Deck 1: The Rise, Fall and Return of the Entrepreneur

Question 1

In Chapter 1, economic thinking is discussed around a model of the "zero-sum game." This implies:

A) that one player's gain is another one's loss
B) that the economy is essentially dynamic and value-adding
C) that the economy is essentially static
D) that the economy can be viewed as a casino for gamblers
E) that the sum of all efforts is often zero for everyone

Answer 1

that one player's gain is another one's loss
that the economy is essentially static

Question 2

According to Richard Cantillon, entrepreneurs were not tasked with producing - that was the task of landowners and farmers. Rather, entrepreneurial work consisted of:

A) combining resources in a new manner
B) being creative and innovative
C) restoring the balance between supply and demand
D) assessing demand and assuming the risk associated with buying products at a given price and then selling them at a to-be-confirmed price
E) convincing farmers to sell their goods at a cut price to entrepreneurs

Answer 2

restoring the balance between supply and demand
assessing demand and assuming the risk associated with buying products at a given price and then selling them at a to-be-confirmed price

Question 3

According to Jean-Baptiste Say, the entrepreneur's task is to shift the factors of production - such as labor, capital and natural resources - "out of an area of lower and into an area of higher productivity and greater yield." In other words:

A) entrepreneurs are highly productive
B) entrepreneurs are generators of value in the economy
C) factors of production are moved from one country to another
D) factors of production tend to increase in value over time
E) the same resources can be more useful and valuable in new combinations and contexts

Answer 3

entrepreneurs are generators of value in the economy
the same resources can be more useful and valuable in new combinations and contexts

Question 4

Jean-Baptiste Say is the man behind Say's Law, which states that:

A) demand creates supply
B) supply creates its own demand

Question 5

Say and Cantillon launched the notion of subjective utility. This states that:

A) the utility the customer perceives affects the value and thus the price of a good
B) the subjective should not be taken into consideration when setting the price
C) price is a subjective experience
D) production costs define the price of a good

Question 6

Economic flow or circulation was introduced by French physiocrats, who expressed for the first time that the economy be conceived as:

A) circulating the transformation of natural resources into goods
B) a cycle of increases, prosperity and stagnation
C) if landowners, farmers and buyers purchase independently of one another
D) a small group of people controlling economic development
E) a system of interdependencies, in this case between landowners, farmers and buyers

Question 7

The term "homo economicus" - economic man - sums up the fundamental assumption national economy holds of humanity as:

A) an economist who manages a household on a tight budget
B) a person who is interested in finances
C) a male economist
D) a component who rationally reacts to various economic stimuli in the economic system
E) a rational entity whose calculated decisions maximize his or her personal utility

Question 8

The book discusses two opposing systems of thought. One is a Darwinist, evolutionary process with the final solution unknown, while the other is a more Newtonian, mechanistic process with a predetermined end. The first is dynamic and voluntary, while the other is static and deterministic.

Question 9

Evolutionary development means that something changes gradually from one form to another.

Question 10

In this context if something is dynamic, it implies that it is developing, in constant movement.

Question 11

Static, in this context, means that something is unchangeable and fixed.

Question 12

Determinism implies that every event is predetermined, that events are the inevitable result of pre-ordained conditions.

Question 13

Voluntarism is the idea that human will and human efforts decide the outcome of various events, in other words the concept of human agency.

Question 14

Frank Knight differentiated between uncertainty and risk, implying uncertainty - as opposed to risk (such as a game of roulette) - is incalculable and cannot be assessed rationally.

Question 15

A central linchpin in the Austrian School is that it views the economic sciences primarily as a theory of:

A) the invisible hand's allocation of resources
B) human decisions/decision-making
C) human actions
D) the manner in which production function handles various choices
E) supply, demand and price mechanisms

Question 16

An essential feature of the Austrian School is its affirmation of subjectivism (opposite: objectivism). This school believes that:

A) entrepreneurs are exceptionally subjective
B) non-entrepreneurs should be viewed as subjects
C) subjectivity is superior to objectivity
D) reality is given to us and essentially impossible to impact
E) the reality we consider relevant is socially constructed
F) humanity's subjective notion of the world must always be taken into consideration
G) reality is continuously being socially constructed

Question 17

Certain fundamental features of the Austrian School are how it considers the market economy as:

