Exam Questions Understanding Small Business Chapter 1

Chapter 1- Understanding Small Business

True/False

1. Small businesses play an important role in the economic growth of any country

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Small businesses in U.S. employ about half of America’s private-sector employees

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Most small businesses in U.S. are single-person firms with no employees

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. A small business is defined as one that is independently owned, operated, and is nationally dominated in its field of operation; and has less than 150 employees

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. To classify a firm as a small business, the SBA counts employment at the firm level

Response: See 1.1

Level: Medium

Learning Objective: Discuss the importance of small business to the economy

1. According to the Small Business Administration, a small business is the one that has less than 50 employees

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Small businesses file more patents per employees than large businesses

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. The minimum legal age requirement for starting a new business in U.S is 18 years

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Small firms and large corporations have a symbiotic relationship

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. The Paycheck Protection Program (PPP) is a loan designed for large corporations to

provide compensation to their executives

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Businesses recognized as large are eligible for SBA’s loan programs

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. According to the text, entrepreneurship involves identifying and pursuing new opportunities to introduce novel goods and services to the market

Response: See 1.2

Level: Medium

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Small businesses and entrepreneurship are complementary

Response: See 1.2

Level: Medium

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Owners of lifestyle businesses do not need to improve products and operations

Response: See 1.2

Level: Medium

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. The large firms that stop growing at some point are known as whales

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. The term ‘gazelle’ is used for those entrepreneurial small firms that have high rates of growth

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. A credit policy that is too lenient can cause collection and cash-flow problems later for small businesses

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Entrepreneurship is a born trait and cannot be learned

Response: See 1.3

Level: Easy

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. One should start a business ONLY when the demand for its goods or services is high

Response: See 1.3

Level: Easy

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. A growth mindset stipulates that one’s skills and qualities are mutable

Response: See 1.3

Level: Easy

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. One of the advantages of running your own business is that you get to do what you love to do

Response: See 1.3

Level: Easy

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. US ranks higher than Canada on global indicators of commercial entrepreneurship

Response: See 1.4

Level: Easy

Learning Objective: Identify Various Forms of Entrepreneurship

1. In U.S., the desire to become a social entrepreneur is strongest for people between the age of 25 and 45

Response: See 1.4

Level: Easy

Learning Objective: Identify Various Forms of Entrepreneurship

1. Facebook and Insomnia Cookies are examples of businesses started by student entrepreneurs

Response: See 1.4

Level: Easy

Learning Objective: Identify Various Forms of Entrepreneurship

1. Silver entrepreneurship is about students running their own business

Response: See 1.4

Level: Medium

Learning Objective: Identify Various Forms of Entrepreneurship

Multiple Choice Questions

1. In U.S., small businesses comprise more than _____percent of all employers
2. 40
3. 99
4. 50
5. 30

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Small businesses employ _____of all private sector employees
2. Half
3. One-third
4. Two-third
5. One-fourth

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. A small business is an independent business that has fewer than ________employees
2. 20
3. 50
4. 100
5. 500

Response: See 1.1

Level: Medium

Learning Objective: Discuss the importance of small business to the economy

1. Small businesses are important because they _________
2. Play an important role in the economic growth
3. Have happy employees
4. Are willing to take risks
5. Have experienced managers

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Which of the following helps small businesses with assistance, loans, and federal contract procurement?
2. The Business Lounge
3. International Business Brokers Association (IBBA)
4. Small Business Administration (SBA)
5. Presidents Association (PA)

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. What is NOT true about the U.S. Small Business Administration (SBA)?
2. It is a federally funded agency
3. It provides assistance and loans to small businesses
4. It helps small businesses with federal contract procurement
5. It is a local agency to promote interest of large corporations

Response: See 1.1

Level: Medium

Learning Objective: Discuss the importance of small business to the economy

1. Which of the following is true about small businesses?
2. Are eligible for SBA’s financial assistance programs
3. Are not eligible to sell to the set-aside programs of the federal government
4. Are not eligible for grants through the government
5. Are not eligible for SBA’s education and training programs

Response: See 1.1

Level: Medium

Learning Objective: Discuss the importance of small business to the economy

1. The SBA’s standards for small businesses are based on _______
2. Number of employees and average annual revenues
3. Average annual revenues and industry
4. Number of employees and industry
5. Number of employees, average annual revenues, and industry

