Practice · 1.1 What Is a Business?

Set A

Bean & Brew is a 12-seat coffee shop that Mina opened near Lakeside High School. Before opening, Mina asked 120 students a short survey. Two results are shown below.

Table 1. "Where do you usually study after 6 p.m.?" (n = 120) | Response | Share of students | | --- | --- | | At home | 55% | | Nowhere — I stop studying | 25% | | A friend's house | 12% | | Other | 8% |

Table 2. "If you could stay two hours with wifi and power outlets, how much would you pay for one drink?" (n = 120) | Amount | Share of students | | --- | --- | | $3 | 40% | | $4 | 35% | | $5 | 20% | | $6 or more | 5% |

Mina decided to open until 9 p.m. with study tables, charge $4 for a basic latte, and offer $2 refills. A latte costs her $1.20 to make.

1. Which of the following best describes Bean & Brew as a business?

AIt is a business because it produces and distributes a product to customers.BIt is a business only if it earns a profit in its first year.CIt is not a business because it sells a good rather than a service.DIt is not a business because it has only 12 seats and one employee.

2. Which survey result most directly indicates a market opportunity for Bean & Brew?

A55% of students study at home after 6 p.m.B25% of students stop studying after 6 p.m. because they have nowhere to go.C8% of students chose 'Other'.D5% of students would pay $6 or more for a drink.

3. Based on Table 2 and Mina's pricing, Bean & Brew's $4 latte price is best described as

Abelow Mina's cost to produce the latteBbelow the amount that 60% of surveyed students were willing to payCequal to or below the amount that 60% of surveyed students were willing to payDabove the amount that 75% of surveyed students were willing to pay

4. Mina chose to serve students studying in the evening rather than office workers who wanted a 7 a.m. opening. Which statement best explains this decision?

AStudents always pay higher prices than office workers.BA business must satisfy every potential customer in its area.COffice workers are consumers, not customers, so they cannot be served.DA business must select which problems, needs, and wants to focus on and which customers to serve.