Question 1 

The most common form of business organization in the United States is the
1) sole proprietorship.
2) corporation.
3) cooperative.
4) partnership

Question 2 

In a limited partnership 1) one partner is not active in the daily operations.
2) both partners share the work load.
3) neither partner is responsible to the other.
4) all partners are responsible to a corporation.

Question 3 

An advantage of a merger between two companies is
1) improved production and efficiency.
2) establishing a legal monopoly.
3) increasing cost.
4) establishing a voluntary transaction.

Question 4 

Diversification is an advantage of 1) private ownership.
2) conglomerates.
3) all corporations.
4) cooperatives.

Question 5 

Voting shareholders in a company hold
1) preferred stock.
2) corporate bonds.
3) common stock.
4) dividends.

Question 6 

Paid vacation time, sick leave, and retirement pensions for workers are known as 1) basic rights.
2) opportunity costs.
3) fringe benefits.
4) bread and butter benefits.

Question 7 

One weakness of the sole proprietorship is that the 1) owner has no control.
2) business depends solely on the owner.
3) owner has too many partners.
4) business is in constant danger of bankruptcy.

Question 8 

The Securities and Exchange Commission (SEC) regulates the 1) Better Business Bureau.
2) sale of corporate stock to the public.
3) inventory of corporations.
4) selection of corporate names.

Question 9 

The owner of shares in a corporation is a 1) proprietor.
2) stockholder.
3) partner.
4) manager.

Question 10 

A sole proprietor 1) has partners in the business.
2) is exempt from paying any taxes.
3) must rely on government subsidies.
4) does not have to pay a separate business tax.

Question 11 

One advantage enjoyed by a corporation is 1) unlimited liability.
2) ease of management.
3) unlimited life.
4) ease of obtaining a charter.

Question 12 

When firms involved in different steps of manufacturing or marketing merge, the result is a 1) multinational merger.
2) horizontal merger.
3) conglomeration.
4) vertical merger.

Question 13 

An example of a nonprofit organization is a 1) doctor's office.
2) limited partnership.
3) public school.
4) grocery store.

Question 14 

Consumers who form a voluntary association to buy in bulk at lower prices form a 1) corporation.
2) cooperative.
3) labor union.
4) credit union.

Question 15 

One advantage of this type of business is diversification. 1) multinationals
2) private ownership
3) cooperatives
4) conglomerates

Question 16 

The sale of stocks is regulated by 1) labor unions.
2) stockbrokers.
3) the Securities and Exchange Commission.
4) the Chamber of Commerce.

Question 17 

In its direct role as an economic institution, government 1) regulates public utilities.
2) owns and manages public utilities.
3) makes grants to individuals in the form of veterans' benefits.
4) acts as umpire to make sure the market stays competitive.

Question 18 

Which economic system is based on the theory of laissez-faire? 1) capitalism
2) syndicalism
3) communism
4) socialism

Question 19

Resource immobility is an obstacle to 1) development of monopolies.
2) multinationals.
3) market externalities.
4) efficient resource allocation.

Question 20 

What is the market structure of the steel and automobile industries? 1) monopoly
2) pure competition
3) oligopoly
4) monopolistic competition

Question 21 

In pure competition,
1) buyers and sellers deal in a variety of products.
2) buyers and sellers act together.
3) a large number of buyers and sellers exist.
4) buyers and sellers have little knowledge of the items for sale.

Question 22 

A condition needed for the success of a competitive market is 1) price ceilings.
2) competition.
3) controlled production.
4) price floors.

Question 23 

What is a major cause of inadequate competition?
1) large number of proprietorships
2) product loyalty of consumers
3) mergers of corporations
4) failure of government subsidies

Question 24 

An example of a public disclosure law is 1) advertising sales.
2) price tags on merchandise.
3) requiring content labels on food products.
4) announcing changes in company leadership.

Question 25 

The first effective federal legislation to regulate big business was enacted in the 1) twentieth century.
2) nineteenth century.
3) eighteenth century.
4) seventeenth century.

