Small Business Practice Test #1

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1. What features define a small business:
a) independently managed
b) Capital from 1 or a small group
c) located in a small area
d) small in comparison to competition
e) all of the above

2. Which of the following would not be considered important to starting a small business:
a) having a product idea or service
b) knowledge about demand and market
c) a business plan
d) a motivational plan
e) money for start up

3. According to the text, entrepreneurs are born not made.
a) True
b) False

4. According to the text, an entrepreneur is not necessarily a gambler but rather a person who takes calculated risks.
a) True
b) False

5. A sole proprietorship has the advantage of
a) unlimited personal liability
b) simplicity of organization
c) ability for estate planning

6. A sole proprietorship has the disadvantage of
a) limited ability for estate planning
b) added tax
c) control in leadership

7. There must be at least one limited partner in any partnership.
a) True
b) False

8. A charity can be either a sole proprietorship or a partnership.
a) True
b) False

9. A partnership has the advantage of
a) ability for estate planning
b) unlimited personal liability
c) ease of organization
d) potential for more capital
e) both a and b are true
f) both c and d are true

10. In a partnership one partner is responsible for all the debts of the others even if the partner did something that violated the contract that formed the partnership.
a) True
b) False

11. A corporation is really only suitable for large organizations that are well established.
a) True
b) False

12. To form a corporation one must:
a) file articles of incorporation
b) issue shares
c) publish all financial statements
d) search government regulations to see how many shares can be issued
e) both a and b
f) both b and d

13. Advantages of corporations are
a) more capital
b) tax advantage
c) limited liability
d) low start up costs
e) all of the above
f) only a, b, and c are true

14. A small business might incorporate when there is a danger with regard to personal liability
a) True
b) False

15. When investigating buying a business which of the following would not be important to investigate:
a) competition
b) zoning bylaws
c) technological advances
d) overvalued inventory
e) all of the above are relevant

16. Primary research is typically less expensive compared to secondary research.
a) True
b) False

17. The biggest disadvantage of franchising in Ontario is:
a) termination policy favours franchisee
b) sharing advertising costs
c) lack of protective regulation

18. The societal marketing concept puts together three important concepts; determining needs and wants, delivering satisfactions and delivering them in a positive way for society.
a) True
b) False

19. The four Ps of marketing are:
a) place, production, price, promotion
b) profit, price, product, promotion
c) product, place, promotion, price

20. Primary research sources are Industry Canada, Business Journals,, and newspapers.
a) True
b) False

21. ________ is the demand for the product category; whereas, _________ is the demand for the specific product.
a) selective, primary
b) secondary, primary
c) primary, secondary
d) primary, selective

22. Ways to demonstrate competitive advantage are:
a) demonstrate superiority and product innovation
b) creating primary demand
c) geographic psychomics
d) none of the above

23. The process of dividing a large market into smaller homogeneous segments based on common needs or/and lifestyles is called:
a) relationship marketing
b) database marketing
c) positioning
d) market deconstruction
e) market segmentation

24. The place product occupies in the consumer's mind is called:
a) segmentation
b) psychographics
c) positioning
d) demographics

25. Which of the following is not one of Maslow's Hierarchy of Needs:
a) self-actualization
b) materialism
c) social
d) esteem

26. Screening messages in conflict with previously learned attitudes and beliefs is called:
a) selective retention
b) selective perception
c) selective exposure

27. Age, gender, income and education are factors considered in
a) demographics
b) psychographics
c) motivation
d) geographics

28. Psychographic segmentation examines lifestyle based on:
a) abilities, ideas and opportunities
b) attitudes, interests, and opinions
c) activities, interests, and opinions

29. A person who prefers the simpler times who is motivated by values and reasonable price would be categorized as
a) a day-to day watcher
b) an old-fashioned puritan
c) a joiner activist
d) responsible survivor

30. The types of self that an advertiser is not interested in is/are:
a) real self and ideal self
b) looking glass self and ideal self
c) ideal self and real self
d) real self