Start a Venture
What do we call someone who organizes a new business and accepts its financial risk?
Answer: An entrepreneur.
Why: Entrepreneurs combine resources to put a business idea into practice.
Watch out: Doing skilled work alone does not make someone the organizer and risk-bearer.
What economic term means the satisfaction or benefit a customer gets from a good or service?
Answer: Utility.
Why: Utility describes the benefit experienced by the consumer.
Watch out: A product's price or production cost does not measure everyone's satisfaction.
What is the name for the money and resources needed to get a business operating?
Answer: Startup capital.
Why: It provides what the venture needs before normal operations can begin.
Watch out: Startup capital is not the revenue the business hopes to earn later.
What do we call the market situation where quantity demanded equals quantity supplied at the current price?
Answer: Market equilibrium.
Why: At that price, the amount buyers want matches the amount sellers offer.
Watch out: Equilibrium does not mean resources are unlimited or everyone gets everything they want.
What do we call a statement about what is expected to happen, rather than a result already observed?
Answer: A prediction.
Why: A prediction can be tested against later observations.
Watch out: Confident wording does not turn an expectation into evidence.
A tailor gains stitching skills through training and buys an electric sewing machine. Which is human capital, and which is physical capital?
Answer: The stitching skills are human capital; the sewing machine is physical capital.
Why: Human capital is useful knowledge and skill. Physical capital is produced equipment used in production.
Watch out: The person, the skill, and the machine are not the same kind of resource.
A music shop sells a guitar and charges for a guitar lesson. Which purchase is a good and which is a service? Explain the difference.
Answer: The guitar is a good; the lesson is a service. The guitar is a physical item, while the lesson is work performed for the learner.
Why: Goods are tangible products. Services are activities supplied to customers.
Watch out: Charging money does not turn a service into a physical good.
A tool-hire business receives a 450,000 VND loan. Its agreement lists 450,000 VND to return plus a 45,000 VND borrowing charge, with no other fees. Identify the principal and the interest.
Answer: Principal: 450,000 VND. Interest: 45,000 VND.
Why: Principal is the original amount borrowed. Interest is the charge for borrowing it.
Watch out: The 495,000 VND total repayment includes both; it is not all interest.
A footbridge opens beside a ferry route and offers a practical way to make the same trip. With other conditions unchanged, how could this affect travelers' response to a later ferry-price rise? Explain.
Answer: Demand may become more price-sensitive because travelers can switch to the footbridge.
Why: A usable close substitute gives buyers another way to meet the same need.
Watch out: This predicts a possible response; it does not prove how every traveler will act.
A household receives wages from a repair shop, then pays the shop to fix a lamp. In circular flow, explain what the shop gives the household in return for each payment or contribution.
Answer: The shop pays wages for the household's labor. It provides a repair service for the household's spending.
Why: Labor and customer spending flow to the firm; wages and the purchased service flow back.
Watch out: Wages pay for work. They are not a reward for buying the repair.
Match each plant nursery input to a factor of production: natural sunlight, workers potting plants, reusable watering cans, and a founder organizing the venture and accepting risk.
Answer: Sunlight: land. Workers' effort: labor. Watering cans: capital. The founder's organizing and risk-taking: entrepreneurship.
Why: The four factors group the resources and roles used to produce goods and services.
Watch out: Land includes natural resources, not just the ground.
A student ranks three uses of one free hour: 1) draw a comic, 2) practice basketball, 3) earn 30,000 VND packing boxes. They choose drawing. What is the opportunity cost, and why is it not automatically 30,000 VND?
Answer: The benefit of practicing basketball is forgone. Basketball is the next-best option; the paid job ranks third.
Why: Opportunity cost is the value of the best available alternative given up.
Watch out: Do not select an option just because its benefit is stated in money.
A screen-print stall sells 16 patches for 12,000 VND each. Materials cost 4,000 VND per patch sold; the daily stall fee is 32,000 VND. With no other costs, calculate daily profit and show your work.
Answer: Profit = (16 × 12,000) − (16 × 4,000 + 32,000) = 96,000 VND.
Why: Profit is sales revenue minus all costs for the same period.
Watch out: Subtract the materials for all 16 patches and the stall fee.
At 40,000 VND per ferry seat, buyers want 30 seats per day and operators offer 90. Name and calculate the market gap, then predict price pressure if prices can change and supply and demand stay fixed.
Answer: A surplus of 60 seats per day: 90 supplied − 30 demanded. This creates downward pressure on price.
Why: Operators offer more seats than buyers want at that price.
Watch out: Subtract the quantities at the same price; do not add them.
A pottery stall earns 420,000 VND in sales on Saturday. On Sunday it sells 12 cups at 25,000 VND each and 6 bowls at 40,000 VND each. Compare daily revenues, then state whether the figures establish which day had higher profit.
Answer: Sunday: (12 × 25,000) + (6 × 40,000) = 540,000 VND. Revenue rises 120,000 VND, but the higher-profit day is unknown.
