1. Viola wants to be a business owner, and is contemplating whether to start her own business or open a
franchise. Which of the following, if true, would be a compelling reason for Viola to open a franchise
rather than start a new business?
A. The franchiser requires $3,000 in start-up costs and a 5 percent monthly royalty fee.
B. The franchiser tightly controls and monitors the service protocol.
C. The franchisee is responsible for developing all marketing materials.
D. The company has only recently become a franchise.
2. Which of the following is federally licensed to borrow money from the Small Business Administration
to invest in or lend to small businesses?
A. SCORE
B. SBICs
C. SBDC
D. FDIC
3. Many governments require that products sold in their particular country be at least partly made there.
This policy involves what type of laws?
A. quota laws
B. local content laws
C. business practice laws
D. free trade laws
4. Which of the following denotes a government order forbidding exportation and/or importation of a
particular product from a particular country?
A. tariff
B. embargo
C. subsidy
D. local content law
5. Why is it difficult to compare relative job growth for different-sized businesses?
A. Sourcing up-to-date employment figures is difficult.
B. Many small businesses experience rapid unreported growth.
C. Spheres of influence overlap between the small and big business sectors.
D. It is hard to determine the cutoff point at which a small business becomes a large business.
6. Shirley is opening a flower shop and has decided to operate as a sole proprietorship. Which of the
following is NOT an advantage Shirley will have in operating her business?
A. freedom
B. simplicity of operation
C. limited liability
D. low start-up costs
7. Which of the following is the most significant disadvantage of starting a business from scratch?
A. having few employees
B. inability to franchise
C. having competition
D. the risk of failure
8. Which of the following helps entrepreneurs gain skills that are essential for running a business?
A. ESOP
B. SBICs
C. SEC
D. SBA
9. Which of the following refers to tariffs that are imposed strictly to raise money for the government?
A. revenue tariffs
B. protectionist tariffs
C. quota tariffs
D. subsidy tariffs
10. Which type of business is legally considered a separate entity from its owners and is liable for its own
debts?
A. sole proprietorship
B. corporation
C. limited partnership
D. cooperative
11. Who are the owners of a corporation?
A. board of directors
B. financial officers
C. stockholders
D. top managers
12. The U.S. government forbids the importation of cigars from Cuba. What is this practice called?
A. embargo
B. tariff
C. subsidy
D. business practice law
13. Which of the following types of tariff is meant to discourage the import of particular products?
A. revenue tariff
B. quota tariff
C. labor tariff
D. protectionist tariff
14. In which business sector are cooperatives still important?
A. manufacturing
B. automotive
C. public utilities
D. agriculture
15. Olivia has found a viable business, a small furniture store, she is interested in purchasing. She has
learned that the store is supplied by reliable vendors and has a steady stream of local and online buyers.
What should be Olivia’s next step at this point?
A. Analyze the furniture store’s past financial statements.
B. Start negotiating a purchase price with the current owner.
C. Approach a banking institution about financing her purchase.
D. Consult a marketing agency about ways to reach more customers.
16. Who constitutes the membership of SCORE?
A. retired executives
B. venture capitalists
C. company officers
D. commercial lenders
17. Which of the following denotes the practice of protecting domestic business at the expense of free
market competition?
A. fair trade
B. balanced trade
C. free trade
D. protectionism
18. Which form of business ownership generates the most sales in the United States?
A. sole proprietorship
B. general partnership
C. cooperative
D. corporation
19. What is the most effective way for an entrepreneur to become a competent manager?
A. working alone
B. relying on luck
C. getting a college degree
D. working for a successful company first
20. Which entity is defined as independent and has little influence on its market?
A. corporation
B. joint venture
C. small business
D. partnership
