econ

Question 1

Which of the following are tax-exempt and do not pay federal or state income taxes?

Answer 1

nonprofit organizations

Question 2

To start a sole proprietorship, what are important tasks to accomplish?

Answer 2

register the name of the business, check and conform to regulations, and obtain necessary licenses and permits.

Question 3

The term for being individually responsible and risking your personal assets when you operate a business is:

Answer 3

unlimited liability

Question 4

A business firm that is itself a legal entity is a:

Answer 4

corporation

Question 5

The type of business organization that has the highest amount of revenue is a:

Answer 5

corporation

Question 6

The type of business organization that is the most numerous is a:

Answer 6

sole proprietorship

Question 7

A ______is a business owned by its members and operated to supply members and others with goods and services.

Answer 7

cooperative

Question 8

Why might a group of business owners decide to form a limited liability company rather than a corporation?

Answer 8

to avoid double taxation of profits

Question 9

How do franchises and chains primarily differ?

Answer 9

Independent store owners have more power to make decisions in a franchise.

Question 10

Which of the following represent ownership in a corporation?

Answer 10

stocks only

Question 11

The typical structure of a large public corporation includes:

Answer 11

stockholders, board of directors and CEO.

Question 12

Which of the following is considered to be an advantage of the corporate form of business organization?

Answer 12

limited liability for the stockholders

Question 13

Two sources of outside funding that a corporation has available that are not available to sole proprietorship or partnerships are:

Answer 13

issuing and selling stocks and bonds.

Question 14

A ___________________ occurs when two firms join together to form a single, larger firm.

Answer 14

merger

Question 15

Going global and becoming a _______offers new opportunities for growth for even the largest firms.

Answer 15

multinational corporation

Question 16

A _________________ combines firms that operate at different stages in the production of a good.

Answer 16

vertical merger

Question 17

The dollar value of capital used up due to aging and wear is called:

Answer 17

depreciation

Question 18

When a corporation issues and sells bonds it is:

Answer 18

borrowing money.

Question 19

Privately held corporations are not allowed to:

Answer 19

issue shares of stock to outsiders.

Question 20

What is the most likely reason that a large business firm would decide to form a conglomerate?

Answer 20

to help have consistent profits despite volatility within certain markets.

Question 21

If two competing grocery stores in a town decide to merge and combine into one company, this would be an example of a:

Answer 21

horizontal merger

Question 22

Companies, like GE and Walt Disney, that produce a wide variety of products would be examples of a:

Answer 22

conglomerate.

Question 23

A ____ occurs when one firm purchases a controlling interest in another firm.

Answer 23

acquisition

Question 24

The least competitive market structure is:

Answer 24

monopoly

Question 25

Airlines charging a different price if a trip involves a Saturday-night stay, movie theaters charging children a different price than adults, and restaurants offering “early-bird” discounts to seniors are all examples of

Answer 25

price discrimination.

Question 26

Exclusive access to a critical input and government protection are considered to be

Answer 26

barriers to entry for a monopolists

Question 27

The term economists use to describe the nature of competition within a market is:

Answer 27

market structure

Question 28

If, in the long run, an increase in output lowers a firm’s average cost, the firm is experiencing:

Answer 28

economies of scale.

Question 29

Imperfect competition is a term used to describe:

Answer 29

monopoly, oligopoly, and monopolistic competition

Question 30

A market in which individual firms are price takers is:

Answer 30

a perfectly competitive market.

Question 31

When an unregulated monopoly replaces a perfectly competitive market, consumers typically:

Answer 31

pay higher prices

Question 32

A market in which high startup costs make it prohibitively expensive for more than one firm to operate is:

Answer 32

a natural monopoly

Question 33

The most competitive market structure is:

Answer 33

perfect competition

Question 34

A monopolist, like other firms, is interested in:

Answer 34

maximizing profit.