciplinary factors and punishment
C) changes in physical working conditions
D) the human side of motivation
Q4) Safety needs are placed at the lowest level in Maslow's hierarchy of needs.
A)True
B)False
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Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample Questions
Q1) Sonny Skies is in his late fifties and loves his work as a pilot for a major airline. He wants to continue working for many more years. The Age Discrimination in Employment Act provides Sonny with the right to keep his job as long as his company is financially sound and he does not commit a felony.
A)True
B)False
Q2) The most common reason for hiring contingent workers is that they improve worker morale.
A)True
B)False
Q3) Airlines, banks, hospitals and many other service organizations are so labor intensive that the cost of labor is their primary cost of operations.
A)True
B)False
Q4) A job analysis results in two written statements. They are:
A) the human resource inventories and the affirmative action statement.
B) the labor supply assessment and the labor demand assessment.
C) the job description and the job specification.
D) the job title review and the performance appraisal.
Page 13
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Chapter 12: Dealing With Union and Employeemanagement Issues
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Sample Questions
Q1) Employees were striking at the local university last year. Very few students were crossing the picket line. In fact, the city's postal employees refused to deliver mail there claiming that they were honoring the strike for their fellow service union members. The postal employees were participating in a voluntary secondary boycott.
A)True
B)False
Q2) One of the things that labor is interested in is fair and competent management.
A)True
B)False
Q3) The Taft-Hartley Act gives the president the power to require striking workers in any industry to return to their jobs for a cooling-off period while representatives of management and the union continue to negotiate.
A)True
B)False
Q4) In the next few years, unions are likely to find that they must adopt a tough, confrontational approach in order to get what they want from management.
A)True
B)False
14
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Chapter 13: Marketing: Helping Buyers Buy
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Sample Questions
Q1) The business philosophy of "produce as much as you can because there is a limitless market" is consistent with which of the following marketing eras?
A) production era
B) selling era
C) marketing era
D) customer relationship era
Q2) Which of the following statements about marketing is the most accurate?
A) Because nonprofit organizations are not motivated by profit, marketing activities are not consistent with their goals.
B) To be successful, marketers must be able to persuade consumers to purchase goods they don't really need.
C) Once a product is sold, focus on the next customer.
D) Marketers recognize the need to learn as much as possible about customers and do everything possible to satisfy them.
Q3) The marketing concept has three parts: (1) a consumer orientation, (2) a service orientation, and (3) an advertising orientation.
A)True
B)False
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15
Chapter 14: Developing and Pricing Goods and Services
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Sample Questions
Q1) Location is very important in the marketing of ________ because consumers desire to purchase these goods with a minimum of shopping effort.
A) unsought goods
B) shopping goods
C) specialty goods
D) convenience goods
Q2) As a brand manager at a firm, Ellen has proposed an aggressive advertising campaign that exaggerates the benefits of their newest product. While Ellen is convinced that this strategy will encourage consumers to try the product, her assistant strongly opposes the idea. Which of the following presents the best explanation for the assistant's opposition to Ellen's proposal?
A) If a firm produces a quality product, the best advertising is word-of-mouth to generate excitement for a new product.
B) The best way to promote new consumer products is with personal selling.
C) Exaggerating the benefits of a product may backfire and injure the product's potential for success.
D) Effective advertising for new consumer products should be subtle and low key. Ellen's proposal is more appropriate for the B2B market.
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Chapter 15: Distributing Products
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Sample Questions
Q1) Paper 'N More sells a variety of office supplies to small businesses and local offices. The fact that it sells only to other firms and not consumers indicates that Paper 'N More engages only in:
A) wholesale sales.
B) mass marketing.
C) pure retailing.
D) second-tier retailing.
Q2) What is a wholesaler? Describe the difference between merchant wholesalers and agents and brokers. Identify three types of limited-function wholesalers.
Q3) Some manufacturers sell directly to consumers or businesses rather than relying on marketing intermediaries.
A)True
B)False
Q4) Inverted logistics is the term used for the activities involved in bringing products back to the producer due to defects or for recycling of materials.
A)True
B)False
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) The primary purpose of a pull strategy is to:
A) offer rebates and discounts to retailers and wholesalers.
B) stimulate consumers to ask for a product, which then encourages retailers to stock it.
C) pull the distribution network together to minimize costs and maximize profits.
D) stimulate retailers to stock each product offered by a particular manufacturer.
Q2) Advertising reaches a national audience more effectively than it communicates with a local market.
A)True
B)False
Q3) Mo's Movies markets DVD and Blu-Ray movies online. The company recently adopted a new program that offers their current customers free DVDs if they encourage their friends to visit Mo's Movies' website. This promotional program represents:
A) second stage advertising.
B) viral marketing.
C) interlinked promotion.
D) virtual inducement.
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Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) Company resources that are purchased with the intention that they will convert to cash within one year are:
A) fixed assets
B) current liabilities
C) current assets
D) owners' equity
Q2) Preferred Pet Care, Inc., successfully took out a loan for $130,000 from Southwest Bank. It used $80,000 of this loan to pay off an existing loan that had a higher interest rate, and purchased X-ray equipment with the remaining funds. These events were noted as financing and investing activities on its balance sheet.
A)True
B)False
Q3) Bookkeeping is part of the accounting cycle, but accounting goes far beyond the activities involved in bookkeeping.
A)True
B)False
Q4) Accounting involves both the recording and the interpreting of financial events. A)True
B)False
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Chapter 18: Financial Management
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Sample Questions
Q1) An effective strategy to manage cash flows requires retail businesses to eliminate their inventory.
