1

Enterprise
Multiple-choice questions
1

Added value is defined as:

a the difference between the cost of purchasing raw materials and the price the
finished goods are sold for
b profit
c the difference between the cost of producing a product and the price for which it
is sold
d 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?
a land
b capital
c labour
d enterprise

An entrepreneur is someone who:

a is an employee of a business enterprise
b takes the risk of starting and managing a business venture
c works for the government to provide public services
d just provides capital to a business start-up.

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

a willing to take risks
b committed and self-motivated
c innovative
d risk averse.

The main difficulty, identified by entrepreneurs in an International Labour

Organization survey, for new business start-ups was:
a finance
b identifying a market need
c marketing
d finding suitable employees.

Chapter 1 Multiple-choice questions

Cambridge University Press 2010

Minimising fixed costs when choosing a location is important for which of the
following reasons?
a It reduces the break-even level of output.
b It reduces the variable costs.
c It ensures that the business is close to its potential market.
d It encourages the entrepreneur to work from home.

Working capital may be defined as:

a the capital to run the business on a day-to-day basis
b machinery that is in working order
c the long-term capital of a business
d stocks and cash in a business.

All of the following will help ensure that there is sufficient working capital except:
a constructing a cash-flow forecast
b injecting sufficient capital at the beginning of a business venture
c offering generous credit terms to customers
d developing a good working relationship with the bank.

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

with the exception of:
a creation of employment
b a more dynamic and innovative economy
c economic growth
d a reduction in competition.

10 A mission statement is:

a
b
c
d

a statement of the specific objectives a business has set itself

an outline of the overall purpose of a business
the financial plan of the business
a description of the marketing strategy to be used by the business.

Chapter 1 Multiple-choice questions

Cambridge University Press 2010