Business Management Mid term

Why do you think entrepreneurship is important to the US economy?

- creates job opportunities - strengthens the economy - increases productivity

How do you think strong communication skills can improve the problem-solving process?

- helps you express ideas and opinions - ask questions - better listener - request information

Who is a business plan written for?

- investors/suppliers - entrepreneurs

What factors affect economic choices?

- scarcity - opportunity cost

What are some important steps and entrepreneur can take before starting a business to ensure its success?

- self-assessment - aptitude - identify unmet needs, create a product, market research (competition, and consumers)

How does the availability of economic resources in conjunction with the law of diminishing returns affect an entrepreneur's decisions?

Any extra economic resource may not increase the output. The law of diminishing returns will prove this, meaning that everything will eventually even off

How does the market structure affect the price of a good or service?

Depending on which market structure it is, the price will vary. Monopoly's have the power to charge whatever they want because there is no competition in that market structure, however, in a perfect competition, price can be the deciding factor, so companies may want to lower their price to attract more buyers

What are the advantages and disadvantages of publicity?

Good publicity can be helpful as no-cost advertising for a business, but it is largely out of the business's control and, if negative, may drive customers away.

Name two strategies used in introductory pricing and describe each method

Penetration pricing and price skimming. Penetration pricing is when a business starts the prices lower than most businesses then go higher. Price skimming is when a business starts the prices at a higher price then will go lower.

Why do you think it would be helpful to speak with members of SCORE before you write your business plan?

SCORE provides free confidential advice that they used and was helpful for when they were running a successful business, so by talking to them, you can use their advice which can benefit your business

What are the various advertising methods that a business can use for promotion?

The various methods that a business can use for promotion include online, television, radio, newspaper, direct mail, magazine, outdoor, and transit advertising.

A new computer device that acts as a watch but also lets you surf the Internet, text, use voice commands, track your fitness levels, access GPS navigation, and much more has just been released. There are people who want this device so badly they are willing to pay any price for it. This device should be priced using: a) demand-based pricing b) cost-based pricing c) competition-based pricing d) time-based pricing

a) demand-based pricing

A disadvantage of entrepreneurship is that entrepreneurs a) do not have a regular income b) control their own decisions c) must implement creative ideas d) none of these

a) do not have a regular income

Another name for economic resources is: a) factors of production b) goods and services c) supply and demand d) command economy

a) factors of production

The U.S. economy is best described as a command economy a) true b) false

a) false

The fixed costs of a business: a) include monthly rent b) are based on the price of supplies c) do not include the cost of insurance d) include advertising costs

a) include monthly rent

A disadvantage of radio advertising is that: a) it is a purley audio message b) ads are required to be submitted weeks or even months in advance c) it is very expensive d) it reaches too broad an audience to be effective

a) it is a purley audio message

Which channel of distribution would be best for someone who makes and sells pottery at his or her home? a) manufacturer to consumer b) manufacturer to retailer to consumer c) manufacturer to wholesaler to retailer to consumer d) manufacturer to agent to wholesaler to retailer to consumer

a) manufacturer to consumer

Which of the following pricing techniques is often used in the introductory stage of a product? a) penetration pricing b) markdown pricing c) prestige pricing d) trade discounts

a) penetration pricing

Creating an image for a product in the customer's mind within a particular industry is called: a) positioning b) branding c) packaging d) distributing

a) positioning

Manufacturing businesses: a) produce the products they sell b) sell the products directly to consumers c) sell services d) take resources out of the ground

a) produce the products they sell

Which of the following is NOT a purpose of a business plan? a) to describe the background/experience of your suppliers b) to explain the idea behind your business c) to explain how you plan to achieve certain objectives d) describe the background/experience of people running your business

a) to describe the background/experience of your suppliers

Special meetings where companies display their product are: a) trade shows b) entrepreneurial conventions c) sponsored by the federal government d) not beneficial for investigating entrepreneurial opportunities

a) trade shows

Copies of resumes help show that owners are qualified to manage a business. a) true b) false

a) true

For many businesses, a small percentage of their product mix often makes up the majority of the sales revenue. a) true b) false

a) true

Libraries have publications that provide data about employment, payroll, and # of establishments a) true b) false

a) true

Needs are things that you must have in order to survive a) true b) false

a) true

Risk is both an advantage and disadvantage of entrepreneurship a) true b) false

a) true

The cover letter briefly describes your business, it's potential for success and the amount of capital you need. a) true b) false

a) true

The executive summary is a short restatement of your plan and should be no longer than 1-2 pages. a) true b) fasle

a) true

The role of businesses is to produce and distribute goods and services that people need and want. a) true b) false

a) true

Two factors that commonly enter into economic decision-making are scarcity and opportunity cost. a) true b) false

a) true

Long-term sales projections are for: a) 2-4 years after start up b) 5 years in the future c) 10 years in the future d) not included in a business plan

b) 5 years in the future

The branding, packaging, and labeling of your product should accomplish all of the following except: a) identify your product b) describe the company's product mix c) differentiate your product from others in the market d) provide information about the product

