OpenStax Entrepreneurship Test Bank
Chapter 5: Identifying Entrepreneurial Opportunity
Chapter 5: Identifying Entrepreneurial Opportunity
* = Correct answer
Multiple Choice/Fill in the Blank
1. According to the text, which of these is the motivation behind many entrepreneurial ideas?
A. acquiring enormous sums of wealth
B. avoiding working for someone else
C. resolving large social economic problems
D. solving small everyday problems*
Difficulty: Easy
2. In order to determine if it is the right time to start a new business, aspiring entrepreneurs
must consider the existence of which of the following criteria?
A. innovative product idea, investors, and favorable market conditions
B. passion, skilled staff, and unmet market need
C. adequate market demand, small market size, and resources
D. significant market demand, significant market size, and significant resources*
Difficulty: Easy
3. Uber, Lyft, and DoorDash are examples of which type of economy?
A. entrepreneurial economy
B. virtual economy
C. market economy
D. shared economy*
Difficulty: Easy
4. Netflix started in 1997 as an online movie rental service. Users could browse the online
catalog and order DVDs to be delivered to their homes. Today it is a streaming platform. As
the company’s success grew, several chains of storefront video rental businesses went out of
business. This phenomenon is known as ________.
A. competition
B. creative destruction*
C. innovation
D. takeover
Difficulty: Moderate
Page 1 of 10
, OpenStax Entrepreneurship Test Bank
Chapter 5: Identifying Entrepreneurial Opportunity
5. According to the text, Schumpeter described the cyclical destruction and creation of new
businesses as ________.
A. designed to increase company efficiency
B. designed to help entrepreneurs
C. natural in a capitalist system*
D. natural in a socialist system
Difficulty: Easy
6. During World War II, the U.S. military used plastics in weapons and motor vehicles.
Following the war, plastics manufacturers began to produce products that consumers could
use in their homes. This is most closely related to which step in Schumpeter’s progression for
finding new business opportunities?
A. Develop a new market for an existing product.*
B. Find a new supply of resources to produce the product.
C. Use existing technology to produce an old product a new way.
D. Use new technology to produce a new product.
Difficulty: Moderate
7. Which of the following combinations creates the greatest entrepreneurial opportunity?
A. high supply, low demand
B. high supply, high demand
C. low supply, high demand*
D. low supply, low demand
Difficulty: Moderate
8. In deciding whether to start their business, the founders of Netflix needed to determine if
there were enough people interested in renting their DVDs through the Internet to make their
investment worth the time and effort. They needed to determine the ________ of the venture.
A. expediency
B. feasibility*
C. practicality
D. viability
Difficulty: Difficult
9. Which of the following is data that an entrepreneur can derive from demographics research?
A. attitude
B. disposable income
C. ethnicity*
D. voting behavior
Difficulty: Moderate
Page 2 of 10
Chapter 5: Identifying Entrepreneurial Opportunity
Chapter 5: Identifying Entrepreneurial Opportunity
* = Correct answer
Multiple Choice/Fill in the Blank
1. According to the text, which of these is the motivation behind many entrepreneurial ideas?
A. acquiring enormous sums of wealth
B. avoiding working for someone else
C. resolving large social economic problems
D. solving small everyday problems*
Difficulty: Easy
2. In order to determine if it is the right time to start a new business, aspiring entrepreneurs
must consider the existence of which of the following criteria?
A. innovative product idea, investors, and favorable market conditions
B. passion, skilled staff, and unmet market need
C. adequate market demand, small market size, and resources
D. significant market demand, significant market size, and significant resources*
Difficulty: Easy
3. Uber, Lyft, and DoorDash are examples of which type of economy?
A. entrepreneurial economy
B. virtual economy
C. market economy
D. shared economy*
Difficulty: Easy
4. Netflix started in 1997 as an online movie rental service. Users could browse the online
catalog and order DVDs to be delivered to their homes. Today it is a streaming platform. As
the company’s success grew, several chains of storefront video rental businesses went out of
business. This phenomenon is known as ________.
A. competition
B. creative destruction*
C. innovation
D. takeover
Difficulty: Moderate
Page 1 of 10
, OpenStax Entrepreneurship Test Bank
Chapter 5: Identifying Entrepreneurial Opportunity
5. According to the text, Schumpeter described the cyclical destruction and creation of new
businesses as ________.
A. designed to increase company efficiency
B. designed to help entrepreneurs
C. natural in a capitalist system*
D. natural in a socialist system
Difficulty: Easy
6. During World War II, the U.S. military used plastics in weapons and motor vehicles.
Following the war, plastics manufacturers began to produce products that consumers could
use in their homes. This is most closely related to which step in Schumpeter’s progression for
finding new business opportunities?
A. Develop a new market for an existing product.*
B. Find a new supply of resources to produce the product.
C. Use existing technology to produce an old product a new way.
D. Use new technology to produce a new product.
Difficulty: Moderate
7. Which of the following combinations creates the greatest entrepreneurial opportunity?
A. high supply, low demand
B. high supply, high demand
C. low supply, high demand*
D. low supply, low demand
Difficulty: Moderate
8. In deciding whether to start their business, the founders of Netflix needed to determine if
there were enough people interested in renting their DVDs through the Internet to make their
investment worth the time and effort. They needed to determine the ________ of the venture.
A. expediency
B. feasibility*
C. practicality
D. viability
Difficulty: Difficult
9. Which of the following is data that an entrepreneur can derive from demographics research?
A. attitude
B. disposable income
C. ethnicity*
D. voting behavior
Difficulty: Moderate
Page 2 of 10