Response: See 1.1

Level: Medium

Learning Objective: Discuss the importance of small business to the economy

1. According to the SBA, most manufacturing companies with _______, and many non-manufacturing businesses with _________ qualify as a small business
2. 500 employees or fewer; average annual receipts under $7.5 million
3. average annual receipts under $7.5 million; 500 employees or fewer
4. 1500 employees; fewer affiliates
5. 500 employees at firm level; affiliates

Response: See 1.1

Level: Hard

Learning Objective: Discuss the importance of small business to the economy

1. According to the SBA, small businesses file _______patents per employees than large businesses
2. Less
3. Equal
4. More
5. Zero

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. Katie has recently opened a new beauty salon. You have been hired to advise Ms. Katie with her business. Katie plans to hire 35 employees and needs loans to buy beauty supplies, new equipment, and pay salaries. Katie’s business is an example of
2. A large corporation
3. A family business
4. A small business
5. None of the above

Response: See 1.1

Level: Easy

Learning Objective: Discuss the importance of small business to the economy

1. _________refers to the effective administration of a small firm with the goals of survival and improvement
2. Development program
3. Performance management
4. Human resource management
5. Small business management

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Which of the following is NOT a common form of misconduct in small firms?
2. Lying to customers
3. Lying to employees
4. Anticompetitive practices
5. Treating all employees with respect

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. The ___________ is a metaphor used in business to suggest that a firm needs to constantly think of improving, even to remain where it is at a given time
2. Red queen effect
3. Gazelles effect
4. Elephants effect
5. Blue queen effect

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. When small firms stop ________, it’s the beginning of the end
2. Hiring
3. Training
4. Improving
5. Caring

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. What is true about small businesses and entrepreneurship?
2. All small businesses behave entrepreneurially
3. All entrepreneurial firms are small businesses
4. All entrepreneurial firms are large corporations
5. Some small firms continue to behave entrepreneurially over time

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Which of the following is a reason for the failure of small firms?
2. Adequate understanding of the market and its future trends
3. A carefully designed credit policy
4. Hoarding too much inventory
5. Creating a desirable place to work

Response: See 1.2

Level: Medium

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. Which of the following is NOT a reason for the failure of small firms?
2. Inadequate understanding of the market and its future trends
3. Extending too much credit
4. Hoarding too much inventory
5. Creating a desirable place to work

Response: See 1.2

Level: Medium

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. ________refers to the practice of large firms seeking to grow through entrepreneurial actions and behaviors
2. Entrepreneurship
3. Corporate entrepreneurship
4. Silver entrepreneurship
5. Social entrepreneurship

Response: See 1.2

Level: Easy

Learning Objective: Define small business management and explain the role of entrepreneurship in managing a small business

1. ________refers to a firm’s inability to grow despite intentions and desire for growth
2. Dwarfism
3. Red queen effect
4. Lack of customer service
5. Lack of management skills

Response: See 1.3

Level: Medium

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. According to Dun & Bradstreet, financial research firm, a business failure is defined as :
2. When a firm closes due to bankruptcy
3. When a firm chooses for foreclosure
4. Voluntary withdrawal of the firm with a financial loss to a creditor or investor
5. All of the above answer choices are correct

Response: See 1.3

Level: Medium

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. Which of the following is a motivation for starting a new business?
2. Independence reward
3. Learning reward
4. Income reward
5. All of the above

Response: See 1.3

Level: Medium

Learning Objective: Recognize the common myths and various benefits about small business entrepreneurship

1. Which of the following is NOT a form of entrepreneurship?
2. Student entrepreneurship
3. Speculator entrepreneurship
4. Silver entrepreneurship
5. Women entrepreneurship

Response: See 1.4

Level: Easy

Learning Objective: Identify Various Forms of Entrepreneurship

1. An entrepreneurial team refers to starting or managing a business
2. By two or more individuals
3. After retirement
4. By a group of people from the Small Business Administration
5. By a young individual

Response: See 1.4

Level: Easy

Learning Objective: Identify Various Forms of Entrepreneurship

1. _________was America’s first self-made millionaire female business owner, and she was in the _________industry
2. Katie Walker; manufacturing
3. Madam C. J. Walker; hair care
4. Sarah Bennett; media
5. Sarah Smith; yogurt

Response: See 1.4

Level: Medium

Learning Objective: Identify Various Forms of Entrepreneurship