Test Bank for Entrepreneurial Finance, 7th Edition,
J. Chris Leach Ronald W. Melicher
,True / False
1. It is estimated that more than one million new businesses are started in the United States each year.
a. True
b. False
ANSWER: True
2. Reasonable estimates place nonemployer (e.g., single person or small family) businesses started each year at less than
100,000.
a. True
b. False
ANSWER: False
3. The entrepreneurial process involves: developing opportunities, gathering resources, and managing and building
operations, all with the goal of creating value.
a. True
b. False
ANSWER: True
4. A market-oriented economic system provides an environment that fosters the formation, development, and
transformation of ideas into useful products and services.
a. True
b. False
ANSWER: True
5. Capitalism is a market-oriented system that prohibits private ownership of physical and financial assets.
a. True
b. False
ANSWER: False
6. Democratic capitalism exists where a country or state organized as a democracy adopts a capitalistic economic system.
a. True
b. False
ANSWER: True
7. Entrepreneurs provide the financing to individuals who think, reason, and act to convert ideas into commercial
opportunities and create opportunities.
a. True
b. False
ANSWER: False
8. Entrepreneurship is the process of changing ideas into commercial opportunities and creating value.
a. True
b. False
ANSWER: True
9. An entrepreneur is an individual who thinks, reasons, and acts to convert ideas into commercial opportunities and to
create value.
, a. True
b. False
ANSWER: True
10. Mark Twain once said, “I was always able to see an opportunity before it became one.”
a. True
b. False
ANSWER: False
11. Around two-thirds of new employers survive at least two years, and only about one-half survive for at least five years.
a. True
b. False
ANSWER: True
12. A study of the U.S. Census Bureau's Characteristics of Business Owners database suggests that about two-thirds of
closed businesses were successful at closure.
a. True
b. False
ANSWER: False
13. Nearly half of business failures are due to economic factors such as inadequate sales, insufficient profits, and industry
weakness.
a. True
b. False
ANSWER: True
14. Financial causes, such as excessive debt and insufficient financial capital, are not major contributors to business
failures.
a. True
b. False
ANSWER: False
15. Although the risks associated with starting a new entrepreneurial venture are large, there is always room for one more
success.
a. True
b. False
ANSWER: True
16. Fads are large societal, demographic, or technological trends or changes that are slow in forming but, once in place,
continue for many years.
a. True
b. False
ANSWER: False
17. Fads are not predictable, have short lives, and do not involve macro changes.
a. True
b. False
ANSWER: True
J. Chris Leach Ronald W. Melicher
,True / False
1. It is estimated that more than one million new businesses are started in the United States each year.
a. True
b. False
ANSWER: True
2. Reasonable estimates place nonemployer (e.g., single person or small family) businesses started each year at less than
100,000.
a. True
b. False
ANSWER: False
3. The entrepreneurial process involves: developing opportunities, gathering resources, and managing and building
operations, all with the goal of creating value.
a. True
b. False
ANSWER: True
4. A market-oriented economic system provides an environment that fosters the formation, development, and
transformation of ideas into useful products and services.
a. True
b. False
ANSWER: True
5. Capitalism is a market-oriented system that prohibits private ownership of physical and financial assets.
a. True
b. False
ANSWER: False
6. Democratic capitalism exists where a country or state organized as a democracy adopts a capitalistic economic system.
a. True
b. False
ANSWER: True
7. Entrepreneurs provide the financing to individuals who think, reason, and act to convert ideas into commercial
opportunities and create opportunities.
a. True
b. False
ANSWER: False
8. Entrepreneurship is the process of changing ideas into commercial opportunities and creating value.
a. True
b. False
ANSWER: True
9. An entrepreneur is an individual who thinks, reasons, and acts to convert ideas into commercial opportunities and to
create value.
, a. True
b. False
ANSWER: True
10. Mark Twain once said, “I was always able to see an opportunity before it became one.”
a. True
b. False
ANSWER: False
11. Around two-thirds of new employers survive at least two years, and only about one-half survive for at least five years.
a. True
b. False
ANSWER: True
12. A study of the U.S. Census Bureau's Characteristics of Business Owners database suggests that about two-thirds of
closed businesses were successful at closure.
a. True
b. False
ANSWER: False
13. Nearly half of business failures are due to economic factors such as inadequate sales, insufficient profits, and industry
weakness.
a. True
b. False
ANSWER: True
14. Financial causes, such as excessive debt and insufficient financial capital, are not major contributors to business
failures.
a. True
b. False
ANSWER: False
15. Although the risks associated with starting a new entrepreneurial venture are large, there is always room for one more
success.
a. True
b. False
ANSWER: True
16. Fads are large societal, demographic, or technological trends or changes that are slow in forming but, once in place,
continue for many years.
a. True
b. False
ANSWER: False
17. Fads are not predictable, have short lives, and do not involve macro changes.
a. True
b. False
ANSWER: True
