Deck 9: The Entrepreneur and the Market Process

Question 1

Generally, microeconomics

A)has little to say about the entrepreneur
B)says a good bit about the entrepreneur.
C)equates the entrepreneur and the manager.
D)equates management and shareholders.

Answer 1

has little to say about the entrepreneur

Question 2

If economic profits are negative

A)accounting profits can be positive.
B)accounting profits can be negative.
C)the cost of capital is not being covered.
D)all of these choices.

Answer 2

all of these choices.

Question 3

Seeking profits without producing anything

A)is called rent-seeking
B)is illegal
C)usually involves government
D)all of these choices

Answer 3

all of these choices

Question 4

It is always the best strategy to

A)not always be the first mover.
B)be the first mover.
C)never innovate.
D)to seek accounting profits.

Question 5

To Schumpeter, the market process is called

A)dynamic externalities
B)static business formation
C)creative destruction
D)all of these choices.

Question 6

In economics

A)costs are seen as all the previous opportunities
B)costs are seen as the next best opportunity
C)are measured in monetary units only.
D)costs are only fixed.

Question 7

Managers and entrepreneurs are

A)the same.
B)different.
C)assume risk.
D)always stockholders.

Question 8

If economic profits are zero

A)accounting profits is less than the cost of capital.
B)accounting profit is just covering the cost of capital.
C)the cost of capital is negative.
D)the entrepreneur should go to his/her next best alternative.

Question 9

The ____ is at the center of the market process.

A)managers
B)shareholders
C)entrepreneur
D)none of these choices.

Question 10

Stock is a form of

A)dividend.
B)debt.
C)equity.
D)lending.

Question 11

The entrepreneur is always searching for

A)positive profit.
B)normal profit.
C)accounting profit.
D)economic profit.

Question 12

Economic profit equals

A)accounting profit plus the cost of capital.
B)accounting profit plus the opportunity cost of labor.
C)accounting profit minus the cost of capital.
D)accounting profits divided by the cost of capital.

Question 13

Specialization should be guided

A)by government regulations.
B)comparative advantage
C)by only technology.
D)by only labor or technology.

Question 14

Entrepreneurs should always

A)be the first mover
B)have a brand name
C)seek economic profit
D)seek accounting profit

Question 15

The market process is

A)governmental.
B)institutional.
C)dynamic.
D)all of these choices.

Question 16

It is sometime useful to view each step in the supply chain as a(n)

A)single market.
B)integrated process.
C)horizontal process.
D)vertical process.

Question 17

Entrepreneurs reveal

A)things that the market knew.
B)things that the market did not know.
C)things that the government knew.
D)things that were previously known.

Question 18

Markets provide

A)information.
B)prices.
C)incentives.
D)all of these choices.

Question 19

A bond is a form of

A)dividend.
B)debt.
C)equity.
D)stock.

Question 20

In the market processes resources end up being located in their

A)highest valued use.
B)next best use.
C)proper use.
D)none of these choices.

Question 21

The market process is dynamic.

Question 22

Entrepreneurs are at the heart of the market process.

Question 23

If economic profits are zero, then the entrepreneur can go elsewhere and do better.

Question 24

Managers are at the heart of the market process.

Question 25

Entrepreneurs serve a different purpose compared to a manager.

Question 26

The market process avoids creative destruction.

Question 27

If accounting profits are positive then economic profit is positive.

Question 28

Entrepreneurs seek accounting profit.

Question 29

Economic Profit equals accounting profit plus the cost of capital.

Question 30

Entrepreneurs create destruction.