Multiple Choice Answers

1. The cost of a franchise may include
royalty payments.
high executive salaries.
a one-time federal franchise tax.
higher-than-usual labor costs.

2. Compared to large corporations, small businesses
play just as important a part in the economy.
attract more attention and make more headlines in the media.
are not as important to the well-being of society.
are highly visible.

3. One glaring example of poor ethics practiced by small businesses in general is
lack of pollution controls.
untruthful labeling of products.
lack of loyalty to employees.
fraudulent reporting of income and expenses for income tax purposes.

4. Different types of small business ownership opportunities include all of the following except
family businesses.

5. Most customer service problems are identified by ?
personal observation.
outside consultants.
customer complaints.
entries in a suggestion box.

6. In a family business, the interests of the family and the interests of the business are best described as
having no relationship with each other.

7. Writing a business plan should be thought of as
the means to an end product.
an ongoing process.
an absolute essential to the startup of businesses.
a mental exercise.

8. A firm’s marketing mix consists of _____ activities.
pricing, promotion, and distribution
product, pricing, and promotion
product, promotion, and distribution
product, pricing, promotion, and distribution

9. A disadvantage of a sole proprietorship is
the complexity of the organization
the cost of starting the business.
the lack of limits on personal liability.
the difficulty of distribution.

10. Which of the following is not an environmental condition affecting selection of a business location?
Weather and climate
Laws and regulations
Raw material availability

11. An analysis of which of the following records facilitates maintenance of adequate stock levels?
Accounts payable records
Accounts receivable records
Cash records
Inventory records

12. Typical venture capitalists invest approximately ____ of their investment in later-stage businesses.
nearly all

13. Which of the following is classified as an entrepreneur?
A manager in a large corporation
A financial manager in a small firm
An owner-manager who bought out the founder of a firm
A salaried technician in a rapidly-growing high-tech firm

14. In general, products that are consumed in fixed amounts have
inelastic demand.
constant demand.
variable demand.
elastic demand.

15. Which of the following does not describe a method of determining promotional expenditures?
Matching industry forecasts
Spending as much as the competition
What can be spared
What it will take to do the job

16. Marcia Mendez, who runs a drapery business, has groups of employees who work in production and in installation. If she decides to use work teams as part of her leadership approach, she must increase

17. Which of the following is a legal basis for selecting employees?

18. An inspection plan that judges products as acceptable or unacceptable, good or bad, is known as
a 100 percent inspection plan.
an attribute inspection.
a variable inspection.
an inspection sampling plan.

19. The owner of a small manufacturing plant wants inspectors to check the width and length of a product (within specified tolerances) during the production process. This calls for
an attribute inspection.
a work sampling inspection.
a 100 percent inspection plan.
a variable inspection.

20. Assets that are relatively liquid are classified as
current assets.
fixed assets.
short-term assets.
other assets.