MHR 322 Exam 1 Questions with Correct Answers Latest Update 2025/2026
Entrepreneurial Mindset - Answers Imagine (Look for problems to solve, notice trends or new
enabling technologies)
Create (Develop innovative solutions, Experiment, Pivot)
Lead (Build a team, Critical thinking skills, Perseverance)
Entrepreneurship - Answers The pursuit of opportunity beyond the resources you currently
control (risk taker, visionary, innovator)
Why is entrepreneurship important? - Answers Important to Society (Job creation, dynamic
economy)
Student Career Benefits (Career paths are more dynamic, firms are looking to become more
innovative, success can lead to wealth creation)
Why the best innovations don't always win - Answers Resource scarcity (Not all innovations can
be supported; entrepreneurs must compete for scarce resources and limited time)
Initial conditions
Path dependence (Winners may be determined by the order in which interactions take
place)
Non-equifinality (even given the same initial conditions and paths, it's possible for outcomes to
be affected by completely unrelated factors)
Legitimacy effects (Sometimes ideas are selected because they are associated with people
perceived to be successful/legitimate)
,Opportunity recognition (Innovation and opportunities are influenced by prior experience)
Entrepreneurial agency (Innovation quality may be important, but survival may be determined by
the characteristics of the innovator)
Network effects
Innovation affinity (Inventors may become emotionally attached to their own innovation very
quickly, which may then restrain rational or objective evaluation)
4 Products Case: Key Takeaways - Answers Size of the market is only one factor (smaller
market with a better fit/need is often better)
Lots of press doesn't mean it is a good idea
It is really hard to get it right but worth trying
S-Curve of Tech Diffusion - Answers Begins with slow initial uptake by innovators, then a rapid
acceleration during the early adoption and early majority phases, and finally slows and flattens
as it reaches the late majority and laggards
Factors Affecting Diffusion Speed - Answers Relative Advantage (+)
• Is it of value? Is it better?
Compatibility (+)
• Require change? Strange or weird?
Trialability (+)
• Can I test/demo it? Trial it at low cost?
Observability (+)
• Can I see it in use? Can I see how many others use it?
Risk (-)
, • How bad is the downside if it doesn't work?
Complexity (-)
• Complex to use or understand? Will it work?
The Psychology of Gains and Looses - Answers Individuals are sensitive to Gains & Loses
- Better at judging changes
Reference Points Matter
- Gains & Losses are evaluated against current state
- Current state is different by individual & perception
- Current state changes
Decreasing Marginal Sensitivity
- Marginal impact is declining
Aversion to Loss
- Equal value losses hurt more than the same gain
The Endowment Effect - Answers "People value items in their possession (or part of their
endowment) more than they value items not in their
possession."
- If you have a mug, you might say it's worth $10. But if you didn't own it and someone offered to
sell it to you, you might only be willing to pay $5.
The Nature of Innovations ("Gives" and "Gets" of Innovations) - Answers Electric Cars: give up
quick refueling with lots of options, get environmental friendliness
The Developer's Curse - Answers Problem #1: Self-Selection
- Typical innovator is not typical consumer
- Being an early visionary can be ahead of the trend, but idea might fail if the world isn't ready for
it yet
Entrepreneurial Mindset - Answers Imagine (Look for problems to solve, notice trends or new
enabling technologies)
Create (Develop innovative solutions, Experiment, Pivot)
Lead (Build a team, Critical thinking skills, Perseverance)
Entrepreneurship - Answers The pursuit of opportunity beyond the resources you currently
control (risk taker, visionary, innovator)
Why is entrepreneurship important? - Answers Important to Society (Job creation, dynamic
economy)
Student Career Benefits (Career paths are more dynamic, firms are looking to become more
innovative, success can lead to wealth creation)
Why the best innovations don't always win - Answers Resource scarcity (Not all innovations can
be supported; entrepreneurs must compete for scarce resources and limited time)
Initial conditions
Path dependence (Winners may be determined by the order in which interactions take
place)
Non-equifinality (even given the same initial conditions and paths, it's possible for outcomes to
be affected by completely unrelated factors)
Legitimacy effects (Sometimes ideas are selected because they are associated with people
perceived to be successful/legitimate)
,Opportunity recognition (Innovation and opportunities are influenced by prior experience)
Entrepreneurial agency (Innovation quality may be important, but survival may be determined by
the characteristics of the innovator)
Network effects
Innovation affinity (Inventors may become emotionally attached to their own innovation very
quickly, which may then restrain rational or objective evaluation)
4 Products Case: Key Takeaways - Answers Size of the market is only one factor (smaller
market with a better fit/need is often better)
Lots of press doesn't mean it is a good idea
It is really hard to get it right but worth trying
S-Curve of Tech Diffusion - Answers Begins with slow initial uptake by innovators, then a rapid
acceleration during the early adoption and early majority phases, and finally slows and flattens
as it reaches the late majority and laggards
Factors Affecting Diffusion Speed - Answers Relative Advantage (+)
• Is it of value? Is it better?
Compatibility (+)
• Require change? Strange or weird?
Trialability (+)
• Can I test/demo it? Trial it at low cost?
Observability (+)
• Can I see it in use? Can I see how many others use it?
Risk (-)
, • How bad is the downside if it doesn't work?
Complexity (-)
• Complex to use or understand? Will it work?
The Psychology of Gains and Looses - Answers Individuals are sensitive to Gains & Loses
- Better at judging changes
Reference Points Matter
- Gains & Losses are evaluated against current state
- Current state is different by individual & perception
- Current state changes
Decreasing Marginal Sensitivity
- Marginal impact is declining
Aversion to Loss
- Equal value losses hurt more than the same gain
The Endowment Effect - Answers "People value items in their possession (or part of their
endowment) more than they value items not in their
possession."
- If you have a mug, you might say it's worth $10. But if you didn't own it and someone offered to
sell it to you, you might only be willing to pay $5.
The Nature of Innovations ("Gives" and "Gets" of Innovations) - Answers Electric Cars: give up
quick refueling with lots of options, get environmental friendliness
The Developer's Curse - Answers Problem #1: Self-Selection
- Typical innovator is not typical consumer
- Being an early visionary can be ahead of the trend, but idea might fail if the world isn't ready for
it yet
