1. What is a risk of being an entrepreneur? a. making your own decisions b. doing work you enjoy
c. making your own hours
d. unexpected obstacles
2. What advantage does a general partnership have over a sole proprietorship?
a. Each partner is responsible for the business action of the others.
b. Partners may have trouble agreeing on policies.
c. Profit is split between the partners.
d. The incentive of becoming partners motivates employees.
3. The foreign exchange rate is
a. the rate at which countries do business.
b. the value of one currency in relation to another.
c. the fair trade value of currencies.
d. the amount of goods that a country can import.
4. Which of the following is NOT a benefit of entrepreneurship for a local economy?
a. paying tariffs
b. hiring employees
c. paying taxes
d. donating to charities
5. In a sole proprietorship, how many people are responsible for the business?
b. one or more
c. at least two
d. any number
6. A mentor provides
a. low-interest loans.
d. free labor.
7. Which product would most likely be sold to a manufacturing business?
c. plastic parts
8. Which product is considered a consumer good?
a. heavy machinery
b. metal part
9. What percentage of American business owners used money of their own, or from their families, to start or buy a business?
a. between 40 percent and 60 percent
b. more than 60 percent
c. less than 20 percent
d. between 20 percent and 30 percent
10. Which type of business ownership provides unlimited liability for its owners?
a. nonprofit corporation
b. C corporation
c. sole proprietorship
d. subchapter S corporation
11. Fair trade is a policy that
a. allows tariffs but not quotas in trade relations between a group of countries.
b. removes all trade barriers and regulations between a group of countries.
c. allows quotas but not tariffs in trade relations between a group of countries.
d. ensures small producers in developing nations make sufficient profits on exports.
12. Which statement about competition between suppliers is FALSE?
a. It pushes prices upward.
b. It pushes prices downward.
c. It is good for consumers.
d. It encourages innovation.
13. According to the Small Business Administration, a small, non-manufacturing business has fewer than __________ employees.
14. The "profit motive" is
a. profit calculated as a percentage of costs.
b. the reason entrepreneurs take on business risks.
c. the good will a business earns with charitable works.
d. the money left over when sales are subtracted from costs.
15. Which type of business is tied to the life span of its owners?
a. nonprofit corporation
b. limited partnership
c. C corporation
d. subchapter S corporation
16. A business that sells goods directly to consumers is a
a. manufacturing business.
b. wholesaling business.
c. retailing business.
d. service business.
17. An entrepreneur
a. must take college-level courses.
b. works for someone else.
c. must employ more than five employees.
d. is responsible for his or her business success.
18. What is a personal characteristic of a successful entrepreneur?
19. The natural ability to perform a specific kind of task very well is referred to as
a. an attitude.
b. a skill.
c. an aptitude.
20. A free market economy is based on
a. free enterprise.
b. government regulation.
d. cooperative agreements.
21. A business that sells goods and services to its members, as well as employing its members, is a
a. general partnership.
b. limited partnership.
22. Auto repair is an example of which type of business?
23. Suppose the ingredients to make one bag of potato chips cost $1.00. Labor costs are $.50; packaging is $.50, and shipping is $1.00. The bag of chips sells for $4.00. What is the manufacturer's profit from selling one bag of chips?
24. The biggest reward for entrepreneurs is often
b. unexpected challenges.
c. personal freedom.
d. government protections.
25. A dot-com company is
a. a company focused on protecting the environment.
b. a company that runs its business from the Internet.
c. a company that has more than one hundred employees.
d. a company that operates internationally.
26. Equilibrium price is
a. the price of a product at which there is a surplus.
b. the price of a product at which there is a shortage.
c. a limit on production set by the government.
d. the price at which supply equals demand.
27. In international trade, the purpose of a quota is to
a. limit the quantity of a product that can be imported into a country.
b. generate tax income from imported goods.
c. create a positive impact on the foreign exchange rate.
d. limit the amount of goods that can be exported from a country.
28. What is a fundamental question of economics?
a. How can work be done more efficiently?
b. How can businesses hire dependable workers?
c. What can be done to improve working conditions?
d. What goods and services are produced?
29. How can a local economy affect a global economy?
a. Local governments can enact tariffs.
b. Local markets sell imported goods.
c. Local governments can enact quotas.
d. Local markets cannot affect the global economy.
30. An attitude is
a. a natural ability to perform a particular kind of work or activity well.
b. a desire to perform a particular kind of work or activity well.
c. a trend or pattern in public opinion that affects supply and demand.
d. a way of thinking about something that affects how you feel about it.
Part B: True or False
Decide whether each statement is true or false.
31. If the selling price for an item is greater than the cost of making it, the seller has made a profit.
32. A sole proprietorship is the simplest and least expensive option for business ownership.
33. Competition between consumers pushes prices downward.
34. Nonprofit organizations are always run by the government.
35. One of the rewards of being an entrepreneur is being able to help your community.
36. In the United States, fewer than half of the entrepreneurs have some college education.
37. Thinking like an entrepreneur can help you become a more valued employee.
38. The profits made by nonprofit corporations are distributed to their donors.
39. Countries use tariffs and quotas to give their domestic suppliers the best chance to meet demand within the country.
40. When there are not enough goods to meet the demand, the result is a surplus of those goods.
41. Entrepreneurs need "people skills" to be successful.
42. Services, as well as goods, can be imported and exported.
43. A tariff is similar to a tax and must be paid on imported goods.
44. Supply is the amount of goods customers are willing to buy.
45. Demand is the amount of goods a manufacturer is willing to produce.
46. For most of the twentieth century, manufacturing businesses played a relatively minor role in the American economy.
47. New locations without financial responsibility is an advantage for a FRANCHISEE.
48. A flu epidemic will increase demand for a medicine that treats symptoms of the flu.
49. A decrease in the cost of ingredients needed to make a popular soft drink will increase supply for the soft drink.
50. A franchise agreement would cover fees and royalties that a franchisee would pay to a franchisor.
This is a practice test to my study guide I need to make sure I got my answers correct.
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