Question 1

New firms do much better when industries are

Accepted Answer

New firms have a higher chance of success when industries are young because there are fewer established competitors and greater opportunities for innovation and differentiation. As industries become older, they become more competitive and dominated by large, established players, making it more difficult for new firms to enter and succeed.

Question 2

The birth,maturation,,and death of an industry is what researchers call

Accepted Answer

The birth, maturation, and death of an industry are described as the industry life cycle. This is a recognized framework used by researchers to analyze the evolution of industries and the challenges and opportunities encountered by companies operating within those industries.

Question 3

Because firms have to operate in an industry to gain experience,from this perspective,new firms are

Accepted Answer

New firms lack experience in the industry, which puts them at a disadvantage compared to established firms that have already gained knowledge and expertise through years of operation. Established firms have had the opportunity to learn from their mistakes, implement improvements, and build brand recognition and customer loyalty. As a result, they have an advantage over new firms.

Question 4

A entrepreneur attended an industry conference and went to a presentation delivered by a person from another business. At the presentation,the entrepreneur heard some interesting ideas that could be used in her business. Which of the following refers to how the entrepreneur learned the new information?

Accepted Answer

Knowledge spillover refers to the process by which information or knowledge is transferred from one part of the economy to another, such as from one company to another or from universities to companies. In this scenario, the entrepreneur learned new ideas by attending a presentation, which is an example of knowledge spillover.

Question 5

Entrepreneurs face a fixed cost to found new firms. When this cost is amortized,the expected returns to founding a firm are _____ in a larger market than in a smaller market.

Accepted Answer

The fixed cost of founding a new firm is the same regardless of the market size, which means that the cost per unit of output will be lower in a larger market than in a smaller market. This lower cost structure will allow the entrepreneur to potentially earn higher profits in a larger market, making the expected returns greater.

Question 6

The term that economists use to refer to the type of information that underlies the production of products and services in an industry is

Accepted Answer

Knowledge conditions refer to the type of information and expertise that are necessary for the production of products and services within an industry.

Question 7

Which of the following categories of adopters,or users,of a product tends to be largest?

Accepted Answer

People who adopt the product in the "middle of the curve" represent the early majority and late majority, which combined, typically form the largest segment of adopters in the diffusion of innovations theory.

Question 8

Entrepreneurs can develop business ideas to take advantage of five different types of opportunities. Which of the following is least likely to be a major entrepreneurial opportunity?

Accepted Answer

While focusing on existing products and producing one very similar can be a strategy, it is not likely to be a major entrepreneurial opportunity. The other options all involve creating something new, whether it be a new product, entering a new market, or developing a new way of organizing.

Question 9

The economist who argues that truly valuable entrepreneurial opportunities come from an external change that either makes it possible to do things that had not been done before or makes it possible to do something in a more valuable way is

Accepted Answer

This definition of entrepreneurial opportunities is a central concept in the work of Josef Schumpeter, who argues that these opportunities arise from what he calls "creative destruction," where new innovations and technologies replace existing ones and create new opportunities for entrepreneurs.

Question 10

Spanish speaking immigrants have entered the country and opportunities for supermarkets with lines of Latin American foods and Spanish language radio stations have grown in many parts of the United States. This is an example of which of the three major sources of opportunity?

Accepted Answer

The growth in opportunities for supermarkets with Latin American foods and Spanish language radio stations is due to social and demographic changes, specifically the influx of Spanish-speaking immigrants into the country.

Question 11

Researchers have identified four aspects of the structure of an industry that make it easier for a person to found a successful new firm. Which of the following is NOT one of those four?

Accepted Answer

The number of people in the business that is being started is not one of the four aspects identified by researchers as making it easier to found a successful new firm. The four aspects identified are capital intensity, advertising intensity, level of concentration, and average size of firms.

Question 12

Which of the following is/are part(s)of the knowledge conditions in an industry?

Accepted Answer

All three factors (R&D intensity, locus of innovation, and nature of the innovation process) are part of the knowledge conditions in an industry. R&D intensity refers to the amount of resources (financial, human, and physical) devoted to research and development activities. The locus of innovation refers to the geographic or organizational location where innovation occurs. The nature of the innovation process refers to the type of innovation being pursued (e.g. incremental vs. radical) and the specific strategies and practices used to develop and commercialize new products and services.

Question 13

Which of the following are the three attributes of demand conditions that enhance new firm formation?

Accepted Answer

Market size provides a potential customer base, market growth implies a growing market and potentially more opportunities, and market segmentation allows for targeting specific customer groups. These attributes create favorable demand conditions for new firm formation.

Question 14

There are many more types of cars targeted at different types of buyers than there are types of frozen corn targeted at different types of buyers. This is an example of

Accepted Answer

This scenario highlights the concept of market segmentation, which involves dividing the market into distinct groups of customers with different needs, wants, and characteristics. The car industry is known for extensive market segmentation efforts, while the frozen corn industry may not have as much need or opportunity for such targeting. The other options are not supported by the information given.

Question 15

___________ refers to how much market share lies in the hands of the largest firms in the industry.

Accepted Answer

Concentration refers to the degree of market control that lies with the largest firms in an industry. It is usually measured by seeking the percentage of market share that is held by the top few firms in the industry.

Question 16

Which of the following would be the first thing for an entrepreneur to do?

Accepted Answer

Before starting a business, it is important to identify industries that are favorable to new firms. This includes doing market research to identify potential customer demand, assessing the competition, and evaluating the regulatory environment. Once this research is done, the entrepreneur can make an informed decision about whether or not to proceed with their business idea. Choosing a reputable attorney, creating a marketing plan, finding a partner, and hiring employees all come later in the process.

Question 17

Assume that changes in technology provide opportunities. Which of the following refers to the source of the technology that provides opportunities?

Accepted Answer

The locus of innovation refers to the source of the technology that provides opportunities.

Question 18

Which of the following is an example of an advantage that an established firm has over a new firm?

Accepted Answer

All of the options listed provide advantages that established firms have over new firms. A) Companies face a learning curve when they develop any product or service, meaning that established firms have already gone through this learning curve and have experience to draw on. B) Business depends a great deal on reputation, which takes time and effort to build up for a new firm. C) Many businesses face economies of scale, which means that established firms are able to produce goods or provide services at a lower cost per unit than new firms, due to their larger scale of operations. D) New companies often find it difficult to compete with established companies because they lack complementary assets, such as established supplier networks or distribution channels.

Question 19

A common approach,or standard,used to make a product is known as a

Accepted Answer

The answer of A common approach,or standard,used to make a...

Question 20

Which of the following is NOT one of the three major sources of opportunity?

Accepted Answer

The answer of Which of the following is NOT one...

Quiz 2: Entrepreneurial Opportunities: Their Origins, Forms, and Suitability For New Ventures