Chapter 8 Economics Review

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A zoning law is a(n)
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law in a city or town that designates separate areas for residency and for business.
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What percentage of total sales in the United States are generated by sole proprietorships?
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6 Percent
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What is one of the first decisions an entrepreneur must make?
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what kind of business organization will best serve his or her interests
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Which of the following is an advantage to owning your own business?
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You can respond quickly to changes in the marketplace.
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An establishment formed to carry on commercial enterprise is called a
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business organization
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Which of the following is required to start up a sole proprietorship type of business?
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You are exempt from your city’s zoning laws.
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Which of the following is a disadvantage of owning a sole proprietorship?
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You can lose all your personal property if your business fails.
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Payment other than wages or salaries is a(n)
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fringe benefit.
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The legally bound obligation to pay debts is known as a
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liability
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An authorization to start a business issued by the local government is a
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business license
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Joe is an accountant and plans to join a group of accountants. He compares a group in a general partnership with a group in a limited liability partnership. He finds the limited liability partnership has one advantage he’s particularly interested in. What is it?
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Joe would not be liable if another partner were to make a mistake.
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If business partners fail to establish articles of partnership,
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they will fall under the Uniform Partnership Act.
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Most partnerships take in receipts amounting to
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under $25,000.
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Which of the following is known as a partnership agreement?
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articles of partnership
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Assets are
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money and other valuables belonging to an individual or business.
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What is a partnership in which partners share equally in both responsibility and liability?
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a general partnership
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A partnership in which only one partner is required to
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limited partnership
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What percentage of businesses in the United States are partnerships?
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7 percent
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Which of the following statements is FALSE?
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A sole proprietorship is a type of limited partnership.
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A partnership in which ALL partners are limited partners is a
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limited liability partnership (LLP).
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Who manages a corporation?
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board of directors and managers
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A conglomerate is
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a business combination merging more than three businesses that make unrelated products.
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The license to form a corporation issued by state government is a
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certificate of incorporation.
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Which of the following statements is FALSE?
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A multinational company pays taxes only in the country in which it is headquartered.
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Why does the government carefully monitor horizontal mergers?
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The resulting single firm might gain monopoly power in its market.
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A formal contract to repay borrowed money with interest at fixed intervals is a
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bond.
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The portion of corporate profits paid out to stockholders is
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a dividend.
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Which of the following is an example of a vertical merger?
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two companies, one producing engines, and the other producing engine parts
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What is the Securities and Exchange Commission (SEC)?
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a federal agency that regulates the stock market
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A vertical merger is
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the combination of two or more firms involved in different stages of producing the same good or service.
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Which of the following is a disadvantage faced by a franchise business owner that would not be encountered by an independent business owner?
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franchising fees and royalties
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A franchise owner’s share of earnings given as a payment to a parent company is called
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a royalty
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Which of the following is NOT an example of a professional organization?
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The American Red Cross
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What kind of organization is the Better Business Bureau?
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business assosiation
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An agricultural marketing cooperative that helps members sell their products is a
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producer cooperative.
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Which of the following is NOT an example of a nonprofit organization?
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A fast food franchise
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An institution that functions much like a business, but does not operate for the purpose of generating profits is a
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nonprofit organization
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A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area is called a
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business franchise.
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A nonprofit organization that promotes the interests of a particular industry is a
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trade assosiation
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Which of the following is NOT a kind of cooperative?
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nonprofit cooperative

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