Question 26 

The FTC was established to regulate
1) agricultural practices.
2) state and local government.
3) monopolies and trusts.
4) interstate commerce.

Question 27 
The concept of laissez-faire means 1) let the buyer beware.
2) keep government out of the affairs of business.
3) the consumer is ruler.
4) let the government become involved.

Question 28 

All public corporations must file financial reports with the 1) ICC.
2) FDA.
3) SEC.
4) FTC.

Question 29 

Which of the following maximize profits by producing the quantity of output where marginal cost is equal to marginal revenue? 1) perfect competitors, monopolistic competitors, and monopolists
2) monopolistic competitors
3) monopolists
4) perfect competitors

Question 30 

Prices reasonably reflect production costs when 1) markets are competitive.
2) supply is greater than demand.
3) there are fewer competitors.
4) price dictates demand.

Question 31 

Mergers and acquisitions might result in 1) more competition.
2) increases in consumer demand.
3) smaller companies.
4) inadequate competition.

Question 32 

The main difference between the perfect competitor and the oligopolist is 1) the number of customers in the market.
2) whether or not buyers are reasonably well-informed.
3) whether or not sellers are reasonably well-informed.
4) the existence of differentiated products.

Question 33 

Local bus companies are an example of a(n) 1) entrepreneurial enterprise.
2) oligopolistic industry.
3) government agency.
4) natural monopoly.

Question 34 

The most common examples of market failures include all of the following except 1) public goods.
2) resource mobility.
3) negative externalities.
4) positive externalities.

Question 35 

A negative externality resulting from the expansion of a local airport may be 1) a rise in retail business in the area.
2) additional employment at the airport.
3) the inconvenience for those living near the airport.
4) an opportunity cost.

Question 36 

A new firm finds it almost impossible to enter an industry dominated by 1) oligopoly.
2) pure competition.
3) monopoly.
4) monopolistic competition.

Question 37 

The government is involved in the United States economy for all of the following reasons EXCEPT to 1) promote and encourage competition.
2) prevent monopolies that deny the public the benefits of competition.
3) regulate industries in which a monopoly is in the public interest.
4) promote the development of market externalities.

Question 38 

The unintended side effects on a third party, caused by business activity, are called negative externalities. price discrimination. externalities. public disclousre.

Question 39 

The minimum wage is adjusted yearly to keep up with inflation. has lost much of its purchasing power because of inflation. equals the average manufacturing wage. only applies to part-time workers.

Question 40 

"Glass ceiling" refers to 1) the two-tiered wage system.
2) the lower income women receive compared with men.
3) the fragile relationship between labor and management.
4) the invisible barrier that keeps women and minorities from getting raises and promotions.

Question 41 

Signaling theory is the idea that 1) workers will relocate to areas where wages are higher.
2) supply and demand for worker's skills and services determine wages.
3) employeers will pay more to hire people with diplomas, certificates, or other degrees.
4) organized labor's bargaining strength helps determine wages.

Question 42 

The category of skilled labor includes whokers who 1) have mechanical abilities and skills needed to operate machines that require little training to use.
2) work primarily with their hands and lack training and skills required for other tasks.
3) have high levels of knowledge-based education and managreial skills.
4) are able to operate complex equipment and require little supervision.

Question 43 

Collective bargaining is 1) the process by which labor and management groups work to resolve their differences.
2) always concluded with an arbitration session.
3) a temporary goverment takeover of company operations.
4) the process of bringing a neutral party to help settle a labor/management dispute.

Question 44 

Labor unions met great resistance from government until _________________, when the government began passing pro-union legislation. 1) the first union strike ended.
2) the Great Depression.
3) 1920.
4) the establishment of the AFL-CIO.

Question 45  

Labor unions were originally formed to 1) hinder the development of monopolies.
2) organize strikes and pickets against employers.
3) fight against market externalities which negatively affected their members.
4) negitiate for higher pay, better working hours and conditions, and jobsecurity for their members.

Question 46 

What economic considerations must individuals take into account in making the decision to open a business?Coporate Finance