Final Examination Practice Sheet

Economics of Small Business

Spring 2014

1. Discuss some of the pros and cons of the choice of a successor manager of a family owned firm within the family. Give examples if possible.  

2. How might we distinguish between family firms and non-family firms? Could

there be more than one criterion?  

3. More profitable businesses spawn fewer startups, but on the average the ones they spawn are themselves more profitable. Explain this dichotomy.

4. Define liquidity constraint and discuss the relation of liquidity constraint to small

businesses.

5. What is “Gibrat’s Law?” Describe some deviations or exceptions from “Gibrat’s Law” that are often observed in the evidence.  

6. How may questionnaire studies be used to study the subjective satisfactions of

people with their lives, jobs and/or businesses? Criticize this approach.    

7. How does limited access to capital influence the size distribution of firms? Why?  

8. Explain the use of dummy variables in a statistical study based on a Cobb- Douglas production function. Give an example.  

  9. Do family and nonfamily SMEs differ in their overall or “total factor

productivity?” What evidence can you cite?