INTRODUCTION TO ENTREPRENEURSHIP
Choose the one alternative that best completes the statement or answers the question.
1) Among minorities, ________ -owned firms had the highest growth rate from 1996 to 2010.
A) Pacific Islander
B) American Indian
C) African American
D) Latino
E) Asian American
2) The Savvy Entrepreneurial Firm feature in Chapter 1 focuses on Revio Mobile (maker of Angry Birds) and
Zeo, two companies that have produced successful products. The feature's main purpose is to illustrate the
importance of ________ as a key characteristic of the founders of entrepreneurial firms.
A) A desire to pursue financial rewards
B) Product/customer focus
C) Execution intelligence
D) Passion for the business
E) Tenacity despite failure
3) According to the textbook, there are three types of startup firms:
A) Innovative firms, entrepreneurial firms, and standard firms
B) Entrepreneurial firms, standard-of-living firms, and statutory firms
C) Lifestyle firms, salary-substitute firms, and entrepreneurial firms
D) Lifestyle firms, general firms, and entrepreneurial firms
E) Standard-of-living firms, statutory firms, and general firms
4) Which of the following is not one of the four steps of the entrepreneurial process?
A) Deciding to become an entrepreneur
B) Moving from an idea to an entrepreneurial firm
C) Determining how to seize the spotlight
D) Managing and growing the entrepreneurial firm
E) Developing successful business ideas
5) James Quinn is starting a firm in the financial services industry primarily to pursue financial rewards.
According to the textbook, starting a business to make a lot of money:
A) Is the number two reason that people start their own business, right behind the lack of better career
prospects?
B) is equally as satisfying as other reasons for starting a business
C) Is the number one reason people start their own business
D) Often fails to live up to its hype
E) Does not rank among the top three reasons that people start their own business
6) As new products that are better than the existing generation of products are introduced, sales normally
increase because the new products provide consumers increased value or worth. This process, which is called
________, stimulates economic activity, which is a good thing for the economy.
A) Repetitive destruction
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B) Iterative destruction
C) Inventive replacement
D) Creative destruction
E) Iterative replacement
7) The number one characteristic shared by successful entrepreneurs is:
A) A desire to achieve financial rewards
B) A desire to bring a revolutionary new product or service to market
C) Passion for the business
D) A desire to fulfill a lifetime dream
E) A desire to employ other people
8) The three primary reasons that people become entrepreneurs and start their own firms are to:
A) Be their own boss, pursue their own ideas, and realize financial rewards
B) Take advantage of government subsidies, pursue their own ideas, and realize financial rewards
C) Gain prestige, realize financial rewards, and eliminate risk in their lives
D) Take big risks, be their own boss, and do what they were "born" to do
E) Do what they were "born" to do, be their own boss, and gain prestige
9) Which of the following was not identified in the textbook as one of the five primary reasons passion is
important for the launch of a successful entrepreneurial organization?
A) The ability to listen to feedback on the limitations of your organization and yourself
B) Perseverance and persistence when the going gets tough
C) The ability to stick to a plan even when faced with evidence that changes are needed
D) A willingness to work hard for an extended period of time
E) Ability to overcome setbacks and "no's"
10) Entrepreneurial firms:
A) Are small firms that yield a level of income for their owner or owners that is similar to what they
would earn when working for an employer
B) Provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while
doing so
C) Bring new products and services to market by creating and seizing opportunities
D) Offer to customers common products that are not particularly innovative, and provide their owner or
owners the opportunity to pursue a particular lifestyle and earn a living while doing so
E) Bring to market new products and services that are not particularly innovative
11) Tahoe Trips & Trails, a company mentioned in Chapter 1, leads multiday outdoor adventure trips for private
groups and corporate clients to Lake Tahoe, Yosemite, Death Valley, and similar locations. The company was
started by Hanna Sullivan, an individual that gave up a prestigious job with a private investment company
because Tahoe Trips & Trails better accommodates her personal lifestyle. Tahoe Trips & Trails is an example
of a(n) ________ firm.
A) salary-substitute
B) Entrepreneurial
C) Statutory
D) Lifestyle
E) standard-of-living
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12) Which of the following is the correct sequence for the four steps in the entrepreneurial process?
A) Developing successful business ideas, moving from an idea to an entrepreneurial firm, deciding to
become an entrepreneur, managing and growing the entrepreneurial firm
B) Deciding to become an entrepreneur, developing successful business ideas, moving from an idea to
an entrepreneurial firm, managing the growing entrepreneurial firm
C) Managing and growing the entrepreneurial firm, developing successful business ideas, deciding to
become an entrepreneur, moving from an idea to an entrepreneurial firm
D) Developing successful business ideas, deciding to become an entrepreneur, moving from an idea to
an entrepreneurial firm, managing and growing the entrepreneurial firm
E) Deciding to become an entrepreneur, moving from an idea to an entrepreneurial firm, developing
successful business ideas, managing and growing the entrepreneurial firm
13) In the book The Theory of Economic Development, ________ argued that entrepreneurs develop new
products and technologies that over time make current products and technologies obsolete. This process is
called creative destruction.
