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Fault tolerance is the ability of a system to continue to function in the event of a failure of some of its components. 
In this question, you could have servers that are replicated across datacenters. 
Availability zones expand the level of control you have to maintain the availability of the applications and data on your VMs. Availability Zones are unique physical locations within an Azure region. Each zone is made up of one or more datacenters equipped with independent power, cooling, and networking. To ensure resiliency, there are a minimum of three separate zones in all enabled regions. The physical separation of Availability Zones within a region protects applications and data from datacenter failures. 
With Availability Zones, Azure offers industry best 99.99% VM uptime SLA. By architecting your solutions to use replicated VMs in zones, you can protect your applications and data from the loss of a datacenter. If one zone is compromised, then replicated apps and data are instantly available in another zone. 
References:
https://docs.microsoft.com/en-us/azure/virtual-machines/windows/manage-availability

A private cloud is hosted in your datacenter. Therefore, you cannot close your datacenter if you are using a private cloud. 
A public cloud is hosted externally, for example, in Microsoft Azure. An organization that hosts its infrastructure in a public cloud can close its data center. 
Public cloud is the most common deployment model. In this case, you have no local hardware to manage or keep up-to-date – everything runs on your cloud provider's hardware.  
Microsoft Azure is an example of a public cloud provider. 
In a private cloud, you create a cloud environment in your own datacenter and provide self-service access to compute resources to users in your organization. This offers a simulation of a public cloud to your users, but you remain completely responsible for the purchase and maintenance of the hardware and software services you provide. 
Reference:
https://docs.microsoft.com/en-gb/learn/modules/principles-cloud-computing/4-cloud-deployment-models

With the public cloud, you get pay-as-you-go pricing – you pay only for what you use, no CapEx costs. 
With the public cloud, you have self-service management.  You are responsible for the deployment and configuration of the cloud resources such as virtual machines or web sites.  The underlying hardware that hosts the cloud resources is managed by the cloud provider. 
Incorrect Answers:
A: You don’t have dedicated hardware.  The underlying hardware is shared so you could have multiple customers using cloud resources hosted on the same physical hardware. 
B: Connections to the public cloud are secure.
C: Storage is not limited.  You can have as much storage as you like.
References:
https://docs.microsoft.com/en-gb/learn/modules/principles-cloud-computing/4-cloud-deployment-models

Azure App Service and Azure SQL databases are examples of Azure PaaS solutions. Therefore, this solution does meet the goal.

Azure App Service is a PaaS (Platform as a Service) service.  However, Azure virtual machines are an IaaS (Infrastructure as a Service) service.  Therefore, this solution does not meet the goal.

Azure App Service is a PaaS (Platform as a Service) service.  However, Azure Storage accounts are an IaaS (Infrastructure as a Service) service.  Therefore, this solution does not meet the goal.

Elasticity in this case is the ability to provide additional compute resource when needed and reduce the compute resource when not needed to reduce costs.  Autoscaling is an example of elasticity. 
Elastic computing is the ability to quickly expand or decrease computer processing, memory and storage resources to meet changing demands without worrying about capacity planning and engineering for peak usage. Typically controlled by system monitoring tools, elastic computing matches the amount of resources allocated to the amount of resources actually needed without disrupting operations. With cloud elasticity, a company avoids paying for unused capacity or idle resources and doesn’t have to worry about investing in the purchase or maintenance of additional resources and equipment. 
References:
https://azure.microsoft.com/en-gb/overview/what-is-elastic-computing/

Azure App Service is a platform-as-a-service (PaaS) offering that lets you create web and mobile apps for any platform or device and connect to data anywhere, in the cloud or on-premises. App Service includes the web and mobile capabilities that were previously delivered separately as Azure Websites and Azure Mobile Services. 
References:
https://docs.microsoft.com/en-us/azure/security/fundamentals/paas-applications-using-app-services

A hybrid cloud is a combination of a private cloud and a public cloud. 
Capital expenditure is the spending of money up-front for infrastructure such as new servers. 
With a hybrid cloud, you can continue to use the on-premises servers while adding new servers in the public cloud (Azure for example).  Adding new servers in Azure minimizes the capital expenditure costs as you are not paying for new servers as you would if you deployed new server on-premises. 
Incorrect Answers:
A: A complete migration of 100 servers to the public cloud would involve a lot of operational expenditure (the cost of migrating all the servers). 
B: An additional data center would involve a lot of capital expenditure (the cost of the new infrastructure).
C: A private cloud is hosted on on-premises servers to this would involve a lot of capital expenditure (the cost of the new infrastructure to host the private cloud). 
References:
https://docs.microsoft.com/en-gb/learn/modules/principles-cloud-computing/4-cloud-deployment-models

Box 1: No
It is not true that a company must always migrate from a private cloud model to implement a hybrid cloud.  You could start with a public cloud and then combine that with an on-premise infrastructure to implement a hybrid cloud. 
Box 2: Yes
A company can extend the capacity of its internal network by using the public cloud.  This is very common.  
When you need more capacity, rather than pay out for new on-premises infrastructure, you can configure a cloud environment and connect your on-premises network to the cloud environment by using a VPN. 
Box 3: No
It is not true that only guest users can access cloud resources.  You can give anyone with an account in Azure Active Directory access to the cloud resources.  There are many authentication scenarios but a common one is to replicate your on-premises Active Directory accounts to Azure Active Directory and provide access to the Azure Active Directory accounts.  Another commonly used authentication method is ‘Federation’ where authentication for access to cloud resources is passed to another authentication provider such as an on-premises Active Directory. 
https://azure.microsoft.com/en-gb/overview/what-is-hybrid-cloud-computing/