Economics Unit 3 Test Review(Long)

corporation

A legal entity owned by individual stockholders who all have limited liability.

If an advertising business buys new computers for its employees, how might its productivity of labor be affected? A. It would increase. B. It would decrease. C. It would double. D. It would stay the same.

A. It would increase.

How do right-to-work laws diminish union power? A. Unions with fewer members have less influence over management. B. Unions with more members have less influence over management. C. Workers who don't belong to unions have greater influence over management. D. Management prefers negotiating with unions with more members.

A. Unions with fewer members have less influence over management.

Limited Partnership

At least one partner is not involved in the daily operations of the business (silent partner)

What generally happens to the equilibrium wage when demand for workers is low and supply is high? A. It gets higher. B. It gets lower. C. It does not change. D. It moves below demand.

B. It gets lower.

Which best describes a sole proprietorship? A. a business owned by two partners B. a business owned by an individual C. a business owned by a corporation D. a business owned by the government

B. a business owned by an individual

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. a horizontal merger. B. a vertical merger. C. a conglomerate. D. a multinational corporation.

B. a vertical merger

General Partnership

Both partners share responsibility for managing the business and each is liable for all the business debts and losses

Why is the demand for labor called a derived demand? A. It is set by the supply of labor. B. It is set by the demand for labor at the lowest price. C. It is set by the demand for another good or service. D. It is set by the supply of goods and services demanded.

C. It is set by the demand for another good or service.

Public Good

Characteristics: People cannot be excluded from the benefits of the product even though they do not pay for it, and one person's use of the product does not reduce its usefulness to others.

5.4 Identify the different types of cooperative organizations.

Consumer Cooperative- sell merchandise to members at reduced prices Service Cooperative- provide a service rather than a good Producer Cooperative- agricultural marketing cooperatives that help members sell their products. market these goods at the highest prices

How does a lack of financial resources for fringe benefits affect a sole proprietor's ability to run a business? A. It makes it difficult for the owner to make a profit. B. It makes it difficult for the owner to promote the business. C. It makes it difficult for the owner to pay competitive wages. D. It makes it difficult for the owner attract good employees.

D. It makes it difficult for the owner attract good employees.

Which of the following is a practice that U.S. companies might follow to lower costs? A. hiring fewer female workers B. hiring fewer foreign-born workers C. hiring more full-time workers D. hiring more part-time workers

D. hiring more part-time workers

Capitalism

Economic system based on private property, competition, free enterprise, and the profit motive.

monopoly

Occurs when barriers prevent firms from entering a market that has a single supplier.

Free Rider

Person who receives the benefit of the good, but does not pay the cost of the good

Free Enterprise

You can go into any business whenever and however you want to

5.1 Explain the characteristics of a sole proprietorship.

business owned and managed by a single individual have to have entrepreneurial spirit to want to take such a big risk and set up a company. accounts for a small percent of all sales in America (4%)

How might employers benefit from workplace safety laws? A. Employers can offer lower wages because more employees will want to work in a safer environment. B. Employers can pay for safety improvements in the workplace. C. Employers can hire fewer workers because the workplace is safer. D. Employers can raise wages because the workplace is safer.

A. Employers can offer lower wages because more employees will want to work in a safer environment.

When would two sides in a labor dispute bring in a mediator? A. If a strike continues for a long time and neither side can reach an agreement. B. If the two sides disagree with an arbitrator's ruling. C. If they are close to reaching an agreement. D. If public opinion supports the union's position.

A. If a strike continues for a long time and neither side can reach an agreement.

What does a partner in a limited liability partnership have that a limited partner in a limited partnership does not have? A. business involvement B. investment in the partnership C. limited liability D. share of profits

A. business involvement

Which type of cooperative organization would attract people who wanted to pay a lower price for organic food? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative

A. consumer cooperative

Limited Liability Partnership

All partners are limited partners and are not responsible for the debts and other liabilities of the other partners

Suppose data show an increase in offshoring by U.S. companies. Which of the following describes a possible effect on the unemployment rate? A. The unemployment rate would remain steady, because offshoring has no effect on jobs in the United States. B. The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries. C. The unemployment rate would decrease, because offshoring creates new jobs in other countries. D. The unemployment rate would decrease because U.S. workers can easily find other jobs in other industries.