Why: Revenue adds sales income from both products. Profit also depends on each day's total costs.
Watch out: Higher revenue alone does not establish higher profit.
A team writes, "Everyone needs our new app." Its observation: weekend hikers cannot refill empty water bottles on the trail. Rewrite the claim as a specific customer problem without assuming an app is the solution.
Answer: Weekend hikers with empty bottles cannot find a place to refill them on the trail.
Why: A useful problem statement identifies the customer, the obstacle, and the situation.
Watch out: Naming a product before establishing the problem can lock the team into the wrong solution.
Total satisfaction from one, two, and three puzzle rounds is 9, 15, and 18 points. A player says, "The third round lowers total satisfaction because it adds less." Correct the claim using the extra satisfaction from rounds two and three.
Answer: Round two adds 6 points; round three adds 3. Marginal utility falls, but total utility rises from 15 to 18.
Why: A smaller positive addition still increases the total.
Watch out: Diminishing marginal utility does not mean total utility must fall.
A kiosk's setup cost was 900,000 VND. Each week it receives 350,000 VND and pays all operating bills of 200,000 VND. All remaining cash repays setup. A teammate predicts three weeks by rounding 900,000 ÷ 350,000. Correct the method and payback time, assuming weekly amounts stay constant.
Answer: Six weeks: 900,000 ÷ (350,000 − 200,000) = 6.
Why: Only the 150,000 VND left after weekly operating payments is available to recover setup.
Watch out: Divide by net cash per week, not sales receipts. Keep the answer in weeks.
A city caps ferry fares below equilibrium. Travelers want 90 seats daily; operators offer 30. A student calls this a price floor and a surplus. Correct both labels and explain how the cap creates the imbalance. Assume normal, unchanged curves.
Answer: It is a price ceiling and a shortage. Below equilibrium, the lower fare increases quantity demanded and reduces quantity supplied.
Why: Travelers want more seats than operators offer at the capped price.
Watch out: A maximum is a ceiling; a minimum is a floor. Cheaper does not mean more seats are available.
A seller offers 24 kites at each of two prices. Both trials sell out early. The seller concludes, "Price has no effect on how many customers want." Explain why the evidence is insufficient and repair the test.
Answer: Sales stopped at the stock limit, so unmet demand is unknown. Repeat with enough stock and comparable conditions, changing only price.
Why: A sellout records what could be sold, not every purchase customers wanted to make.
Watch out: Equal recorded sales do not prove equal demand when both trials run out.
A laundry can wash 18 loads, dry 9, and fold 15 per day. A tested new rack layout raises drying to 14 without new machines or lower quality. Will it raise daily capacity, and does it count as innovation? Justify both.
Answer: Yes: capacity rises from 9 to 14 loads per day. The useful change in how work is organized is process innovation.
Why: Drying limits both systems. Innovation can improve a process without inventing new technology.
Watch out: Extra capacity does not prove extra sales or higher profit.
A festival has funds for either more stalls or covers that stop litter blowing into nearby gardens, but wants both. A negative externality harms people outside a sale. Explain the scarcity, then justify the choice that directly reduces this externality.
Answer: Funds cannot cover both wants. Choose the litter covers to protect neighboring gardeners; give up the benefit of the extra stalls.
Why: Scarcity forces a choice. The covers reduce harm to people outside the festival sales.
Watch out: The opportunity cost is the forgone benefit of stalls, not the benefit gained from covers.
A repair stand has 90,000 VND cash and must pay a 140,000 VND bill tomorrow. Customers owe it 200,000 VND, payable next week. It forecasts a monthly profit. Should it use today's cash for new equipment? Justify your decision using profit and liquidity: cash available when bills are due.
Answer: It should first address the bill: cash is already 50,000 VND short. Forecast profit and next week's payment cannot pay tomorrow's bill.
Why: Profit and the timing of available cash are different. Buying equipment now would worsen the immediate cash gap.
Watch out: Money owed to the business is not yet spendable cash.
Controlled trials use starting values for percentages. Route A: price rises 25%, quantity falls 10%. Route B: price rises 10%, quantity falls 20%. Compare elasticity using |% quantity change| ÷ |% price change|. Which route is more elastic, and how could substitutes explain it?
Answer: A: 10 ÷ 25 = 0.4. B: 20 ÷ 10 = 2. B is more elastic; more close alternatives could make its buyers switch more easily.
Why: Elasticity compares percentage responses, accounting for different-sized price changes.
Watch out: The results do not prove that substitutes caused the difference.
A luggage-storage team has a positive classroom role-play and 12 paid bookings at one price. Evaluate what this evidence shows about real demand, then design a fair test of a higher price.
Answer: Paid bookings show some real demand at the tested price. Neither finding establishes demand at a higher price. Compare actual bookings at both prices under matched conditions.
Why: Role-play supports a prediction; real customers face real budgets and alternatives. A fair test isolates price.
Watch out: One price and a small trial cannot guarantee future demand or profit.