Entrepreneurship Study Guide 1

The ____________________ has resulted in new resources, markets, and ideas.

Global Marketplace

If a change in price has little or no effect on the quantity demanded, we say that demand for the item is ____________________.

Inelastics Demand

The chances of a new business succeeding are good with... a. effective planning and management. c. today's global economy. b. tax breaks. d. today's job market.

a. effective planning and management.

contract to use something for a specified period

a. lease

One disadvantage of entering a family business is... a. normal business relationships can be difficult to establish with family members. b. financing is especially difficult. c. less job satisfaction. d. high start-up costs.

a. normal business relationships can be difficult to establish with family members.

One advantage of a sole proprietorship is that... a. the owner has total control. c. start-up costs are lower. b. there is little financial risk. d. goodwill is already established.

a. the owner has total control.

a business undertaking involving risk

a. venture

One drawback of working at home is ____________________.

isolation

An idea plus a(n) ____________________ equals an opportunity

market

If a small change in the price of an item causes a significant change in the quantity demanded, we say that the demand for the item is ____________________.

Elastic demand

When people have the right to make economic choices, they live in a(n) ____________________.

Free Enterprise System

A key element in a market economy between similar businesses is... a. competition. c. low prices. b. service. d. exporting.

a. competition.

A business that is operating under a new name or a business that has been purposely discontinued to start a new one is considered a... a. sole proprietorship. c. business failure. b. discontinuance. d. corporation.

b. discontinuance.

specially designated areas of a community that provide tax benefits to new businesses

b. enterprise zones

Banks that lend money to people to start a new business require a business description and a(n)... a. income statement. c. partnership agreement. b. financial plan. d. guarantee of success.

b. financial plan

the loyalty of customers to a business

b. goodwill

Revenues lost to lower prices can be made up through... a. higher prices. b. higher volume. c. lower prices. d. lower volume.

b. higher volume.

On an income statement, the amount left after subtracting operating expenses from gross profit is the... a. profit ratio. c. revenue. b. net profit. d. capital gain.

b. net profit.

A business that files Chapter 7 bankruptcy and loses money for creditors and investors is considered a... a. new venture. c. business failure. b. service business. d. discontinuance.

c. business failure.

A proven product, established management systems, and customer goodwill are three advantages of... a. joining a family business. c. buying a franchise. b. working at home. d. starting a new business.

c. buying a franchise.

The amount of goods or services that consumers are willing and able to buy is determined by... a. price. c. demand. b. quantity. d. scarcity.

c. demand.

the point at which consumers buy all of a product that is supplied

c. equilibrium

the potential for future sales

c. market outlook

Buying an existing business... a. usually involves fewer start-up costs than buying a franchise. b. provides more security than starting a new business or investing in a franchise. c. requires analyzing the location, competition, and market outlook. d. is a high risk because successful businesses are not sold.

c. requires analyzing the location, competition, and market outlook.

The amount of a good or service that producers are willing to provide is called... a. services. c. supply. b. inelastic. d. volume.

c. supply.

A free enterprise system is also called ____________________ or a market economy

capitalism

In a(n) ____________________, the owners buy shares in the company, which is chartered by the state.

corporation

A new business's ability to start and grow is affected by which of these variables? a. favorable taxes, good markets, and supportive governmental policies b. incentives to create new businesses c. the nature of the venture and availability of resources d. all of the above

d. all of the above

Location would be an especially important factor in the success of a... a. gas station. c. grocery store. b. fast-food restaurant. d. all of the above.

d. all of the above.

the study of how nations allocate scarce resources to the production and distribution of products

d. economics

the costs of doing business

d. operating expenses

Entrepreneurs tend to... a. face less competition because they work alone. b. be dissatisfied with their businesses. c. delegate responsibility. d. work long hours.

d. work long hours

an individual who undertakes the creation, organization, and ownership of a business

e. entrepreneur

expenses involved in going into business

e. start-up costs

A person who organizes a business and then runs it is called a(n) ____________________.

entrepreneur

document that shows how much a business has earned or lost

f. income statement

an idea that has commercial value

f. opportunity

A(n) ____________________ is the legal right to sell a company's goods and services.

franchise

money left over after all the expenses of running a business have been deducted from the income

g. profit

income from sales

g. revenue

On an income statement, the difference between the cost of goods and their selling price is the ____________________.

gross profit

the process of recognizing an opportunity, testing it in the market, and gathering resources necessary to go into business

h. entrepreneurship

document describing the start-up costs and operating expenses of a new business

h. financial plan

A(n) ____________________ offers low costs and flexible working conditions.

home-based business

A new movie video is released. Everyone rushes to buy it and a shortage develops. Stores order more and then have a surplus. The store reduces the price of the video and sells the excess inventory. They have achieved ____________________.

market equilibrium

Control and profits are divided between two or more people in a(n) ____________________.

partnership

A business that is completely owned by one person is a(n) _______________________.

sole proprietorship

A(n) ____________________ is a new business undertaking that involves risks.

venture