Risk Management in Small Business Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. McDonald's was held liable for injuries to customers caused by its coffee being too hot. Why was the liability based on the theory of negligence?

Question 2 2. The theory of product liability which assumes the existence of a contract between the parties is called _____.

Question 3 3. Of the following statements, which one BEST explains how the theory of negligence differs from the theory of strict liability?

Question 4 4. _____ is the legal responsibility imposed on businesses for the manufacturing or selling of defective goods.

Question 5 5. Which one of the following is NOT a step involved in risk management?

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Question 6 6. Samantha is a CEO of a large marketing company. She is trying to determine what external factors may impact the business in the next few months. She is concerned about the 2018 midterm elections and has decided to invest money into a PAC of a pro-business independent candidate. Another cause for concern is the increasing number of complaints regarding her IT sector. Which of the following may impact her business, and how can she manage these factors?

Question 7 7. How does technological change affect risk management?

Question 8 8. Which of the following is an example of an environmental change related to an economic factor?

Question 9 9.

A total breach of contract occurs when a party wholly fails to fulfill his or her obligations under a contract. Which of these examples demonstrates a total breach of contract?

For each example, Rick has hired Mitch to build a tree house in the large oak tree in his backyard. The tree house is for his grandchildren. It should have three windows and be completed in time for them to enjoy during their visit for Spring Break.

Question 10 10. Contracts are usually made in an effort to formalize an agreement and to protect the parties in the agreement. A contract will place an obligation on each of the contracting parties. In contract law, what is the definition of obligation?

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Question 11 11. Ron contracts with an online bill pay service to pay his personal bills. Ron uses the service to pay his car payment every month. According to the auto finance company, any payment made after the specified due date results in a $50 late fee. This month, the bill pay service experienced a bug in their software system. They delivered Ron's car payment, but not by the due date. Ron was charged the $50 late fee. Ron sued the bill pay service. For what type of contract breach will the court likely order a remedy in this case?

Question 12 12. Shelly wants to open a smoothie shop in her neighborhood. She hires Wayne to do market research for her. Wayne is obligated to research the need for a smoothie shop in that neighborhood. Wayne conducts the research and delivers his report to Shelly, along with a bill for $1000. Shelly reviews the research and discovers that Wayne accidentally researched the wrong neighborhood. Shelly sues Wayne for breach of contract. The court should enforce a remedy suitable for which type of contract breach?

Question 13 13. What is the difference between general liability insurance and product liability insurance?

Question 14 14. Companies get Key Person Insurance to cover against _____.

Question 15 15. Which of the following statements is the best explanation of how insurance allows a company to manage risk?

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Question 16 16. Which one of the following types of insurance is usually required by law?

Question 17 17. Dennis told his coworkers that if he wins at the casino, he will, in his own words, 'help them out financially'. What can this be considered as?

Question 18 18. Which of the following must be part of a contract for it to be enforceable?

Question 19 19. When Justin collapsed after a workout, he was lucky that a doctor was on hand to help him. The doctor provided immediate medical care and sent Justin the bill afterwards. Justin refused to pay because he did not ask for medical care from the doctor. Justin is obligated to pay because:

Question 20 20. The act of both parties agreeing to carry out their promise is which element of a contract?

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Question 21 21. Which of the following is NOT a step in the risk management process?

Question 22 22. Zuk company Ltd. decides to launch a brand new type of bicycle called the Zukbike. The company accepts this risk and is prepared to pay for the losses that may occur. Which type of risk management approach is being used by the company?

Question 23 23. Which of the following management decisions involves risk reduction?

Question 24 24. How is risk related to insurance?

Question 25 25. Under the UCC, an acceptance is achieved _____.

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Question 26 26. Under the UCC, an offer is _____.

Question 27 27. Sometimes additional or different terms are included in an acceptance. Under the UCC, these terms become part of the contract unless:

Question 28 28. Billy and Beatrice are both in the bike business. Billy orders several bike chains from Beatrice. Beatrice doesn't have the exact chains in stock, but sends Billy very similar chains in the same size Billy requested. Under the UCC, if Billy accepts the chains from Beatrice:

Question 29 29. Jane was injured when a hair dryer that she purchased from ABC Corporation caught on fire. She was using it normally. Why would ABC be held liable for the defective hair dryer according to the strict liability theory of product liability?

Question 30 30. Which one of the following is an example of environmental change related to the external political environment?

Risk Management in Small Business Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next question. You can skip questions if you would like and come back to them later with the "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. You will lose your work if you close or refresh this page. Good luck!

Business 321: Small Business Management  /  Business Courses