A) Joseph Schumpeter
B) Michael Porter
C) Thomas Friedman
D) Jim Collins
E) H.H. Stevenson
14) The What Went Wrong? Feature in Chapter 1 focuses on YouCaster, a company that was launched in 2006
but eventually went out of business. According to the feature, YouCaster failed for two primary reasons:
A) Too few customers and a lack of intellectual property protection
B) A lack of passion and too few customers
C) A poorly equipped team of entrepreneurs and a lack of passion
D) A lack of execution intelligence and a poor product/customer focus
E) A lack of resolve and poor execution intelligence
15) According to the textbook, the number one reason that people become entrepreneurs is to:
A) Be their own boss
B) Continue a family tradition
C) Pursue their own ideas
D) Realize financial rewards
E) Gain prestige
16) Stacey Wills, who is at heart a craftsperson, recently started a firm to manufacturer a new innovative food
blender. Stacey's desire is to sell her food blender to as many people as possible, because she firmly believes in
the merits of her product. Stacey's story best illustrates which of the following characteristics, or attributes, of a
successful entrepreneur?
A) Tenacity despite failure
B) A desire to gain financial rewards
C) Product/customer focus
D) A desire to please consumers
E) Execution intelligence
17) According to Chapter 1, a sentiment that venture capitalists often express is that:
A) They would never fund a strong entrepreneur with a weak business idea
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B) A new venture's marketing plan is more important than either the strength of the entrepreneur or the
strength of the business idea
C) The strength of the entrepreneur and the strength of the business idea are of equal importance
D) They would rather fund a strong entrepreneur with a mediocre business idea than fund a strong
business idea with a mediocre entrepreneur
E) They would rather fund a strong business idea with a mediocre entrepreneur than fund a strong
entrepreneur with a mediocre business idea
18) According to the textbook, entrepreneurs are:
A) Gamblers
B) Moderate risk takers
C) Minimal risk takers
D) Forceful risk takers
E) Aggressive risk takers
19) The Partnering for Success feature in Chapter 1 focuses on how pharmaceutical products are brought to
market. The "lesson learned" from the feature for entrepreneurs is:
A) Partnerships between smaller entrepreneurial firms and large firms almost always favor the smaller
entrepreneurial firms, particularly in the pharmaceutical industry
B) Large firms and smaller entrepreneurial firms can often produce the best results by partnering with
each other rather than acting as adversaries
C) the most compelling partnerships between smaller entrepreneurial firms and large firms allow both
categories of firms to be generalists, and not focus strictly on their areas of expertise
D) Partnerships between smaller entrepreneurial firms and large firms almost always favor the large
firm, particularly in the pharmaceutical industry
E) It rarely works out for large firms and smaller entrepreneurial firms to partner with each other,
particularly in the pharmaceutical industry
20) According to the Global Entrepreneurship Monitor (GEM) 2007 study, the majority of people in
high-income countries are drawn to entrepreneurship:
A) Because an important role model was an entrepreneur
B) To gain prestige
C) Due to lack of career prospects
D) To take advantage of an attractive opportunity
E) As a result of government incentives
21) Which of the following statements is not true about women-owned businesses in the United States?
A) Women-owned firms still trail male-owned businesses in terms of sales and profits.
B) There are a growing number of groups that support and advocate for women-owned businesses.
C) The number of women-owned businesses is increasing.
D) Over 50% of women-owned firms are home-based.
E) The top industry for women-owned firms is manufacturing.
22) Which of the following is not one of the five common myths about entrepreneurs?
A) Entrepreneurs are tenacious.
B) Entrepreneurs are born not made.
C) Entrepreneurs love the spotlight.
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D) Entrepreneurs should be young and energetic.
E) Entrepreneurs are moderate risk takers.
23) Which of the following was not identified in the textbook as one of the common traits and characteristics of
entrepreneurs?
A) Intolerant of ambiguity
B) Has a strong work ethic
C) Promoter
D) Decisive
E) Visionary
24) According to the textbook, the four characteristics of successful entrepreneurs are:
A) Passion for the business, seeks recognition, young and energetic, and execution intelligence
B) Passion for the business, on the cutting edge of technological change, very charismatic, and tenacity
despite failure
C) On the cutting edge of technological change, forward thinking, tenacity despite failure, and
product/customer focus
D) Passion for the business, tenacity despite failure, product/customer focus, and execution intelligence
E) Young and energetic, passion for the business, product/customer focus, and seeks recognition
25) According to the textbook, entrepreneurship has historically had:
A) A major impact on the economy and minor impact on society
B) A minor impact on both the economy and society
C) No impact on either the economy or society
D) A major impact on society and minor impact on the economy
E) A major impact on both the economy and society
26) According to the Global Entrepreneurship Monitor (GEM) 2010 survey, about ________ of adults in the
United States are either starting a business or are running a business that has been in existence for less than 3
1/2 years.