A) an entrepreneur-driven, dynamic process of search and learn
B) a giant experimental laboratory
C) a dynamic system, the most central aspect of which is the endless stream of knowledge that individuals generate and distribute through their choices and actions
D) a system in which each individual possesses crucial information in order to make a rational decision
E) a system in which price mechanisms control supply and demand
F) a system which is always seeking, striving for and attaining equilibrium

Question 18

Certain fundamental features of the Austrian School are its thoughts on the human being. In other words:

A) differences between people are more interesting than their similarities
B) a human is only understandable on the basis of his/her subjective perception of a situation
C) humans are bundles of reflexes that respond to simple stimuli
D) humans are biological beings programmed to react in certain manners
E) human beings are social and cultural creatures who constantly interpret their surroundings and ascribe personal meaning to situations and events
F) human beings are able to comprehend decisions after thorough and utility-based analysis
G) human beings react rationally to economic stimuli/incentives

Question 19

Certain fundamental features of the Austrian School are that it considers entrepreneurs as:

A) acting based on judgmental decision-making
B) acting without having perfect information about the future
C) obtaining information before making a decision
D) avoiding experiments and uncertainty
E) clever and rational, with the ability to make predictions

Question 20

In his early work, Israel Kirzner identifies "alertness" as the entrepreneur's distinguishing characteristic. In other words, entrepreneurs are alert to gaps in the market, and respond by filling them.

Question 21

Many have shown how entrepreneurs are dependent on institutions. What do institutions signify in this context?

A) the authorities and public organizations which impact entrepreneurship
B) the rules of the game which society expresses in the form of systems of rewards, conventions, laws, traditions and values
C) supporting organizations or institutions which assist entrepreneurs in the startup phase
D) theories pertaining to entrepreneurship and business ownership

Question 22

Schumpeter was on an unceasing quest to find out "how the economic system generates the force which incessantly transforms it" (growth and development force). His answer was that the key is:

A) the entrepreneur as creative destruction
B) homo economicus, economic man
C) price mechanism and competition
D) a combination of land, work and capital
E) a tendency towards balancing out supply and demand
F) laws of nature in the economy

Question 23

Creative destruction is a key concept of Schumpeter's, which sets out to clarify innovation and economic growth. In other words, it means:

A) that creative people destroy economic circulation
B) that the new and improved replaces the old, keeping the economy going non-stop
C) that entrepreneurs are the ones who make it happen
D) that the economy's natural impulse to restore balance is fueled by entrepreneurs

Question 24

Schumpeter stated that "the carrying out of new combinations" is the trademark of innovation. He detailed this by placing new developments - innovation - in five categories. Which three DO NOT belong here?

A) new goods, new qualities
B) new markets
C) new methods
D) new meeting places
E) new forms of organization
F) new tax laws
G) new support systems
H)new sources of raw materials

Question 25

The first chapter mentions "the dark side of entrepreneurship." This pertains to the concept that:

A) entrepreneurship can cause stress and impact on social relationships
B) entrepreneurship is often a side job
C) entrepreneurship is often a solitary affair
D) a person can lose a lot of money
E) negative factors such as coldness, obsession and self-interest are often at play in the process
F) defines the risks of entrepreneurship

Question 26

Shane and Venkataraman have worked towards summarizing the essence and unique aspects of entrepreneurship, and have come up with a widely accepted definition of entrepreneurship as:

A) working together to achieve something
B) acting regardless of the resources on hand
C) starting a company, and once it has been started, entrepreneurship has reached its completion
D) being on the lookout for opportunities and problems
E) how, and by whom, opportunities are discovered, created and exploited

Question 27

The proposition "All business owners are not entrepreneurs and all entrepreneurs are not business owners" is discussed in the book. In all likelihood, this implies: (four are correct)

A) once an entrepreneur, always an entrepreneur
B) that all businesses are not entrepreneurial
C) that entrepreneurship always pertains to business and business ventures
D) that entrepreneurship only exists in the private sector
E) that business ventures and entrepreneurship are one and the same
F) that one can be an entrepreneur in various sectors of society
G) that one can be an entrepreneur without being a business owner
H)that one can be a business owner without being an entrepreneur

Question 28

The book is based upon four factors/components which can be considered the building blocks of entrepreneurship. These are:

A) environment, traits, profitability and process
B) environment, person(s), opportunity and process
C) environment, risks, evaluation and process
D) the individual, process, risks and the economy