A)True
B)False
Q2) To reduce the time and expense of collecting their accounts receivable, some firms:
A) extend credit to new customers.
B) offer extended payment plans to existing customers.
C) adopt a just-in-time inventory policy.
D) accept bank credit cards.
Q3) An operating budget analyzes the firm's spending plans for long-lasting assets that require large sums of money.
A)True
B)False
Q4) The most widely used source of short-term funding is trade credit.
A)True
B)False
Q5) Trade credit represents one of the most expensive forms of short-term financing.
A)True
B)False
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Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Q1) Stocks that are not listed as trading on one of the national or international stock exchanges can be traded on the OTC, Over-The-Counter exchange.
A)True
B)False
Q2) Once a stock exchange agrees to list a company, the firm can be assured that it will always be listed by that exchange.
A)True
B)False
Q3) Which of the following securities provides the owner the right to vote for the corporate board of directors?
A) Common stock
B) Bonds
C) Preferred stock
D) Callable bonds
Q4) The primary market allows an investor to purchase financial securities from other investors.
A)True
B)False
Page 21
Q5) Explain the differences between preferred stock and common stock.
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Chapter 20: Money, Financial Institutions, and the Federal Reserve
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Sample Questions
Q1) Last week Dave was looking for a place to deposit a $30,000 inheritance from his Great Aunt Martha, who passed away three months ago. He does not plan to spend his money frivolously. He will need part of the funds from time to time for his college education, which he promised Great Aunt Martha he would complete. After speaking with several sales consultants in banking and nonbank institutions, he likes the fact that he can open a stock brokerage account and a money-market account at Goodman Stacks Investment Company (a nonbank company), and will be issued checks for paying bills. You remind him that with the recent mergers between banking and nonbank institutions, he may be able to find a company that provides (both) the convenience of banking services (ATM, cash availability) and low-risk/high-risk securities products.
A)True
B)False
Q2) Which of the following represents a benefit of coins over paper money?
A) Improved portability
B) Increased divisibility
C) Enhanced stability
D) Improved durability
Q3) Identify and discuss the tools and products that electronically transfer funds.
Page 22
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Chapter 21: Managing the Marketing Mix: Product, Price,
Place and Promotion
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Sample Questions
Q1) Global advertising can save companies money in research and ad design.
A)True
B)False
Q2) Phil's activities as a salesperson for Marquette Publishing are part of Marquette's promotion mix.
A)True
B)False
Q3) Retailers are marketing intermediaries who sell to ultimate consumers.
A)True
B)False
Q4) Many firms that want to use an intensive distribution strategy would find vending machines an attractive method of selling their goods.
A)True
B)False
Q5) Gill's Gadgets establishes the price it charges for its products by determining the cost of production and then adding on a desired profit margin. Gill's strategy is known as target costing.
A)True B)False
Page 23
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Chapter 22: Extension: Working Within the Legal Environment
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Sample Questions
Q1) An interlocking directorate occurs when a contract between a retailer and a wholesaler requires misleading advertising.
A)True
B)False
Q2) Which of the following established a government agency to enforce the laws regulating unfair competition?
A) Clayton Act
B) Sherman Act
C) Federal Trade Commission Act
D) Robinson-Patman Act
Q3) The primary objective of a tax credit is to encourage businesses to behave in certain ways. One example is offering a tax credit to automobile manufacturers for the purchase of robotics used in the manufacture of automobiles.
A)True
B)False
Q4) The number of Americans filing for bankruptcy has decreased as a result of the Bankruptcy Reform Act.
A)True
B)False
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Chapter 23: Extension: Using Technology to Manage Information
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Q1) Extranets now allow small firms to share and process data much as large firms have been able to do using electronic data interchange.
A)True
B)False
Q2) During the 1970s, the purpose of data processing was to support the existing business by improving the flow of financial information.
A)True
B)False
Q3) A firm that wanted to enable its employees to use and share data without allowing outsiders to gain access could do so by establishing a(n):
A) extranet.
B) innernet.
C) enternet
D) intranet.
Q4) In the 1970s business technology was known as data processing.
A)True
B)False
Q5) What are the four characteristics of useful information?
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Chapter 24: Extension: Managing Risk
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Sample Questions
Q1) Workers' compensation insurance is required in all states except Louisiana.
A)True
B)False
Q2) "Insurable interest" means that the policyholder is the one at risk to suffer a loss.
A)True
B)False
Q3) A ________ insurance company is owned by stockholders, just like any other investor-owned company. A ________ insurance company is owned by its policyholders.
A) stock; mutual
B) corporate; stock
C) stock; corporate
D) mutual; limited liability
Q4) Speculative risk involves a chance of either profit or loss.
A)True
B)False
Q5) Outsourcing helps some companies avoid risk.
A)True
B)False
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Chapter 25: Extension: Managing Personal Finances
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Q1) Listing all of your personal assets is the first step in preparing your own income statement.
A)True
B)False
Q2) Don is young and newly married. He and his wife plan to have children in the near future and Don wants to get a significant amount of life insurance coverage at as low a cost as possible. He would be well advised to purchase a term insurance policy.
A)True
B)False
Q3) Carrie is trying to find a way to reduce her car insurance premium. She would be well advised to decrease her insurance policy's deductible.
A)True
B)False
Q4) What are the advantages of investing in a home?
Q5) The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.
A)True
B)False
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