Quiz _Unit Economics

#1. Which of the following statements about Unit economics is NOT True?
A. Early-stage investors are likely to perform unit economics analysis when
deciding between proposals and will have a good insight into scalability.
B. For SaaS startups one unit it typically a “software user”.
C. Unit economics metrics are not applicable for mature companies.

#2. Which of the following statements about LTV to CAC ratio is TRUE?
A. An ideal ratio is 1. It means that it costs you as much to acquire one
customer as they spend on your product.
B. An ideal ratio is considered to be 3:1, where you get three times the value of
acquisition from each new customer.
C. The ratio is expected to be very high (e.g. 15:1). This means that a business
shouldn’t spend more of your time and budget to sales and marketing.

#3. ….. is the percentage of your customers that cancel their subscription during a
given period.
A. Gross margin per customer lifespan
B. Retention rate
C. Discount rate
D. Churn rate

#4. What is NOT a 'unit' in Unit economics?

A. A startup business
B. A customer
C. A product sold
D. A purchase made (e.g. one ride in Uber taxi)

# 5. What is the typical question that an owner of a business may ask himself to
understand the business better from the perspective of unit economics?
A. What is the industry concentration ratio?
B. What are the factors of production?
 C. How much revenue do you make from a new customer and what did it cost
to get that customer?
D. What will cause a change along the supply and demand curve?

#6. Let’s say you had 900 customers early this month but were left with 600 when
the month was over. Calculate the average lifetime of a customer and a churn rate.
Total number of months customers stayed = 1 * (900-600) = 300
A. 11 months and 8,75 %
B. 2,5 months and 14,2 % Average Lifetime = 300 / 900 = 0.33 years

C. 3 months and 33,3% Number of customers lost during the month = 900 - 600 = 300

Churn Rate = 300 / 900 = 0.33 or 33%

# 7. Let’s say 70 customers brought the profit of $15000 in a 4-month period.
Calculate the average revenue per user (ARPU) per month and how much revenue
each customer will generate per year.
A. $53.57 and $643 ARPU per month = 15000 / (70 * 4) = $53.57
B. $ 25 and $ 300 Revenue generated per customer in 4 months и 15000/70 и $214.29
C. $ 54 and $ 650 Revenue per year = 214.29*3 = $642.87

# 8. Which of the following indicates the strong unit economics?

A. CAC = LTV
B. CAC < LTV
C. CAC > LTV

# 9. All of the following are measures to improve Unit economics of a firm Except:
A. by increasing customer lifetime value
B. by decreasing customer acquisition cost
C. by reducing break-even point
D. by increasing customer churn rate

# 10. Which of the following statements about Customer Lifetime Value (LTV) is
NOT true?
A. That’s the money you invest in attracting a new customer, including
advertising, marketing, special offers and so on.
B. Is a measurement of how valuable a customer is to your company, not just on
a purchase-by-purchase basis but across the whole relationships.
C. Represents the total amount of money a customer is expected to spend in
your business, or on your products, during their lifetime.
# 11. Let’s assume that you start the calendar year’s third quarter with $1,000,000 in
your bank account. End the quarter with $700,000 cash, receive no additional
funding, and generate $90,000 of sales (in cash terms) over the quarter. The monthly
gross burn rate is ….
A. $130,000 Cash Burned = $1,000,000 - $700,000 = $300,000
B. $100,000
Monthly Gross Burn Rate = $300,000 / 3 = $100,000
C. $210,000

# 12. Unit Economics addresses the following questions EXCEPT:

A. What is each client worth to you?
B. To what extent the clients are satisfied by competing products that are
available on the market?
C. What percentages of your clients will churn?
D. How much money are you spending to get each client?

# 13. Let’s say you had 500 customers early this month but were left with only 400
when the month was over. Calculate the average lifetime of a customer and a churn
rate.

A. 12,5 months and 80%

B. 4 months and 25%
C. 5 months and 20%

# 14. We suggest having 500 customers first of the month, resulting in 600
customers by its end, plus 200 new customers during the month. Calculate the
retention rate.
A. 80% Retention Rate = ((600 - 200) / 500) x 100% = 80%
B. 85,7%
C. 160%

# 15. Let’s say 30 customers brought the profit of $960 in a two-month period.
Calculate the average revenue per user (ARPU) per month and how much revenue
each customer will generate per year.
A. $ 16 and $ 384 ARPU per Month = $960 / (30 x 2) = $16
B. $32 and $192
Revenue per Customer per year = $960 / 30*12=$384
C. $16 and $192