Problem 2 (28 points)

Circle the most appropriate answer to the related question, or the phrase or word that best completes the corresponding statement.

1. Khaled is buying a new car. The first choice is a great and a more practical deal, but Khaled ended up buying the second choice because he loves the way it looks. Khaleds decision is based on:

1. Insight or intuition
2. Experience
3. Framing
4. Emotion.

2. An employee is comparing income statements from the past three years to evaluate changes and trends in the businesss revenue. What type of business analysis is the employee conducting?

1. Production
2. Financial
3. Information management
4. Sales

3. During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025. The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over represents the owner's

1. Net profit.
2. Gross profit.
3. Sales income.
4. Operating expenses.

4. The future that you desire to create is known as a

1. Mission statement.
2. Goal.
3. Prediction.
4. Vision.

5. Which of the following statements is true about new venture risk-taking:

1. When an entrepreneur seeks a high profit, the risk is usually higher.
2. When the entrepreneur seeks to limit risk, the reward tends to increase.
3. An entrepreneur's financial risk is not closely related to rewards.
4. The entrepreneur who does not care about profit is a high risk-taker.

6. Small-business owners develop and use operating procedures so that everyday tasks are performed in a(n) __________ way.

1. Innovative
2. Imprecise
3. Diverse
4. Standard

7. A business could use the budget information to make operating changes if:

1. Total revenues exceed projected costs.
2. Estimated sales exceed actual sales.
3. Expected profits are increasing.
4. Accounts receivables are on target.

8. The W in SWOT analysis stands for:

1. Worth of business.
2. Weakness.
3. Work/life.
4. Wedge.

1. The plan shows whether the business is economically feasible or not:

5. Financial.
6. Business.
7. Economic.
8. Marketing.

10. What are the two types of disruptive business models?

1. High-end and low-end.
2. New-product and new-market.
3. New-market and low-end.
4. New-channel and high-quality.

11. Which of the following is a characteristic of a profit-and-loss statement?

1. Is the same as a balance sheet.
2. Summarizes expenses and revenue from sales.
3. Shows the owner's financial position.
4. Lists assets and liabilities.

12. Which of the following statements is true about business startup requirements:

1. New business owners usually need to register for patent protection.
2. The financial needs to start a new business depend on the nature of the venture.
3. Purchasing a franchise is usually easy and inexpensive for startup business owners.
4. Equipment is the least expensive requirement for a startup business.

13. Which of the following is the most critical component of a business plan?

1. Market analysis
2. Company description
3. Executive summary
4. Financial plan

14. Which of the following employees would most likely be described as innovative by his/her supervisor:

1. Jake, because he is always willing to adapt to changes during a project
2. Madison, because she prefers to stick to traditional ideas and processes
3. Elizabeth, because she gets frustrated when she needs to learn new skills
4. Anthony, because he is usually quiet during brainstorming sessions