Entre2 ASK Practice Exam Part 1 (#1-12)

One way that an advertising agency can protect the original song it created for a client's television commercial is by obtaining a

• patent

• copyright

• trademark

• license

Answer explanation

Copyright. A copyright is legal protection of books and other artistic works granted by government and giving their creators sole rights to them for a certain period of years. An original musical work, such as a song, is a type of intellectual property that can be copyrighted. If an advertising agency wants to prevent others from using the original song, it can obtain a copyright. A patent is legal protection of an invention or a process granted by government to its owners for a certain period of years. A trademark is a legal method for protecting brands from misuse. A license does not protect an original song from use by others.

Which of the following is a characteristic of a product trade-name franchise:

• It is not open to the public.

• The franchisee can choose the name of the business

• The franchisee has unlimited liability.

• It is owned by shareholders.

Answer explanation

The franchisee can choose the name of the business. A product trade-name franchise is an independent sales relationship between a supplier (franchisor) and a dealer (franchisee) to stock and sell a specific or exclusive line of products. In this relationship, the franchisee is able to choose the name of the business. These franchises are open to the public, usually have limited liability, and are owned by the franchisee, not shareholders.

Jackie is a dentist. Which channel of distribution will Jackie use to provide services to clients?

• consumer

• indirect

• direct

• industrial

Answer explanation

Direct. Direct channels of distribution are the paths, or routes, in which goods and services move directly from the producer to the consumer or industrial users. Jackie will provide services directly to clients without the use of intermediaries. Indirect channels are routes taken when goods and services move from the producer to the channel members and then to consumers or industrial users. Industrial channel and consumer channel are not channels of distribution.

Managers are responsible for directing the business's employees in ways that promote goodwill and build positive customer relationships, which often improve

• revenue from investments

• channel member efficiency

• customer retention rates

• resource allocation efforts

Answer explanation

Customer retention rates. When managers direct employees in ways that promote goodwill, they are guiding the employees' attitudes and actions so they will satisfy customers and build customer loyalty. Loyal customers generate repeat business and improve the business's customer retention rates. Channel members are the intermediaries that move goods and services to the end user. An investment involves using money to generate a profit or gain. Resources are the items or people that are needed to complete a project.

When Charlyne buys gasoline for her car, she is surprised that she doesn't have to pay any tax in addition to the price of the gasoline. Why is this?

• Charlyne is paying an excise tax that is already included in the purchase price.

• Charlyne must pay the tax later on her own.

• Charlyne is paying a property tax that is already included in the purchase price.

• The flat tax means that Charlyne doesn't have to pay taxes on gasoline.

Answer explanation

Charlyne is paying an excise tax that is already included in the purchase price. For certain products, the government levies taxes that businesses pay by building the amount into the customer's purchase price. In other words, instead of charging a tax in addition to the product's price, the business just charges a higher price to begin with, using the difference to pay the required tax to the government. These are known as excise taxes. Since Charlyne is paying the excise tax, she does not have to pay the tax later on her own. Property taxes are based on a percentage of a property's value. With a flat tax, every business pays the same percentage, no matter how much profit it makes.

Which of the following attitudes should an entrepreneur have about new technological developments:

• New technologies are overrated and should be avoided.

• The impact of new technologies should always be evaluated.

• New technologies should be applied to all business practices.

• The benefits of new technologies do not outweigh their high cost.

Answer explanation

The impact of new technologies should always be evaluated. An entrepreneur should always evaluate the potential impact that new technologies could have on business opportunities and competition. While the application of technology to business practices often has huge benefits, it is not always feasible or wise to apply them to every business practice. While the benefits of new technologies may be expensive or overrated sometimes, their impact and business potential should always be evaluated.

Which of the following is an example of a demographic trend that has encouraged entrepreneurial discovery:

• Technological advancements

• Interest rate fluctuations

• Industry deregulation

• Increased cultural diversity

Answer explanation

Increased cultural diversity. Many forces and trends in the external environment, including demographic changes, macroeconomic changes, technological changes, and political/regulatory changes, impact entrepreneurial discovery. A good example of a demographic change, or a change in the physical and social characteristics of the population, is increased cultural diversity. Many entrepreneurs have used the increased diversity to their advantage by developing businesses that cater to particular ethnic groups within the population. Interest rate fluctuations, industry deregulation, and technol

Which of the following is a characteristic of a well-conducted feasibility study:

• Subjective

• Abbreviated

• General

• Complete

Answer explanation

Complete. A well-conducted feasibility study is accurate, complete, and relevant. It provides thorough information to address issues associated with venture ideas. The information needs to be specific to the venture ideas under consideration rather than general. The information provided needs to be as objective as possible so that the potential business owner can make informed, unemotional decisions. A prefeasibility study can be conducted before investing the time and money into a full-blown feasibility study. The pre-feasibility study helps sort out ideas that are not feasible to pursue.

Which of the following is a major cost that every new startup must plan for:

• Capital expenditures

• Expansion costs

• Continuous improvement costs

• Legal battles

Answer explanation

Capital expenditures. All new ventures must plan for capital expenditures on the equipment and supplies needed to operate the business. Only established businesses need to plan for expansion and continuous improvement costs. Legal battles can occur, but they are not a major cost that every startup has to consider.

Which of the following is an example of a person financing a new business by selling assets:

• Isabella asks her brother for $5,000.

• Ann offers her home as collateral for a bank loan.

• Jonathan sells his vintage sports car.

• Logan uses his credit card to purchase business supplies.

Answer explanation

Jonathan sells his vintage sports car. Businesspeople finance new ventures in a variety of ways. They can obtain bank loans, borrow from family and friends, or find angel investors. In addition, some people sell their personal belongings (assets), such as a car or house in order to obtain cash to open their businesses. Collateral is anything of value (e.g., car, home) belonging to the borrower that is pledged to the lender to guarantee that the loan will be repaid. Purchasing supplies with a credit card is not an example of selling assets to finance a new business.