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BAEP423 Midterm Questions and Correct
Answers
Product Ans: a tangible item that exists in nature or is made by
people
Service Ans: intangible work that provides time, skills, or
expertise in exchange for money
Free Enterprise System Ans: economic system in which businesses
are privately owned and operate relatively free of govt.
interference
Capitalism Ans: the free-market system; characterized by
individuals and companies competing for economic gains, private
property ownership and wealth
Capital Ans: money or property owned and used in business
Voluntary Exchange Ans: a transaction between two parties who
agree to trade money for a product or service
Dividend Ans: each stockholder's portion of the profit-per-share
paid by a corporation
Cost/Benefit Analysis Ans: a decision-making process in which
the costs of taking an action are compared to the benefits
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Opportunity Cost Ans: the value of what must be given up in
order to obtain something else
Social Entrepreneurship Ans: a for-profit enterprise that has the
dual goals of achieving profitability and attaining social returns
Venture Philanthropy Ans: a subset or segment of social
entrepreneurship wherein financial and human capital are invested
in not-for-profit enterprises with the intention of generating social
rather than financial returns on their investments
Green Entrepreneurship Ans: enterprise activities that avoid harm
to the environment or help to protect it in some way
Five Roots of Opportunity in Market Place Ans: Problems,
Changes, Inventions, Competition, Technological Advances
Strategy Ans: a plan for how an organization or individual plans
to perform and outdo competitors
Franchise Ans: a business that markets a product or service
developed by a franchisor, typically in the manner specified by
that franchisor
Acquisition Ans: the purchase of a business
Due Diligence Ans: the exercise of reasonable care in the
evaluation of a business opportunity
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Gazelle Ans: a company that achieves an annual growth rate of
20% or greater, typically measured by the increase of sales rev
Microenterprise Ans: firm with five or fewer employees, initial
capitalization requirements of under $35,000, and the consistent
operational involvement of the owner
Lifestyle Business Ans: a microenterprise that permits is owners
to follow a desired pattern of living, such as supporting college
costs or taking vacations
Profit Ans: amount of money remaining from the revenue of a
business after all costs are deducted
Feasibility Analysis Ans: a study to assist in making a go/no go
decision based upon a close examination of product/service,
market, industry, and financial data in a sufficient degree of detail
to ensure confidence in the results
Business Plan Ans: a document that thoroughly explains a
business idea and how it will be carried out
Mission Ans: a concise communication of strategy, including a
business definition, and explanation of competitive advantage
Mission Statement Ans: a brief, written statement that informs
customers and employees what an organization's goal is, and
describes the strategy and tactics to meet it
© 2025 All rights reserved
BAEP423 Midterm Questions and Correct
Answers
Product Ans: a tangible item that exists in nature or is made by
people
Service Ans: intangible work that provides time, skills, or
expertise in exchange for money
Free Enterprise System Ans: economic system in which businesses
are privately owned and operate relatively free of govt.
interference
Capitalism Ans: the free-market system; characterized by
individuals and companies competing for economic gains, private
property ownership and wealth
Capital Ans: money or property owned and used in business
Voluntary Exchange Ans: a transaction between two parties who
agree to trade money for a product or service
Dividend Ans: each stockholder's portion of the profit-per-share
paid by a corporation
Cost/Benefit Analysis Ans: a decision-making process in which
the costs of taking an action are compared to the benefits
© 2025 All rights reserved
, 2 | Page
Opportunity Cost Ans: the value of what must be given up in
order to obtain something else
Social Entrepreneurship Ans: a for-profit enterprise that has the
dual goals of achieving profitability and attaining social returns
Venture Philanthropy Ans: a subset or segment of social
entrepreneurship wherein financial and human capital are invested
in not-for-profit enterprises with the intention of generating social
rather than financial returns on their investments
Green Entrepreneurship Ans: enterprise activities that avoid harm
to the environment or help to protect it in some way
Five Roots of Opportunity in Market Place Ans: Problems,
Changes, Inventions, Competition, Technological Advances
Strategy Ans: a plan for how an organization or individual plans
to perform and outdo competitors
Franchise Ans: a business that markets a product or service
developed by a franchisor, typically in the manner specified by
that franchisor
Acquisition Ans: the purchase of a business
Due Diligence Ans: the exercise of reasonable care in the
evaluation of a business opportunity
© 2025 All rights reserved
, 3 | Page
Gazelle Ans: a company that achieves an annual growth rate of
20% or greater, typically measured by the increase of sales rev
Microenterprise Ans: firm with five or fewer employees, initial
capitalization requirements of under $35,000, and the consistent
operational involvement of the owner
Lifestyle Business Ans: a microenterprise that permits is owners
to follow a desired pattern of living, such as supporting college
costs or taking vacations
Profit Ans: amount of money remaining from the revenue of a
business after all costs are deducted
Feasibility Analysis Ans: a study to assist in making a go/no go
decision based upon a close examination of product/service,
market, industry, and financial data in a sufficient degree of detail
to ensure confidence in the results
Business Plan Ans: a document that thoroughly explains a
business idea and how it will be carried out
Mission Ans: a concise communication of strategy, including a
business definition, and explanation of competitive advantage
Mission Statement Ans: a brief, written statement that informs
customers and employees what an organization's goal is, and
describes the strategy and tactics to meet it
© 2025 All rights reserved
