Topic 5 Economics

Suppose data show an increase in offshoring by U.S. companies. Which of the following describes a possible effect on the unemployment rate?

The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries.

Cooperative organizations are controlled by:

Their membership

Which of the following is a potential disadvantage of multinational corporations?

They have an undesired influence on politics and culture in other countries.

In order to do business, what is one regulation that corporations have to follow?

They have to file quarterly and annual reports with the SEC.

Why would someone be willing to share the economic right to business ownership by forming a general partnership?

To limit liability

A nonprofit organization that promotes the interests of a particular industry is called

Trade association

Do multinationals have more or fewer regulations than corporations that are in just one country?

more, because they have to obey laws and pay taxes in more than one country

A common characteristic of all nonprofit organizations is that they

pay no taxes

_____ is an agricultural marketing organization that helps members sell their products

producer cooperative

Over the past two decades, the U.S. economy has shifted from a manufacturing economy toward a(n) __________ economy.

service-producing

Which of the following must a company that wants to hire guest workers show?

that using guest workers will not lower the wages of native-born workers

Which of the following is NOT information the Bureau of Labor Statistics provides?

the future employment figures for specific companies

A major advantage of a franchise is that

the parent company provides guidance on running the business

Which of the following is among the reasons why average real wages have declined in the last couple of decades?

Deregulation of some industries has increased competition, causing employers to cut wages.

The portion of a corporate profits paid to stockholders

Dividends

Why is it easy to start a sole proprietorship?

Sole proprietors do not need to file a lot of paperwork to start a business.

Which type of business organization accounts for the greatest number of actual business?

Sole proprietorship

Rank the following business from that which an owner has the most control to the least control

Sole proprietorship, partnership, franchise, corporation

Which statement about sole proprietorships is true?

Sole proprietorships are the most common form of business organization in the United States.

A certification representing ownership in a company

Stock

What does the limited liability of the owners of stock in a corporation mean?

Stockholders can only lose the money they have invested

Limited liability for stockholders in a corp is an advantage of this organization because

Stockholders don't have to pay the corp. debts if it fails. Stockholders assets are safe from lawsuits against the corp.

In a closelyheld corporation,

Stocks are issued only to a select group of people

Who pays taxes in a corporation?

The corporation and its shareholders

Fringe benefits refers to

The extras given to workers other than wages

Why is liability the biggest disadvantage of a sole proprietorship?

The owner could lose personal property if the business fails

A major advantage of sole proprietorships is

The owner has full authority over business decisions

What happens to the stockholders when a corporation files for bankruptcy?

The owners can lose only the money they have invested.

What does the board of directors in a corporation do?

make all major decisions for the corporation

The owner of a factory that manufactures clothing buys several clothing stores to sell the clothing the factory produces. This is an example of

A vertical merger

Which best describes a sole proprietorship?

A business owned by an individual

Which advantage of a sole proprietorship could also be a disadvantage?

A sole proprietor has full control

Suppose a business is owned by two partners. What skill does each partner need that a sole proprietor would not necessarily need?

Ability to collaborate with an equal

Which of the following businesses would most likely be subject to laws that regulate the disposal of dangerous chemicals?

An auto repair shop

What percentage of the net income earned in the US is generated by corporations

Approximately 60%

A legal agreement that out each partner's rights and responsibilities in a partnership

Articles of partnership

What is an advantage that the general partners who own a partnership have that the owner of a sole proprietorship may not have?

Better access to capital

Legally binding contract issued by a corporation promising to repay the amount it has borrowed

Bond

What is an advantage of being a franchisee?

Brand recognition

A business that pays fees to a parent company

Business franchise

What does a partner in a limited liability partnership have that a limited partner in a limited partnership does not have?

Business involvement

How do corporations raise capital?

By selling stocks and bonds

The federal government watches mergers to ensure they do not threaten

Competition

What risk do limited partners face that general partners do not?

Complete dependence on business abilities of others

A combination of more than three businesses that produce unrelated goods

Conglomerate

Which of these is an advantage that general partners alone enjoy in a limited partnership?

Control of business operations

A legal entity owned by stockholders

Corporation

Disadvantages include the double taxation and more government regulation

Corporation

Generally speaking, which business organization offers the greatest opportunity for growth?

Corporation

Which organization has the advantage of providing an owner with a 'ready to go' business plan?

Franchise

The joining of two firms competing in the same industry with the same good or service

Horizontal merger

Why might a limited partnership have a greater ability to raise capital than a general partnership?

Increase attractiveness due to limits on liability

Which of the following is NOT a benefit of corporations?

Increased government regulation

What is one advantage of a vertical merger?

It can allow a firm to operate more efficiently.

How does a lack of financial resources for fringe benefits affect a sole proprietor's ability to run a business?

It makes it difficult for the owner to attract good employees

What role does the Securities and Exchange Commission fulfill with regard to corporations?

It regulates the stock market

Which of the following is a reason that companies engage in offshoring?

Labor costs may be lower in some over countries.

The legal obligation to pay debts

Liability

What is a corporate charter (aka certificate of incorporation)?

License to form a corp. issued by a state government

Which is a disadvantage of sole proprietorships?

Limited access to resources

What disadvantage do partners and franchisees share?

Limits on control of the business

What must a sole proprietor do if the business fails?

Pay all the business debts

publicly held corporation has

many shareholders who can buy or sell its stock.

Which of the following BEST defines the learning effect theory?

With increased education comes an increased efficiency of production, resulting in higher wages.

Regulations cities and towns use to designate separate areas for business

Zoning laws

A consumer cooperation usually have lower prices because

buy goods in large quantities

Which term does the Bureau of Labor Statistics use to describe people who once sought work but have given up looking for a job?

discouraged workers

Which of the following is a practice that U.S. companies might follow to lower costs?

hiring more part-time workers