Entrepreneurship — Practice Quiz

Profit (which can also be a loss)

Step 1: This question tests understanding of the key difference between an entrepreneur and an intrapreneur in terms of financial reward. Step 2: An entrepreneur is the owner of the business and therefore earns PROFIT as the reward. However, since profit is uncertain, it can also result in a loss — making this reward risky. Step 3: An intrapreneur, being a paid senior executive, receives a FIXED SALARY and fringe benefits such as bonuses, stock options, insurance, etc. Step 4: 'Stock options only' is incorrect because intrapreneurs get salary plus stock options, not just stock options. 'Fixed

One who is cautious, follows predecessors, and avoids risk and change

Step 1: Clarence Danhof's classification includes Fabian entrepreneurs as a distinct type. Step 2: Fabian entrepreneurs are described as very cautious and skeptical about change. They are shy and lazy, unwilling to take risks, and follow the footsteps of their predecessors. Step 3: They are dominated by customs, traditions, religion, and past practices. Mom and Pop stores are a classic example. Step 4: The option 'refuses to adopt changes and suffers losses due to stubbornness' describes DRONE entrepreneurs — they are even more resistant than Fabian entrepreneurs and are pushed out of the mark

Innovator

Step 1: The question directly refers to Schumpeter's definition of an entrepreneur. Step 2: According to Joseph Schumpeter, 'An entrepreneur is an innovator who brings economic development through new combination of factors of production.' Step 3: The key term here is 'Innovator' — the entrepreneur brings something NEW by combining land, labour, and capital in a new way. Step 4: 'Risk-bearer' is associated with Richard Cantillon's view. 'Organiser' is one of the three elements of entrepreneurship but not Schumpeter's defining term. 'Manager' is a different role — a manager runs an existing ent

Recession

Step 1: The question describes a specific scenario — demand is falling but production continues, creating excess supply. Step 2: This is the hallmark of the RECESSION phase. Producers do not notice the decrease in demand instantly, so they keep producing, leading to oversupply and falling prices. Step 3: The PEAK phase is when prices and profits are at their highest — not a period of falling demand. Step 4: The TROUGH phase is when the economy hits its lowest point — prices, demand, and supply are all at the minimum. Step 5: RECOVERY is when demand starts picking up again from the lowest point