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

In the 1800s, why was there a greater need for labor unions than there is now? A. Factories were safe. B. Workers worked longer hours. C. Strong child-labor laws had been passed. D. Wages were reasonable.

B. Workers worked longer hours.

What disadvantage do partners and franchisees share? A. domination by national corporation B. limited access to national advertising C. limits on control of the business D. payment of fees and royalties

C. limits on control of the business

Competition

Gives us the best possible product at the best possible price

Public Transfer Payments

Government transfers income from taxpayers to recipients who do not provide anything in return

Regulations

Promote competition and protect consumers Ensure a level playing field Prohibit unfair business practices

Over the past two decades, the U.S. economy has shifted from a manufacturing economy toward a(n) __________ economy. A .industrial-based B .service-producing C .high-tech D .agricultural-based

B .service-producing

Which term describes a perceived barrier that may prevent qualified women from receiving promotions to top-level jobs? A. "women's work" B. "the glass ceiling" C. "human capital" D. "women's career paths"

B. "the glass ceiling"

Which term does the Bureau of Labor Statistics use to describe people who once sought work but have given up looking for a job? A. part-time workers B. discouraged workers C. unemployed workers D. under-employed workers

B. discouraged workers

Why might a limited partnership have a greater ability to raise capital than a general partnership? A. increased access to corporate funds B. increased attractiveness due to limits on liability C. increased probability of corporate acquisition D. increased share of profits with more investors

B. increased attractiveness due to limits on liability

Which type of cooperative organization would attract people who needed help preparing their income tax returns? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative

B. service cooperative

Why has union membership fallen in manufacturing industries? A. Manufacturing jobs pay better wages than they did in the past. B. Workers from manufacturing industries have moved into new fields. C. Manufacturing companies have laid off union workers due to foreign competition. D. More white-collar workers are employed in manufacturing.

C. Manufacturing companies have laid off union workers due to foreign competition.

Which describes a way the government provides an incentive to a non-profit hospital so that it can offer free services to poor patients? A. Having fewer doctors at the hospital B. Not requiring the hospital to maintain health standards C. Not requiring the hospital to pay taxes D. Allowing the hospital to turn away some patients who need services

C. Not requiring the hospital to pay taxes

What happens to the stockholders when a corporation files for bankruptcy? A. The stockholders must also file for bankruptcy. B. The owners can force the board of directors to pay the debt. C. The owners can lose only the money they have invested. D. The owners can avoid paying the debt by forming a limited liability corporation.

C. The owners can lose only the money they have invested

Do multinationals have more or fewer regulations than corporations that are in just one country? A. fewer, because they pay less taxes than regular corporations B. the same, because they only have to obey the laws and pay the taxes of the country they are headquartered in C. more, because they have to obey laws and pay taxes in more than one country D. more, because they are not allowed to have vertical or horizontal mergers

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

Why would someone be willing to share the economic right to business ownership by forming a general partnership? A. to benefit from being connected to a well-known brand name B. to enjoy a greater share of profits C. to limit liability D. to avoid paying additional income tax

C. to limit liability

What role does the Securities and Exchange Commission fulfill with regard to corporations? A. It trades securities on the stock market. B. It issues licenses to business owners. C. It forms limited liability corporations. D. It regulates the stock market.

D. It regulates the stock market.

Why is liability the biggest disadvantage of a sole proprietorship? A. The owner may not be able to complete work on time. B. The owner might be unable to pay his or her employees. C. The owner may have difficulty getting loans from banks. D. The owner could lose personal property if the business fails.

D. The owner could lose personal property if the business fails.

What does the board of directors in a corporation do? A. work in the various departments of the corporation B. run the corporation and oversee its operations C. own the corporation D. make all major decisions for the corporation

D. make all major decisions for the corporation

deregulation

Government no longer decides what role each company can play in a market and how much it can charge its customers. It weakens government control which in turn is meant to promote competition.

Which advantage of a sole proprietorship could also be a disadvantage? A. A sole proprietor has full control. B. A sole proprietor can easily start a business. C. A sole proprietor is the sole receiver of profit. D. A sole proprietor has to follow relatively few regulations.

A. A sole proprietor has full control.

What is the KEY difference between cooperatives and nonprofits? A. Cooperatives benefit their members; nonprofits mainly benefit the public. B. Cooperatives benefit the public; nonprofits mainly benefit their members. C. Nonprofits use profits to expand; cooperatives use profits for maintenance. D. Nonprofits provide mainly goods; cooperatives focus largely on services.

