Entrepreneurship and Small Business Management

Chapter 1: What Is Entrepreneurship?

Practice Test

1
A/An_____________is an individual who undertakes the creation, organization, and ownership of a
business.
Need a Hint?

consumer
A)

entrepreneur
B)

business owner
C)

capitalist
D)

2
A/An___________ is a new business undertaking that involves risk.
Need a Hint?

monopoly
A)

venture
B)

entrepreneur
C)

market structure
D)

3
____________is the study of how people choose to allocate scarce resources to fulfill their unlimited
wants.
Need a Hint?

Economics
A)

Entrepreneurship
B)

Free enterprise system

C)

Monopoly
D)

4
In a/an__________, people have an important right to make economic choices.
Need a Hint?
entrepreneurship
 A)

monopoly
B)

free society
C)

free enterpise system

D)

5
___________is money left after all expenses of running a business have been deducted from the income.
Need a Hint?

Capital
A)

Cost
B)

Profit
C)

Surplus
D)

6
________ competition is a market structure in which there are numerous buyers and sellers, and no single
buyer or seller can affect price.
Need a Hint?

Free enterprise
A)

Monopolistic
B)

Oligopolistic
C)

Perfect
D)

7
A__________is a basic requirement for survival.
Need a Hint?

need
A)

good
B)

service
C)

want
D)

8
The resources businesses use to produce the goods and services people want are called__________.
Need a Hint?
 factors of manufacturing
A)

factors of production
B)

capital
C)

start-up funds
D)

9
________ occurs when demand exceeds supply.
Need a Hint?

Production
A)

Scarcity
B)

Want
C)

Need
D)

1
0 In a free enterprise system, the price of a product is determined in the _____________.
Need a Hint?

marketplace
A)

stock market
B)

government
C)

company
D)

1
1 ____________ is the total market value of goods and services produced by workers and capital within a
country during a given period.
Need a Hint?

Federal Reserve
A)

Factors of Production
B)

Resources
C)

Gross Domestic Product

D)

1
2 The entrepreneur is the driving force of the_________________process.
 Need a Hint?

start-up
A)

venture
B)

manufacturing
C)

production
D)

1
3 Studies by the Small Business Administration report that _____ percent of new businesses survive the first
two years
Need a Hint?

42
A)

33
B)

66
C)

50
D)

1
4 A/An________________is a business that has stopped operating with a loss to creditors.
Need a Hint?

new venture
A)

enterprise
B)

business failure
C)

discontinuance
D)

1
5 A ____________ is a business that may be operating under a new name
Need a Hint?

discontinuance
A)

business failure
B)

new venture
C)

start-up
D)
Chapter 1: What Is Entrepreneurship?

Practice Test
Results Reporter
Out of 15 questions, you answered 9 correctly with a final grade of 60%
9 correct
(60%)
6 incorrect
(40%)
0
unanswered
(0%)

Your Results:
The correct answer for each question is indicated by a  .

1 CORRECT
A/An_____________is an individual who undertakes the creation, organization, and
ownership of a business.

consumer
A)

entrepreneur
B)

business owner
C)

capitalist
D)
Feedback: Entrepreneurship is the primary catalyst for economic growth. (See p. 6.)

2 CORRECT
A/An___________ is a new business undertaking that involves risk.

monopoly
A)

venture
B)

entrepreneur
C)

market structure
D)
Feedback: About one in three households are involved with a new venture or a small
business. (See p. 6.)

3
INCORRECT ____________is the study of how people choose to allocate scarce resources to fulfill their
unlimited wants.

Economics
A)
Entrepreneurship
 B)

Free enterprise system

C)

Monopoly
D)
Feedback: To understand how entrepreneurs and customers interact in the economy, you
need to start with economics. (See p. 7.)

4
INCORRECT In a/an__________, people have an important right to make economic choices.

entrepreneurship
A)

monopoly
B)

free society
C)

free enterpise system

D)
Feedback: People can choose to start a business and compete with other businesses in a
free enterprise system. (See p. 8.)

5
INCORRECT ___________is money left after all expenses of running a business have been deducted from
the income.

Capital
A)

Cost
B)

Profit
C)

Surplus
D)
Feedback: Profit is one way of measuring success in a free enterprise system, but there is
a risk of failure. (See p. 8.)

6
INCORRECT ________ competition is a market structure in which there are numerous buyers and sellers,
and no single buyer or seller can affect price.

Free enterprise
A)

Monopolistic
B)

Oligopolistic
C)

Perfect
D)
Feedback: Few, if any, perfect competition markets exist. Because there is no difference in
quality, one seller's merchandise is just as good as another's. (See p. 9)
7 CORRECT
A__________is a basic requirement for survival.

need
A)

good
B)

service
C)

want
D)
Feedback: Goods and services are the products our economic system produces to satisfy
consumers' wants and needs. (See p. 11.)

8 CORRECT
The resources businesses use to produce the goods and services people want are
called__________.

factors of manufacturing
A)

factors of production
B)

capital
C)

start-up funds
D)
Feedback: Other factors include labor, capital, and entrepreneurship. (See p. 11.)

9 CORRECT
________ occurs when demand exceeds supply.

Production
A)

Scarcity
B)

Want
C)

Need
D)
Feedback: To have one thing means to give up something else. (See p. 11.)

10
CORRECT In a free enterprise system, the price of a product is determined in the _____________.

marketplace
A)

stock market
B)

government
C)

company
D)
 Feedback: Sellers want to sell at the highest possible price, and buyers want to buy at the
lowest possible price. (See p. 11.)

11
CORRECT ____________ is the total market value of goods and services produced by workers and
capital within a country during a given period.

Federal Reserve
A)

Factors of Production
B)

Resources
C)

Gross Domestic Product

D)
Feedback: The federal government publishes statistics that help entrepreneurs understand
the economy and predict possible changes. Examples are the employment rate, consumer
confidence, and the GDP. (See p. 14.)

12
CORRECT The entrepreneur is the driving force of the_________________process.

start-up
A)

venture
B)

manufacturing
C)

production
D)
Feedback: The entrepreneurial process includes five key components: the entrepreneur,
the environment, the opportunity, start-up resources, and the new venture organization.
(See p. 18)

13
INCORRECT Studies by the Small Business Administration report that _____ percent of new businesses
survive the first two years

42
A)

33
B)

66
C)

50
D)
Feedback: Studies show that more new businesses succeed than fail. The rate drops to
about 40 percent by six years. (See p. 21.)

14
CORRECT A/An________________is a business that has stopped operating with a loss to creditors.

new venture
A)
 enterprise
B)

business failure
C)

discontinuance
D)
Feedback: The business loses money for creditors, the people who lent it money, and its
investors. (See p. 21.)

15
INCORRECT A ____________ is a business that may be operating under a new name

discontinuance
A)

business failure
B)

new venture
C)

start-up
D)
Feedback: Businesses that disappear from the tax rolls are not always failures. They may
be businesses the owners have purposely discontinued to start new ones. (See p. 21.)