Question 1

An outcome resulting from an action is said to be certain when it will definitely happen.

Accepted Answer

An outcome is considered certain if it is guaranteed to occur as a result of an action, with no possibility of any other outcome.

Question 2

The types of loss listed in the text are:

Accepted Answer

D

Question 3

Most good entrepreneurs take any unmitigated risk available.

Accepted Answer

Good entrepreneurs typically assess and manage risks rather than taking unmitigated risks, as this approach helps ensure the sustainability and success of their ventures.

Question 4

Which of the following is the most uncertain task?

Accepted Answer

Independent research on self-driving cars is highly uncertain due to the complexity of the technology, regulatory challenges, and the need for significant resources and expertise.

Question 5

Regret is defined in the context of entrepreneurship as the amount of loss that a person can tolerate.

Accepted Answer

The answer of Regret is defined in the context of...

Question 6

An increased downside with a(n) ________ leads to a(n) ________

Accepted Answer

The answer of An increased downside with a(n) ________ leads...

Question 7

Of the following combination of values, ________, ________, and ________ leads to the highest risk.

Accepted Answer

High financial investment, high uncertainty, and high hazard collectively contribute to the highest risk because they involve significant resources, unpredictable outcomes, and potential for harm.

Question 8

According to figure 7.1, which of the following does not factor into the perceived risk?

Accepted Answer

Anticipated returns do not factor into perceived risk, which is more concerned with hazard, uncertainty, and outcome variability.

Question 9

Which of the following is not listed as a product or process uncertainty?

Accepted Answer

Channels are typically related to distribution or communication pathways, not directly to product or process uncertainties.

Question 10

Which of the following is a market uncertainty?

Accepted Answer

Competitors are a source of market uncertainty because their actions and strategies can be unpredictable and affect market dynamics.

Question 11

The scale of a firm is the extent of the activity of a firm as described by its size.

Accepted Answer

The scale of a firm refers to the size and scope of its operations, including factors like production capacity, market reach, and overall business activity.

Question 12

Diseconomies of scale correlate with more quantities produced than economies of scale.

Accepted Answer

Diseconomies of scale occur when increasing production leads to higher per-unit costs, while economies of scale occur when increasing production leads to lower per-unit costs.

Question 13

When significant economies of scale exist in manufacturing, distribution, service, or other functions of a business, larger firms (up to some point) have a cost advantage over smaller firms.

Accepted Answer

Economies of scale mean that as a firm increases production, the cost per unit decreases, giving larger firms a cost advantage over smaller ones due to spreading fixed costs over more units.

Question 14

Scalability depends on a firm's ability to increase its ________.

Accepted Answer

Scalability refers to a firm's ability to increase its capacity to handle growth or increased demand without compromising performance or losing revenue potential.

Question 15

Which of the following leads to a total cost of $100?

Accepted Answer

The total cost is calculated as (cost/unit * quantity) + fixed cost. For option B: (15 * 6) + 10 = 90 + 10 = 100.

Question 16

For a type of business based on talent, like consulting, scalability is ________ and fixed costs are ________.

Accepted Answer

Scalability is medium because consulting relies heavily on individual talent, which is not easily scalable. Fixed costs are low because consulting typically requires fewer physical resources and infrastructure.

Question 17

"Metcalfe's law"
states that the value of a network increases with the number of participants in the network.

Accepted Answer

Metcalfe's law posits that the value of a network is proportional to the square of the number of its users, suggesting that as more people join, the network's value increases significantly.

Question 18

Apple computers, today, would be considered a:

Accepted Answer

Apple is a well-established company with a strong market position, making it a relatively low-risk investment. It also has a history of strong financial performance, leading to high expected returns.

Question 19

The axis of the risk matrix are ________ and ________.

Accepted Answer

The answer of The axis of the risk matrix are...

Question 20

Dropbox exhibits ________.

Accepted Answer

Dropbox exhibits economies of scale with increasing returns because as the number of users increases, the cost per user decreases due to the scalable nature of cloud infrastructure.

Quiz 7: Risk and Return