A) 5.5 percent
B) 9.0 percent
C) 3.8 percent
D) 7.6 percent
E) 12.5 percent
27) Sarah Thorton is the founder of a company named Extreme Sports Apparel. The company makes apparel
products for extreme sports enthusiasts such as rock climbers, triathletes, parasailors, and BMX bikers. Sarah
wants her company to pursue a high level of corporate entrepreneurship. To achieve that goal, Sarah's firm
should be:
A) Taking a "wait and see" posture, not innovative, and risk averse
B) Proactive, not innovative, and risk taking
C) Proactive, innovative, and risk taking
D) Innovative, risk averse, and take a "wait and see" posture
E) Taking a "wait and see" posture, innovative, and risk taking
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28) Which of the following is not a personality trait or characteristic common among entrepreneurs?
A) Short attention span
B) Visionary
C) Self-starter
D) Promoter
E) Alert to opportunities
29) According to the textbook, Google, Facebook, and Zynga are examples of ________ firms.
A) Industry-standard
B) Standard-of-living
C) Ssalary-substitute
D) Lifestyle
E) Entrepreneurial
30) Which of the following was not given in the textbook as a reason for the increase in the number of senior
entrepreneurs?
A) Corporate downsizing
B) Seniors tend to be more passionate about new business ideas than middle-aged or younger
prospective entrepreneurs.
C) Many seniors have extensive business experience and other qualities that equip them for an
entrepreneurial career.
D) Growing worries among seniors that they need to earn additional income to pay for future health care
services and other expenses
E) An increasing desire among older workers for more personal fulfillment in their lives
31) Netflix is an established firm that encourages and emphasizes entrepreneurial behavior throughout its
various divisions. According to the textbook, Netflix practices:
A) Business entrepreneurship
B) Enterprise entrepreneurship
C) Tactical entrepreneurship
D) Strategic entrepreneurship
E) Corporate entrepreneurship
32) ________ is the process of creating something new, which is central to the entrepreneurial process.
A) Creativity
B) Modernism
C) Execution
D) Creative destruction
E) Innovation
33) According to the textbook, there are three types of startup firms: entrepreneurial firms, lifestyle firms, and:
A) Innovative firms
B) Civil firms
C) Salary-substitute firms
D) Standard-of-living firms
E) Statutory firms
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34) GiftZip, the company profiled in the opening feature for Chapter 1, makes money via:
A) Monthly subscription fees
B) Payments from companies that offer gift cards for displaying their cards on the site
C) Online advertising
D) Earning an affiliate fee for gift card purchases that originate from its site
E) The direct sale of gift cards displayed on its site
35) Which of the following statements regarding business success (or failure) rates is correct?
A) After four years, 15 percent of new businesses are still open.
B) After four years, 25 percent of new businesses are still open.
C) Two out of three businesses fail within the first four years.
D) Nine out of ten businesses fail within the first four years.
E) After four years, 50 percent of new businesses are still open.
36) Apple Inc. is a firm that is proactive, innovative and risk-taking. From this description, we can most
accurately conclude that Apple has a high level of:
A) Enterprise focus
B) Innovative intensity
C) Creative intensity
D) Innovative concentration
E) Entrepreneurial intensity
37) A(n) ________ is a written document that describes all the aspects of a business venture in a concise
manner.
A) Operations plan
B) Contingency plan
C) Business model
D) Corporate plan
E) Business plan
38) Pacific Printing LLC is a startup that is working on a new technology for the printing industry. Because the
technology it's working on is highly proprietary, the company is located in the warehouse district of a large
western city. Pacific's founder, Jan Sims, rarely gives interviews, and is careful to not divulge much about what
the company is doing. Which of the following common myths about entrepreneurs does the behavior of its
founder, Jan Sims, dispel?
A) Entrepreneurs should be young and energetic.
B) Entrepreneurs love the spotlight.
C) Entrepreneurs are gamblers.
D) Entrepreneurs are motivated primarily by money.
E) Entrepreneurs are born, not made.
39) A firm's ________ is a plan for how it competes, uses its resources, structures its relationships, interfaces
with customers, and creates value to sustain itself on the basis of the value it creates.
