1. Carol Jones wanted her business to increase sales by 50 percent over the next five years. To do so, she must hire three more people. She wanted to determine how to evaluate these people, so she lists their job specifications and develops job descriptions. She also listed where these employees would work and what training they would require. What management functions is Carol performing, and how do they apply to this scenario?

2. Sam Smith is currently employed as a mechanical engineer and is paid $65,000 per year plus benefits that are equal to 30% of his salary. Sam wants to begin a consulting firm and decides to leave his current job. After his first year in business, Sam's accountant informed him that he had made $45,000 with his consulting business. Sam also notices that he paid $6,000 for a health insurance policy, which was his total benefit during his first year. What was Sam's opportunity cost?

3. A friend came into your office and said that his bank was out to kill small businesses. You asked him what he meant by this remark, and he said that he read an article that said his bank had just loaned $10 million to a major automobile manufacturer at a rate of 4 percent, which is less than prime. However, your friend just borrowed $50,000 from the same bank and they charged him prime plus three percent, or 7.5 percent. Your friend has been in business for two years, and last year he had a loss of $2,000. How can you explain this difference in interest rate to your friend?