ECONOMICS CHAPTER 7

subchapter S corporation.

A business with fewer than thirty-five shareholders can incorporate as a(n)

True

A corporation is more likely to obtain low-interest loans than a partnership.

impersonality

According to the text, what disadvantage often results from corporations' great size?

an inability to respond to the market.

According to the textbook, corporations' complex organizational structure can sometimes lead to accusations of

True

Approximately one-half of all new businesses fail within five years.

False

Historically, sole proprietorships have the shortest lifespan of the three business types.

individuality and immortality

In the eyes of the law, a corporation possesses which two important qualities?

False

Legally, partnership always require a written contract.

one-fourth

Suppose you buy 70,000 shares of a particular corporation's stock. If the company has issued a total of 280,000 shares, how much of the company do you now own?

the sole proprietorship.

The most popular business model in the United States today is

unlimited financial liability

What great risk balances out the many advantages of both the sole proprietorship and partnership models?

information

What important business factor can sole proprietorships protect better than corporations can?

limited personal liability

What is the chief advantage of incorporating a company?

greater financial resources

What is the primary advantage of partnerships over sole proprietorships?

sole proprietorship

Which business type gives its owner(s) the most freedom?

freedom from outside control

Which of the following is an advantage of a sole proprietorship?

What is the limit of each partner's liability?

Which of the following is not a question that a general partnership must answer?

no more than fifty shareholders

Which of the following is not an accurate criterion for an LLC?

Do unto others as you would have them do unto you.

Which statement best summarizes J.C. Penney's business philosophy?

limited partner

an investor with no liability and few or no duties in the company

surety

becoming security for another's debt

stock

portions of ownership in a company

CEO

president of a corporation

creditor

someone to whom a debt is owed

cosigner

someone who agrees to pay bank a loan if the original borrower cannot