econ chapter 9

Question 1

proprietorship

Answer 1

a form of business in which there’s one owner

Question 2

unlimited liability

Answer 2

the concept that an owners personal assets can be used to pay bills of the business

Question 3

partnership

Answer 3

type of business organization in which there are two or more owners

Question 4

partnership agreement

Answer 4

a legally binding document tat specifies how the responsibility and profits or losses from a partnership will be split between the partners

Question 5

corporation

Answer 5

an organization of people legally bound together by a charter to conduct some type of business

Question 6

articles of incorporation

Answer 6

a written application to the state requesting permission to form a corporation

Question 7

charter

Answer 7

legal authorization to organize a business as a corporation

Question 8

stock

Answer 8

shares of ownership in a corporation

Question 9

limited liability

Answer 9

concept that owners of a business are only responsible for its debts up to the amount they invest in their business

Question 10

dividends

Answer 10

part of a corporation’s income paid to its stockholders

Question 11

test of the market

Answer 11

being able to provide goods that satisfy consumers needs and desires at prices consumers are willing to pay

Question 12

multinational business

Answer 12

a firm that sells and produces in multiple countries

Question 13

nonprofit organization

Answer 13

an organization that does not have profit as its objective

Question 14

franchise

Answer 14

a contract between a parent company and some other business or individual that details the terms under which the franchise does business with products names or other services of the franchisor

Question 15

line of credit

Answer 15

arrangement through which a business can quickly access needed money from a bank

Question 16

bond

Answer 16

a certificate stating the amount the corporation has borrowed from the holder and the terms of repayment

Question 17

interest

Answer 17

the payment for using someone else’s money

Question 18

common stock

Answer 18

a type of stock that gives the holder a partial ownership of the corporation

Question 19

merger

Answer 19

combining of one company with another company it buys

Question 20

horizontal merger

Answer 20

merger of two companies in the same industry

Question 21

vertical merger

Answer 21

merger of two companies that are at different stages in the same production process

Question 22

conglomerate merger

Answer 22

a me3rger of two companies that are in different businesses