Is a person who takes a risk to produce goods and services in search of profit Mcq?

Factors of production are inputs used to produce an output, or goods and services. They are resources a company requires to attempt to generate a profit by producing goods and services. Factors of production are divided into four categories: land, labor, capital and entrepreneurship.

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Factors of Production
Key Takeaways
Economic Schools of Thought on Factors of Production
Is person who takes a risk to produce goods and services in search of profit?
In which type of organization does one person take all the risk?

Factors of Production

Land is the natural resource that an enterprise uses to produce goods and services to generate a profit. Land is not just restricted to the physical property or real estate. It includes any natural resources the land produces, such as crude oil, coal, water, gold or natural gas. The resources are natural materials that are included in the production of goods and services.

Labor is the amount of work laborers and workers perform that contributes to the production process. For example, if a laborer works and their efforts create a good or service, they contribute to labor resources.

Key Takeaways

Factors of production are resources a company uses to generate a profit by producing goods and services.
Land, labor, capital and entrepreneurship are the four categories of factors of production.
The primary debate and separation between capitalism and socialism is about the ownership of the primary factors of production.

Capital is any tool, building or machine used to produce goods or services. Capital varies throughout each industry. For example, a computer scientist uses a computer to create a program; their capital is the computer they use. On the other hand, a chef uses pots and pans to deliver a good and service, so the pots and pans are the chef's capital.

Entrepreneurship combines these factors of production to earn a profit. For example, an entrepreneur brings together gold, labor and machinery to produce jewelry. The entrepreneur takes on all the risks and rewards that come with producing a good or service.

Economic Schools of Thought on Factors of Production

Most economic schools identify the same types of factors of production: land, labor, capital and entrepreneurship (intellectual capital and risk-taking). Monetarist, neoclassical and Keynesian schools of thought are mostly in agreement about who should own the factors of production and their roles in economic growth. Marxist and neo-socialist schools argue that the factors of production should be nationalized and that growth primarily comes from labor capital. The Austrian school is perhaps the most capital-intensive school, suggesting that the structure of the factors of production determines the business cycle.

The chief debate between capitalism and socialism is about the ownership of the primary factors of production. Capitalists believe that private ownership is a necessary condition for competition, innovation, and sustained economic growth. Socialists and Marxists argue that accumulated private capital leads to unchecked wealth disparity and the concentration of power in the hands of a few business interests.

Austrians contend the factors of production need to be viewed as heterogeneous and time-sensitive.

Austrians argue that normal Keynesian and neoclassical models are fundamentally flawed because they aggregate all production capital into senseless snapshots. For example, the standard notion of gross domestic product (GDP) treats all investment as equal and treats all capital goods sales as equal.

The Austrian method stresses that it makes a real difference whether producers build houses or lay down railroad tracks. When a ton of steel is used towards a sustainable end, it should be treated as more valuable than when it is wasted during a housing bubble, for example. Mistakes made with capital goods are more difficult to correct and lead to more serious long-term consequences. This is referred to as the heterogeneity of capital. Since capital goods investment and usage is closely tied to the interest rate, Austrians oppose even nominal interest rate controls by central banks.

Entrepreneurship is the willingness and ability to establish, organise and manage a business and take financial risks to make profits. An Entrepreneur is an innovator who brings in new ideas to create a successful business venture.

We have compiled some multiple-choice questions and answers on entrepreneurship to help students understand the concept better:

Which of these is not a type of entrepreneurship?
1. Small business entrepreneurship
2. Scalable entrepreneurship
3. Large scale entrepreneurship
4. Intrapreneurship

Answer: d

Which of these actions of an entrepreneur will most likely result in creative destruction?
1. Developing a new product
2. Taking over a competitor’s business
3. Issuing shares to individuals and institutions
4. Lowering prices of your product or service

Answer: a

According to Schumpeter, innovative entrepreneurs would:
1. Thrive in the market
2. Not survive and disappear from the market.
3. Get absorbed within larger innovative businesses
4. Get absorbed within non-innovative businesses

Answer: c

Which of these is not a challenge for the entrepreneur?
1. Managing the cash flow of their business
2. Recruiting new employees
3. Choosing the product or service to sell in the market
4. Formulating rules and regulations relating to conducting entrepreneurship in their country

Answer: d

Which of these theories involve taking a moderate amount of risk as a function of skill and not chance?
1. Need for achievement
2. Need for affiliation
3. Need for authority
4. Need for independence

Answer: b

Which of these is not a category of external forces that affects a business?
1. Competitive forces
2. Technological forces.
3. Economic forces
4. Socio-economic forces

Answer: b

Which among these is a money manager who is involved in making risk investments from equity capital with the objective of gaining better returns?
1. Entrepreneur
2. Businessperson
3. Buyer
4. Venture capitalist

Answer: d

Andrew Carnegie belonged to this century:
1. 16th to 17th Century
2. 20th to 21st Century.
3. 17th to 18th Century
4. 19th to 20th Century

Answer: d

Which of these is the first activity of a new business?
1. Departure point
2. Goal Orientation
3. Business skill development
4. None of the above

Answer: a

Who should be involved in preparing a firm’s business plan?
1. Accountant
2. Engineer
3. Entrepreneur
4. None of the above

Answer: c

What should be the main worry of a company’s founder who asks for capital in exchange for equity shares in their venture?
1. Valuation
2. Control
3. Capitalisation
4. Legal formalities

Answer: c

The process of creating something new is called:
1. Creative flexibility
2. Management
3. Business
4. Innovation

Answer: d

Ownership position of less than 50 per cent in a business is known as:
1. Majority Interest
2. Joint Venture
3. Minority Interest
4. None of the above

Answer: c

Which of these is also known as corporate venturing?
1. Intrapreneurship
2. Mergers
3. Entrepreneurship
4. Acquisition

Answer: a

If an entrepreneur takes decisions on behalf of their enterprise, it is known as ______:
1. Routine decisions
2. Strategic decisions
3. Organisational decisions
4. Personal decisions

Answer: c

Entrepreneurship Development Program is helpful for:
1. First-generation entrepreneurs
2. Future generation entrepreneurs
3. Existing Entrepreneurs
4. None of the above

Answer: a

These decisions are concerned with policy matters and they influence the goals and objectives of a business venture:
1. Routine decisions
2. Strategic decisions
3. Organisational decisions
4. Personal decisions

Answer: b

Ownership position of more than 50 per cent in a business is known as:
1. Minority Interest
2. Joint Venture
3. Majority Interest
4. None of the above

Answer: c

What is the purpose of a feasibility study for starting a new venture?
1. Exploring for potential customers
2. Estimate sales
3. To understand if there are any barriers to success
4. None of the above

Answer: c

An entrepreneur who is the owner of more than one business is called:
1. Portfolio Entrepreneur
2. Intrapreneur
3. Corporate Entrepreneur
4. None of the above

Answer: a

Also See:

Difference between Businessman and Entrepreneur
Entrepreneurship Development Process

Is person who takes a risk to produce goods and services in search of profit?

A person who undertakes the risk of starting a new business venture is called an entrepreneur. An entrepreneur creates a firm to realize their idea, known as entrepreneurship, which aggregates capital and labor in order to produce goods or services for profit.

In which type of organization does one person take all the risk?

Basic types of business ownership
• Proprietorship A form of business organization with one owner who takes all the risks and all the profits.	• Partnership A form of business organization with two or more owners who share the risks and the profits.

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