Unit 4: Infrastructure and support systems - Practice Quiz

1 What is the main purpose of entrepreneur-friendly government policies?

2 Which policy measure makes it easier for entrepreneurs to start a business?

3 Entrepreneurship development schemes commonly provide which type of support?

4 What is the main purpose of an entrepreneurship training scheme?

5 What is a major role of financial institutions in entrepreneurship development?

6 Besides finance, what support may entrepreneurship development agencies provide?

7 Which factor should an entrepreneur consider when selecting a product or service?

8 Why should an entrepreneur study customer needs before selecting a service?

9 Which form of ownership is owned and controlled by one person?

10 Which form of ownership is generally created by two or more persons who agree to run a business together?

11 What does business registration mainly provide?

12 Which authority usually handles business registration?

13 Which factor is important when selecting a site for a manufacturing unit?

14 Why is transport availability important when selecting a business site?

15 Which of the following is an internal source of capital for a new entrepreneur?

16 Which source of capital normally requires repayment with interest?

17 What does manufacturing know-how refer to?

18 Which is a common way to acquire manufacturing know-how?

19 What is a basic function of product packaging?

20 What does product distribution involve?

21 A state introduces a single-window online portal for business approvals. What is the most likely benefit for new entrepreneurs?

22 Small manufacturers in a cluster cannot individually afford product-testing equipment. Which policy intervention best addresses this problem?

23 An individual plans to establish a new micro manufacturing unit and needs a bank-linked subsidy to reduce the initial financial burden. Which Indian scheme is most suitable?

24 A technology entrepreneur has a prototype but needs laboratory access, mentoring, and help refining the business model. Which support mechanism is most appropriate?

25 A bank considers a micro-enterprise viable, but the promoter lacks sufficient collateral. How can a credit-guarantee institution support the proposal?

26 A first-time entrepreneur needs information about local industrial estates, government incentives, and district-level approvals. Which agency is generally the most appropriate first contact?

27 An entrepreneur scores two products using demand, profit potential, and internal capability. The weights are , , and . Product A scores , , and , while Product B scores , , and . Which product has the higher weighted score?

28 Market research shows interest in an online tutoring service, but customers' willingness to pay is uncertain. What should the entrepreneur do before making a large investment?

29 A person is opening a small neighbourhood repair shop, wants full control, and is willing to accept unlimited personal liability. Which form of ownership is most suitable?

30 Three founders want limited liability, a separate legal entity, and the ability to raise equity from private investors. Which form is generally most appropriate?

31 Why should promoters complete company incorporation before signing major contracts in the company's name?

32 A registered enterprise intends to manufacture packaged food products. Which additional registration or licence is most directly related to its activity?

33 Two sites are evaluated using cost, logistics, and labour availability with weights , , and . Site X scores , , and ; Site Y scores , , and . Which site has the higher weighted score?

34 A processing unit uses a bulky agricultural input that loses substantial weight during production. Where should the unit preferably be located?

35 A garment manufacturer needs funds for inventory and wages during a three-month seasonal production cycle. Which source is most suitable?

36 An enterprise is purchasing machinery expected to operate for eight years. Which financing choice best follows the maturity-matching principle?

37 A start-up wants to use a proven production process quickly instead of developing the technology internally. Which method is most appropriate?

38 Before signing a technology-transfer agreement, which issue should the entrepreneur evaluate most carefully?

39 A company sells a snack that quickly loses crispness when exposed to humidity. Which packaging feature is most important?

40 A producer of frozen desserts is expanding into distant cities. Which distribution arrangement best protects product quality?

41 A government wants to support innovative start-ups without permanently protecting inefficient firms. Which policy design best balances experimentation, accountability, and competitive neutrality?

42 After an entrepreneurship policy begins, start-up registrations rise by 30%, but survival and employment remain unchanged. Which evaluation method would most credibly test whether the policy caused meaningful improvement?

43 A first-generation entrepreneur has a technically feasible prototype but lacks collateral, managerial experience, and market validation. Which scheme package best addresses the binding constraints?

44 A subsidy scheme reimburses 40% of machinery cost after purchase. Audits reveal inflated invoices and purchases of unnecessary equipment. Which redesign most directly reduces this moral-hazard problem?

45 A venture has uncertain technology, long development time, and no collateral, but it could scale rapidly after validation. Which institutional financing sequence is most appropriate?

46 A lender rejects a viable microenterprise solely because the promoter lacks collateral. Which intervention preserves the lender's appraisal role while addressing the collateral gap?

47 A firm can launch only one product because its testing laboratory has 2,000 hours of annual capacity. Product P contributes $60 per unit and needs 3 laboratory hours; Product Q contributes $85 per unit and needs 5 hours. Demand exceeds capacity for both. Which product should be prioritized on the binding-resource criterion?

48 Market research shows high stated demand for a subscription service, but customer interviews reveal low willingness to pay and easy switching to free alternatives. What is the strongest next decision before full launch?

49 Three founders expect repeated external equity rounds, want limited liability, and need ownership interests that investors can acquire without dissolving the enterprise. Which form is most suitable?

50 Professionals forming a consultancy want operational flexibility and limited liability, but they do not expect public fundraising or freely traded ownership. Which ownership form best fits these priorities?

51 An enterprise has received a general business registration, but its proposed activity also requires an environmental consent and a sector-specific operating licence. What follows from the general registration?

52 A founder chooses a business name, signs a long lease, prints regulated-product labels, and only then checks name availability and licensing rules. Which sequencing principle was most clearly violated?

53 Site A has annual fixed costs of $500,000 and variable logistics cost of $8 per unit. Site B has annual fixed costs of $740,000 and variable logistics cost of $5 per unit. Ignoring other differences, above what annual volume is Site B less costly?

54 A weighted site analysis gives the highest score to Site X, but Site X lacks a legally obtainable water-discharge permit essential to production. How should the result be interpreted?

55 A seasonal firm needs $2 million for four months to finance confirmed receivables, but it is considering issuing ten-year equity for the entire amount. Which financing principle most strongly argues against that choice?

56 A project is financed with 40% debt costing 8% after tax and 60% equity costing 16%. If financing proportions remain stable, what minimum project return approximately preserves investor value?

57 A technology licence offers low upfront fees but gives no access to process documentation, training, or troubleshooting support. The entrepreneur must independently operate and improve the process. Which risk is greatest?

58 A foreign licensor proposes royalties on total factory sales, including products that do not use the licensed process, and prohibits local process improvements. Which negotiation response best protects the entrepreneur?

59 A fragile product's premium package costs $3 more per unit but reduces return probability from 8% to 2%. Each returned unit costs $70 in replacement and logistics. Ignoring other effects, what is the expected net benefit of premium packaging per unit?

60 A manufacturer sells through retailers and plans to launch a direct online channel at a lower price while expecting retailers to provide demonstrations and after-sales support. Which policy best limits free-riding and channel conflict?