b) describe the company's product mix

The history and background section of a business plan: a) describes the experience of the people managing the business b) describes how you came up with the idea for your business c) explains the history of your company's product d) is not needed for a sole proprietorship

b) describes how you came up with the idea for your business

Which of the following would be the best way for you to promote your pressure washing business? a) free sample b) discount coupon c) contest d) gift with purchase

b) discount coupon

Which of the following would not be considered a capital resource? a) the money needed to pay employees b) employees c) building d) equipment

b) employees

A business plan is necessary only if you need to secure financing for your business. a) true b) false

b) false

A financial statement based on projected revenues is called an informal financial statement. a) true b) false

b) false

A handwritten business plan is acceptable if it is neat, well organized and inviting to read. a) true b) false

b) false

A travel agency is a retail business because it sells airline and train tickets a) true b) false

b) false

Agents and wholesalers serve as intermediaries that facilitate the flow of goods through direct channels of distribution. a) true b) false

b) false

Although there have been important entrepreneurs since the 20th century, none existed before 1900 a) true b) false

b) false

An advantage of entrepreneurship is that business owners make all decisions themselves a) true b) false

b) false

Aptitude is the ability to evaluate your strengths and weaknesses a) true b) false

b) false

Entrepreneurial businesses include retailing business, but not service businesses a) true b) false

b) false

Entrepreneurs and employees are both directly affected by consequences of decisions they make a) true b) false

b) false

Entrepreneurship thrives in a command economy. a) true b) false

b) false

Everyone has the qualities and aptitude needed to become a successful entrepreneur a) true b) false

b) false

Inelastic demand occurs when a change in price creates more demand. a) true b) false

b) false

Many companies display their products at the Small Business Administration (SBA) a) true b) false

b) false

Not every product has features a) true b) false

b) false

Opening two more restaurants in other locations around the city would be an example of a short-term goal for the owner of a new restaurant. a) true b) false

b) false

Publicity is always good for a business. a) true b) false

b) false

Small companies cannot take as many risks as large companies a) true b) false

b) false

The first 3 pages of a business plan should be the cover letter, title page and the statement of purpose. a) true b) false

b) false

The form of ownership section is included only if you plan to organize as a partnership or corporation. a) true b) false

b) false

The main body of your plan may be long because it should include all available info and supporting documents. a) true b) false

b) false

The most basic of needs is security. a) true b) false

b) false

The return on investment (ROI) is the amount earned as a result of the investment and is expressed in fractions. a) true b) false

b) false

The supply curve for a market economy shows that as the price of a product or service rises, suppliers are willing to produce less of the good or service. a) true b) false

b) false

When services are combined under one charge, rather than making the customer pay for each individual part of the service, this is called price skimming. a) true b) false

b) false

Which of the following is a retail business? a) auto repair shop b) grocery store c) gold mine d) farm

b) grocery store

A business plan is important for all of the following reasons except: a) it helps communicate your ideas to others b) helps decide what products to sell c) may help you secure financing d) makes you think about all aspects of your business

b) helps decide what products to sell

Which of the following is not not one of the three basic economic questions that countries must answer? a) what goods and services will be produced? b) how much will be charged for goods and services? c) how will the goods and services be produced? d) for whom will the goods and services be produced?

b) how much will be charged for goods and services

Two key factors that aid an entrepreneurs commitment to a business are: a) hobbies and sales experience b) interest and past experience c) interest and sales experience d) funny jokes and great smile

b) interests and past experience

The most cost-effective channel of distribution option is: a) manufacturer to retailer to consumer b) manufacturer to consumer c) manufacturer to wholesaler to retailer to consumer d) consumer to retailer

b) manufacturer to consumer

If you were going to start a small cake decorating business, which type of market structure would you most likely be entering? a) perfect competition b) monopolistic competition c) oligoply d) monopoly

b) monopolistic competition

Which of the following pricing strategies is often used when introducing a new product into the market with the goal of developing a strong customer base while discouraging competition? a) price skimming b) penetration pricing c) prestige pricing d) price lining

b) penetration pricing

According to the theory of hierarchy of needs: a) everyone's needs will eventually be satisfied b) people must satisfy lower-level needs before they can focus on higher-level needs c) everyone has the same needs d) needs and wants are usually the same

b) people must satisfy lower-level needs before they can focus on higher-level needs