A) Operations model
B) Tactical model
C) Business plan
D) Strategic plan
E) Business model
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40) According to the textbook, the biggest jump in entrepreneurial activity, by age range, from 1996 to 2010 is
among entrepreneurs in the:
A) 55 to 64 age range
B) 35 to 44 age range
C) 45 to 54 age range
D) 19 years old and younger age range
E) 20 to 34 age range
41) According to Chapter 1, investors often cite the ________ as their most important criterion in the decision
to fund new ventures.
A) Strength of the industry the new firm is entering
B) Financial position of the new venture
C) Strength of the entrepreneur
D) Strength of the new venture's marketing plan
E) Strength of the business idea
42) Chad and Allison Druxman launched a firm several years ago and have been particularly successful in
introducing new products to the marketplace. One thing that Chad and Allison are particularly good at is
translating their thoughts, creativity, and imaginations into products that reach the marketplace. The ability to
make this happen is most closely related to which of the following characteristics of successful entrepreneurs?
A) Execution intelligence
B) Passion for the business
C) Tenacity despite failure
D) Product/market focus
E) A desire for recognition
43) Which of the following statement is correct regarding entrepreneurial activity and age ranges?
A) The highest percentage of entrepreneurs falls in the 19 years old and younger age range.
B) The highest percentage of entrepreneurs falls in the 45 to 54 age range.
C) The highest percentage of entrepreneurs falls in the 35 to 44 age range.
D) The highest percentage of entrepreneurs falls in the 20 to 34 age range.
E) The highest percentage of entrepreneurs falls in the 55+ age range.
44) In regard to patent activity (issuance), which of the following statements is correct?
A) Small businesses are not active in patent activity.
B) Small businesses underperform their larger counterparts.
C) Small businesses and large businesses are relatively equal.
D) Small businesses outperform their larger counterparts.
E) Large businesses are not active in patent activity.
45) An event that prompts an individual to become an entrepreneur, such as losing a job, inheriting money, or
accommodating a certain lifestyle, is referred to as a(n):
A) Prompting event
B) Entrepreneurial prompt
C) Triggering event
D) Initiating event
E) kick-off event
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46) Which of the following statements is incorrect regarding the economic impact of entrepreneurial firms in
the United States?
A) Small firms are providers of a significant share of the innovations that take place.
B) Small businesses are the creators of most new jobs.
C) Small businesses outperform their larger counterparts in terms of patent activity.
D) According to a Kauffman Foundation survey, 92% of Americans say entrepreneurs are critically
important to job creation.
E) Small businesses employ just less than half of all private sector employees.
47) Kentucky Soup and Salad is a casual dining restaurant that has been owned by Kenneth Peterson for the
past 11 years. The restaurant offers a menu that is typical for casual dining restaurants and affords Kenneth a
level of income that is similar to what he would earn in a conventional job. According to the textbook,
Kentucky Soup and Salad is an example of a(n):
A) Quality-of-life firm
B) Industry-standard firm
C) Salary-substitute firm
D) Entrepreneurial firm
E) Lifestyle firm
48) Which of the following was not a contributing factor to Gift Zips early success?
A) The gift card market was growing.
B) It was becoming increasingly affordable to launch an online business.
C) People were becoming increasingly comfortable buying online.
D) Positive PR
E) Angel investor funding
49) At the high school and younger level, according to a Harris Interactive Survey, ________ said they'd like to
start their own business someday.
A) 10% B) 20% C) 30% D) 40% E) 50%
50) Suppose you are a Small Business Development Center counselor and you're looking at the personality
profiles of five potential entrepreneurs. Based on the profiles, which individual has the most desirable mix of
personal characteristics to become a successful entrepreneur?
A) Candidate A: visionary, energetic, moderate risk taker
B) Candidate B: seeks recognition, self-starter, creative
C) Candidate C: visionary, high risk taker, energetic
D) Candidate D: high risk taker, achievement-motivated, networker
E) Candidate E: tolerant for ambiguity, seeks recognition, motivated primarily by money
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Write your answer in the space provided or on a separate sheet of paper.
51) Identify and discuss the three primary reasons that entrepreneurial behavior has a strong impact on the
United States economy.
52) Describe the three primary reasons that people become entrepreneurs and start their own firms.
53) Identify the three types of startup firms, and discuss how they differ. Provide examples of each type of firm.
54) What is entrepreneurship? What is the essence of entrepreneurial behavior?
55) Describe the four main characteristics of successful entrepreneurs.
ANSWERS:
1) D 18) B 35) E
2) E 19) B 36) E
3) C 20) D 37) E
4) C 21) E 38) B
5) D 22) A 39) E
6) D 23) A 40) A
7) C 24) D 41) C
8) A 25) E 42) A
9) C 26) D 43) D
10) C 27) C 44) D
11) D 28) A 45) C
12) B 29) E 46) E
13) A 30) B 47) C
14) B 31) E 48) E
15) A 32) E 49) D
16) C 33) C 50) A
17) D 34) D
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