AnswersPersonal Finance - EL3403Case Study: Starting a Business

Case Study: Starting a Business — Unit test Answers

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Which situation best illustrates the concept of scarcity?

A
a class designing and selling calendars
B
a cook learning to be an executive chef
C
a friend buying a copy of a popular DVD
D
a person buying a used car due to limited income
62
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An entrepreneur is someone who

A
starts and runs a business.
B
is an employee of a business.
C
invents products for other businesses.
D
works for multiple developing businesses.
63

In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of

A
purchasing a unit.
B
distributing that unit.
C
producing the next unit.
D
producing a different unit.
64

Read the paragraph below, and then decide which type of economy is being described.In this economy, community members typically use simple tools to plant and harvest crops. Food supplies are supplemented by hunting animals and gathering plant materials. Members trade with each other to obtain needed goods, as few people hold currency. Little economic growth occurs.What type of economy is being described?

A
a traditional economy
B
a free market economy
C
a mixed-market economy
D
a command economy
65

To be successful, an entrepreneur must be willing to invest money, considerable effort, and.

Answer not available
66

What is a main reason why entrepreneurs experience daily stress?

A
They have considerable responsibility.
B
They need to spend time training employees.
C
They need to have sufficient income to pay loans.
D
They have to contribute both to the market and society.
67

The chart shows a production possibilities schedule for Sabrina’s Soccer. Stan’s Sporting Goods is a competitor that can manufacture seven soccer balls out of a possible ten, if it makes one soccer net. Which statement correctly compares the two businesses?

Question illustration
A
Sabrina’s Soccer has a comparative advantage over Stan’s Sporting Goods because Sabrina’s Soccer has a lower opportunity cost.
B
Stan’s Sporting Goods has a comparative advantage over Sabrina’s Soccer because Stan’s Sporting Goods has a lower opportunity cost.
C
Sabrina’s Soccer has an absolute advantage over Stan’s Sporting Goods because Sabrina’s Soccer has a lower production cost.
D
Stan’s Sporting Goods has an absolute advantage over Sabrina’s Soccer because Stan’s Sporting Goods has a lower production cost.
68

The point of maximum profit is the point at which the marginal cost equals the

A
marginal revenue.
B
market price.
C
total revenue.
D
production cost.
69

Which statement best describes incentives?

A
Incentives are mostly positive.
B
Incentives are mostly negative.
C
Incentives can be positive or negative.
D
Incentives are neither positive nor negative.
70

The graph shows the price of green tea compared to the amount supplied by producers.What does this graph suggest about green tea? Choose two answers.

Question illustration
A
Green tea is elastic in terms of supply.
B
Green tea is inelastic in terms of supply.
C
Green tea is neither elastic nor inelastic.
D
The supply of green tea changes sharply with the price.
E
The quantity supplied of green tea does not change sharply with the price.
71

What must an entrepreneur do after creating a business plan?

A
open the business
B
finance the business
C
file the right paperwork
D
identify an opportunity
72

What led to Henry Ford’s success as an entrepreneur?

A
His personal wealth.
B
His innovative production methods.
C
His commitment to improving labor laws.
D
His desire to pay high wages.
73

Which characteristic of being an entrepreneur could be seen as both a benefit and a drawback?

A
job security.
B
personal fulfillment.
C
financial risk.
D
a flexible working environment.
74

Which activity would a consumer most likely perform?

A
filling a lawnmower with gas
B
answering phones in an office
C
growing vegetables in a home garden
D
helping mow lawns in the neighborhood
75

Producers must understand the marginal benefit of making an additional unit, which shows the

A
actual gain.
B
eventual gain.
C
possible gain.
D
unlikely gain.
76

The total amount of a product available in a market at a given price is called the

A
count.
B
demand.
C
number.
D
supply.
77

In a mixed market economy, property owned by an individual

A
can be used by all citizens.
B
can be run by a city or state.
C
can help promote personal wealth.
D
can be used by government workers.
78

regulationgoalsdependencyweakness

A
regulation
B
goals
C
dependency
D
weakness
79

What was the main effect of entrepreneurship in China?

A
Poverty noticeably declined.
B
Foreign investment declined.
C
New products were invented.
D
Product exports exceeded imports.
80

An entrepreneur conducted many experiments in a project without success. What characteristic must this person have to succeed?

A
a dedication to hard work
B
a willingness to admit failure
C
an ability to learn from mistakes
D
an assumption of responsibility

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