The Savvy Entrepreneurial Firm Feature for Chapter 4 Focuses on Three

question 68

Multiple Choice

The Savvy Entrepreneurial Firm feature for Chapter 4 focuses on three companies: Skullcandy, Zillow, and Riya. The overarching point of the feature is:

• A) most business plan require major changes after the business is launched and the founder's start getting customer feedback
• B) the degree to which business plans pan out as their founders envisioned varies
• C) most business plans require only minor changes after the business is launched and the founders start getting customer feedback
• D) the most effective business plans take three to six weeks to complete
• E) most business plans are quickly discarded after the business is launched

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Definitions:

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, measuring the financial success of a business beyond normal profit margins.

Explicit Costs

Refers to direct monetary expenses businesses incur in their operations, such as wages, rent, and materials.

Normal Profit

Normal profit is the minimum amount of profit needed for a company to remain competitive in the market, covering all its opportunity costs.

Normal Profits

The level of profit that business owners consider satisfactory or "normal", essentially covering both explicit and implicit costs, including a normal rate of return on investment.