Business Basics
Which best describes an entrepreneur?
A. Anyone who has a job
B. Someone who creates and develops a business
C. Anyone who buys a product
D. Someone who only invests in other businesses
Answer: B — Someone who creates and develops a business
Entrepreneurs recognize opportunities and take action to build something. They don’t necessarily have to invent a brand-new product.
The person who purchases a business’s product or service is the:
A. Competitor
B. Customer
C. Investor
D. Supplier
Answer: B — Customer
Answer: B - Customer
An artist sells an original painting. What is she selling?
A. Product
B. Service
C. Both
D. Neither
Answer: A — Product
You make a bracelet for $5 and sell it for $15. Ignoring other expenses, how much profit do you make?
A. $5
B. $10
C. $15
D. $20
Answer: B — $10
A customer says she loves your product but wishes it came in another size. What’s the most useful thing an entrepreneur could do?
A. Ignore her
B. Immediately change the entire business
C. Consider the feedback and see whether other customers want it too
D. Stop selling the product
Answer: C
Teach: Good entrepreneurs listen to customers, but one person’s opinion doesn’t automatically mean you change everything.
Which is an example of a SERVICE rather than a PRODUCT?
A. A custom T-shirt
B. An original painting
C. A professional dog-walking session
D. A handmade necklace
Answer: C — A professional dog-walking session
A product is something you purchase; a service is work performed for a customer. Some businesses sell both.
Money a business spends in order to operate is called:
A. Revenue
B. Branding
C. Expenses
D. Profit
Answer: C — Expenses
Teach: Supplies, packaging, website fees, advertising and shipping could all be expenses.
Answer: C — Expenses
Supplies, packaging, website fees, advertising and shipping could all be expenses.
A hairstylist charges someone $75 for a haircut. What is primarily being sold?
A. Product
B. Service
C. Both
D. Neither
Answer: B — Service
A business sells 10 shirts for $25 each. How much REVENUE did it earn?
A. $25
B. $100
C. $250
D. It can’t be determined
Answer: C — $250
You have an idea you love, but you’re unsure whether anyone would buy it. What would be a smart next step?
A. Make 1,000 immediately
B. Research potential customers and similar products
C. Spend all your money on a logo
D. Raise the price
Answer: B
This is market research, and we’ll get much deeper into it later.
A baker notices that no local bakery offers gluten-free birthday cakes. She begins selling them. What did she identify?
A. A business opportunity
B. An expense
C. A profit
D. An employee
Answer: A — A business opportunity
Many businesses begin when an entrepreneur notices something customers want or need that isn’t currently being provided well.
ALL the money a business receives from its sales before subtracting expenses is called:
A. Profit
B. Revenue
C. Inventory
D. Investment
Answer: B — Revenue
This is an important distinction: revenue is not the same as profit.The name, logo, colors, style and overall identity people associate with a business are part of its:
A photographer charges a family for a photo session AND sells them a printed photo book afterward. This business provides:
A. Only products
B. Only services
C. Both products and services
D. Neither
Answer: C — Both
A business earns $800 in revenue but has $300 in expenses. What is its profit?
A. $300
B. $500
C. $800
D. $1,100
Answer: B — $500
Revenue − Expenses = Profit.
Your product is selling well, but customers frequently complain that orders arrive late. What should you focus on FIRST?
A. Creating a new logo
B. Adding more products
C. Fixing your order/fulfillment system
D. Increasing your social media followers
Answer: C
Growth isn’t always about getting more customers. Sometimes a business needs to improve how it handles the customers it already has.
Two people both sell handmade candles. What could give one business a competitive advantage?
A. Making exactly the same thing in exactly the same way
B. Having a distinctive product or experience customers value
C. Always having the highest price
D. Refusing to advertise
Answer: B
A competitive advantage is something that gives customers a reason to choose one business over another.
The name, logo, colors, style and overall identity people associate with a business are part of its:
A. Inventory
B. Revenue
C. Brand
D. Market
Answer: C — Brand
A brand is actually bigger than a logo. It’s the overall identity and impression of the business.
Someone designs a digital planner once and sells downloadable copies online. The download is best classified as:
A. A product
B. A service
C. An expense
D. A customer
Answer: A — A product
Products don’t have to be physical! Digital downloads, ebooks, templates and apps can be products.
A candle costs $8 to make. Packaging costs another $2. The candle sells for $20. Ignoring other expenses, what is the profit per candle?
A. $8
B. $10
C. $12
D. $18
Answer: B — $10
You have to include all relevant costs, not just the obvious one.
You sell a product for $20. Customers love it and sales are strong, but it costs you $22 to make each one. What’s the biggest problem?
A. Branding
B. Customer interest
C. Profitability
D. Social media
Answer: C — Profitability
Popular doesn’t automatically mean profitable. If you lose $2 every time you make a sale, more sales actually mean losing more money.
Which statement about successful business ideas is MOST accurate?
A. The most creative idea always succeeds
B. A business only needs something the owner enjoys making
C. A strong idea connects something being offered with customers willing to buy it
D. A business will succeed as long as its product is inexpensive
Answer: C
Teach: Liking your idea matters, but a business also needs customers who see value in it.
A business studies who is most likely to want its products and focuses its marketing on that group. That group is its:
A. Target market
B. Inventory
C. Competition
D. Revenue stream
Answer: A — Target market
“Everyone” usually isn’t a useful target market. Businesses benefit from knowing who they’re trying to reach.
$500
A graphic designer is paid to create a custom logo for ONE specific client’s business. What is the designer primarily selling?
A. A product because the final logo is an image
B. A service because the client is paying for customized work
C. Neither because nothing physical is created
D. A product because all businesses sell products
Answer: B — A service
This one’s intentionally tricky. The client receives a finished logo, but they’re primarily paying for the designer’s customized expertise and work.
A business sells 20 shirts for $30 each. Each shirt costs $12 to make, and the business spent another $100 on advertising. What was the total profit?
A. $240
B. $260
C. $360
D. $500
Answer: B — $260
Work it out:
Revenue = 20 × $30 = $600
Shirt expenses = 20 × $12 = $240
Advertising = $100
Total expenses = $340
Profit = $600 − $340 = $260
A business has a great product and lots of social media followers, but very few followers ever purchase anything. Which question would be MOST useful to investigate?
A. Should we change the logo color?
B. Are we reaching people who actually want and can buy our product?
C. Should we post twice as often?
D. Should we immediately create more products?
Answer: B
Followers aren’t automatically customers. This gets into target market, marketing and conversion — getting the right people interested enough to actually buy.