Business A Level 1 Enterprise

When a business ‘creates or adds value’ it increases:

• the difference between the cost of purchasing raw materials and the price the finished

  goods are sold for

• the number of products it sells

•  the difference between the cost of producing a product and the price for which it is sold

• the difference between the price of a product and the variable cost of its production

The machinery that is used by a business is an example of which factor of production?

• Land

• Labor

• Capital

• Enterprise

An entrepreneur is someone who:

• is an employee of a business enterprise

• takes the risk of starting and managing a business venture

• works for the government to provide public services

• just provides capital to a business start-up

Which one of the following is not a likely characteristic of a successful entrepreneur?

• willing to take risks

• committed and self-motivated

• innovative

• risk averse

The most likely difficulty for new business start-ups is:

• obtaining finance

• identifying a market

• marketing

• finding suitable employees

When an entrepreneur decides to spend $1,000 on a new computer to store details of inventories, the opportunity cost is:

• $1,000

• everything else that could have been purchased with $1,000

• time

• quality

All of the following will help ensure that there is sufficient working capital for a new business except:

• constructing a cash-flow forecast

• injecting sufficient capital at the beginning of a business venture

• developing a good working relationship with the bank

• offering generous credit terms to customers

Business enterprise is claimed to bring all of the following benefits to an economy with the exception of:

• creation of employment

• a more dynamic and innovative economy

• economic growth

• a reduction in competition

The most important difference between social enterprises and profit-seeking businesses is:

• social enterprises never aim to make a profit

• social enterprises will have objectives other than profit

• profit-seeking businesses will always make a profit

• social enterprises do not sell goods and services but profit seeking businesses do

Why do new businesses often fail?

Select more than one answer.

• Lack of Capital

• Poor management skills

• Changes in the business environment

• Lack of luck