The SBA: a) holds trade shows b) publishes info that may be helpful for small businesses c) has a department in most public libraries d) is located in the white house

b) publishes info that may be helpful for small businesses

Transit advertising includes ads placed on: a) buildings b) taxis c) billboards d) privately-owned cars

b) taxis

What determines the type of economic system a country has? a) the political beliefs of the country's ruler b) the way the basic economic questions are answered c) the resources of the country d) the demands of the people

b) the way the basic economic questions are answered

Cost-based pricing is determined by: a) considering what competitors charge for the same product or service b) using the wholesale cost of an item as the basis for the price charged c) finding out how much customers are willing to pay for a product or service d) analyzing customer need

b) using the wholesale cost of an item as the basis for the price charged

Things that you think you must have in order to be satisfied are called: a) needs b) wants c) preferences d) goals

b) wants

A paid form of communication sent out by a business about a product or service is: a) publicity b) sales promotion c) advertising d) a press release

c) advertising

The introductory elements of a business plan include all the following except: a) cover letter b) statement of purpose c) an introduction d) an executive summary

c) an introduction

Which of the following is not an example of a service? a) lawn care b) car wash c) bicycle d) cable TV installation

c) bicycle

Which of the following is not a role played by entrepreneurs in the US economy? a) supply goods and services to meet consumer needs and wants b) provide capital investment and job creation c) determine how to allocate natural resources d) serve as agents for change

c) determine how to allocate natural resources

Which of the following would be a good addition to the product mix for a health club? a) diamond rings b) chocolate chip cookies c) fitness apparel d) photo print service

c) fitness apparel

An example of a noneconomic want is: a) clothing b) housing c) friendship d) cars

c) friendship

Which of the following is not a function of business? a) production b) marketing c) job creation d) finance

c) job creation

Aptitude is the ability to: a) act quickly b) evaluate interests c) learn a particular kind of job d) all of these

c) learn a particular kind of job

A business that needs a license should include what section in their business plan? a) health/safety b) license c) legal issues d) none of these

c) legal issues

Which of the following type of business is least likely to distribute its products or services directly to consumers? a) retail business b) service business c) manufacturing business d) none of these directly distributes products to consumers

c) manufacturing business

The four basic principles of the US economic system are: a) private property, freedom of choice, loss, competition b) taxed property, freedom of choice, profit, competition c) private property, freedom of choice, profit, competition d) private property, limited choice, profit, competition

c) private property, freedom of choice, profit, competition

The location of your business should be discussed in the: a) marketing section b) form of ownership section c) product/service section d) competition of ownership section

c) product/service section

During late summer, Nordstrom department stores offer fall and winter clothes at a discounted price for a short period of time. After that time, the price of this clothing goes up and is not reduced again until the end-of-season clearance. This is an example of: a) prestige pricing b) price lining c) promotional pricing d) multiple-unit pricing

c) promotional pricing

One purpose of a business plan is to: a) describe how your business expects to set objectives b) explain how you will find your target customers c) show how your business will keep customers d) identify the investors in your company

c) show how your business will keep customers

List the three types of economic resources and give an example of each

capital - machines, cash human - employees, entrepreneur natural - oil, water

Entrepreneurs try to: a) identify the needs of a market b) meet the needs of a market c) make a profit d) all of the above

d) all of the above

In the US economy, competition forces a business to: a) improve products b) keep costs low c) provide good customer service d) all of the above

d) all of the above

All business plans: a) have 7 basic elements b) are not alike c) have the same purpose d) all of these

d) all of these

Example of promotion include: a) advertising b) publicity c) sales promotion d) all of these

d) all of these

In a command economy: a) there is very little choice for consumers in what is available b) individuals may not always be able to obtain exactly what they want c) the government determines what, how, and for whom goods are produced d) all of these

d) all of these

In the US today, small companies: a) can be more creative than large companies b) have innovative ideas that lead to technological changes c) contribute billions of dollars every year to the US economy d) all of these

d) all of these

Publicity: a) is generated by media coverage b) may involve staging an event or bringing in a celebrity c) may be favorable or unfavorable d) all of these

d) all of these

The marketing section of your business plan explains: a) how you plan to enter the market b) who your prospective customers are c) your advantages over the competition d) all of these

d) all of these

To successfully use the marketing concept, a business must do which of the following? a) identify what will satisfy the customers' needs and wants b) develop and market products or services that customers consider better than other choices c) operate profitably d) all of these

d) all of these

You can find out about business opportunities from: a) books and magazines b) government publications c) the SBA d) all of these

d) all of these

In a market economy, individual choice: a) does not influence how items are produced b) creates scarcity c) has no effect on production d) creates the market for a good or service

d) creates the market for a good or service

If a product has inelastic demand, a price increase will cause a) consumers to buy more b) competitors to enter the market c) consumers to buy less d) little or no change in the demand for the item

d) little or no change in the demand for the item

You should identify risks and explain how you plan to deal with them in: a) the goals and objections section b) the marketing section c) the business section d) the financial section

d) the financial section

Which of the following is NOT important in determining if a business opportunity is realistic? a) the rate of business failure b) the background needed to run the type of business c) the market in the community for the type of business d) the interest rates for loans at different banks

d) the interest rates for loans at different banks

Why is an executive summary important to a business plan?

it should capture the reader's interest

Why is it important to identify risks your business may face in your business plan?

it shows how you will overcome these risks and issues. It also shows how you have thought out your business plan very well

Describe some public relations activities that businesses in your area have performed.

through town events like the turkey trot. Here, they could promote their business throughout the run, or on the t-shirt that is given to the runners. Another example is sponsoring youth sports teams. So whenever that team plays, people will notice your business and hopefully look into buying your product/service