Unit 1: Entrepreneurship & Business Models
Business & Finance · Unit 1 · Paper 1

Entrepreneurship & Business Models unit test

A test on this unit alone, marked as a percentage and a letter grade — for the test your class is actually sitting, rather than for May. Answer everything, then submit once: seeing the answer to question 3 before attempting question 4 makes the final percentage meaningless.

Paper 1Paper 2Paper 3
Each paper is built from this unit’s 28 terms and is the same for everyone, so a teacher can assign “Unit 1, Paper 1” and every student sits the identical test. Multiple choice is marked objectively; the written sections you mark yourself against the model answer and rubric.
Suggested time 34 min 31 points0/17 attempted
1

Barriers to entry

2

Minimum viable product

3

Exit strategy

4

Term sheet

5

Crowdfunding

6

Economies of scope

7

Subscription model

8

Limited liability

9

First-mover advantage and its limits

10

Marketplace (platform) model

11

Social enterprise

12

Bootstrapping

Short answer 1. Define or explain: Sole trader risk exposure

3 pts

Short answer 2. Define or explain: Pre-money vs post-money valuation

3 pts

Short answer 3. Define or explain: Scalability

3 pts

Short answer 4. Define or explain: Franchising

3 pts

Free response

7 pts

Devin is launching a subscription service that delivers replacement parts and maintenance kits to owners of electric bicycles. He plans to charge $18 per month. Variable cost per subscriber is $6.50 per month for parts and $2.50 for shipping. Fixed monthly costs are $4,500 for warehouse space and software and $6,300 in salaries. Customer acquisition costs him $27 in advertising per new subscriber, and the average subscriber stays 14 months.

Calculate the contribution margin per subscriber per month.

Calculate the number of subscribers required to break even each month.

Calculate the customer lifetime value of a subscriber, using contribution margin, and compare it with the acquisition cost.

Identify the revenue model Devin is using and explain one advantage of it over one-time product sales.

Explain one key partnership or key resource this business model depends on.

Explain one specific risk to the business if average subscriber tenure fell from 14 months to 6 months, supporting your answer with a calculation.

Recommend one change Devin could make to improve unit economics, and justify it.