A. Cooperatives benefit their members; nonprofits mainly benefit the public.

Why do you think a business owner would want to move jobs to a country where labor is not unionized and cheap? A. It would increase profits. B. It would diversify the workforce. C. It would lead to a more skilled workforce. D. It would increase wages.

A. It would increase profits.

Which of the following BEST defines the learning effect theory? A. With increased education comes an increased efficiency of production, resulting in higher wages. B. With increased education comes increased intelligence and an increased tendency to be hard-working. C. With increased education comes increased aptitude for memorizing, recalling, and test-taking. D. With increased education comes increased importance in an employee's role in a given company.

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

What risk do limited partners face that general partners do not? A. complete dependence on business abilities of others B. necessity of meeting rigid operational standards C. need to report earnings from business as income D. possibility of having personal assets used to meet business obligations

A. complete dependence on business abilities of others

5.3 Analyze the advantages of incorporation.

Advantages for Stockholders- MAIN REASON: gain benefit of limited liability -dont carry personal responsibility for corporation action -they can only lose what they put in -they can easily sell their stocks Advantages for Corporations- -more potential growth -can make money by selling bonds -can hire the best of the best workers -long life because stock is transferable

5.5 Explain trends in the wages and benefits paid to US workers.

recently wages in america have been decreasing. greater competition from foreign companies has decreased the demand for workers and deregulation of many domestic industries forced firms to cut wages along with increase the use of temporary work. medical care and other benefits are also increasing in price.

cooperative

A business organization owned and operated by a group of individuals for their shared benefit. Members make the decisions and distribute profits.

Corporation

A business with many owners, called shareholders. Advantages include access to resources, professional managers, limited liability, and unlimited life. Disadvantages are the start-up costs and effort, heavy regulation, double taxation, and loss of control.

Subsidy

A government payment that helps cover the cost of an economic activity that is considered to be in public interest

oligopoly

A market dominated by a few, large, profitable firms thus forming significant barriers to entry. They typically present a big challenge to government because they may seem to work together as a monopoly even if they are not.

pure competition

A market in which a large number of firms all produce essentially the same product. The market equilibrium determines the same price for all sellers.

monopolistic competition

A market where companies compete in an open market to sell products that are similar but not identical. The products are similar enough to be substituted for one another but not identical. Typically firms compete based on differentiated products, location, service level, advertising, and other non-price factors.

Circular Flow Model

A model that depicts how goods and services flow in exchange for money

Sole Proprietorship

A small business with one owner. Advantages are that they are easy to open and close, have few regulations, have freedom and control, and the owner keeps the profit. Disadvantages are limited funds, limited life, and unlimited liability.

limited partnership

The form of business where two or more individuals own a business but only one partner has unlimited personal liability and management control. The other partner has limited liability and does not play a role in managing the business.

general partnership

The form of business where two or more individuals share equally in both responsibility and liability.

liability

The legal obligation to pay debts.

limited liability corporation

This type of business has the advantage of limited liability for owners and the advantage of only being taxed once.

nonprofit organization

This type of organization does not have an owner. Rather, it is run by a board of directors in order to offer some type of service or benefit to the public. Their primary purpose is not to make a profit.

Oligopoly

1. Few seller and many buyers (4 of the largest firms control 40% of the market) 2. Standardized or differentiated products 3. More control of prices 4. Little freedom to enter or exit market

Monopolistic Competition

1. Many sellers & many buyers 2. Similar but differentiated products 3. Limited control of price 4. Freedom to enter & exit market

Perfect Competition

1. Numerous buyers and sellers 2. Standardized products 3. Freedom to enter and exit the market 4. Independent buyers and sellers 5. Well-informed buyers and sellers

Monopoly

1. Only 1 seller 2. Restricted, regulated market 3. Control of prices

Federal Trade Commission (FTC)

Enforces anti-trust laws and monitors unfair business practices

5.2 Explain the characteristics of different types of partnerships.

General Partnership- all partners share equally in both responsibility and liability Limited Partnership- only one member is required to be a general partner, the remaining contribute money Limited Liability Partnership- all partners are limited partners meaning they only put in money and can only lose what they put in

sole proprietorship

It is the easiest form of business to start & is owned by one individual.

5.6 Analyze how supply and demand in the labor market affect wage levels.

Labor Demand- what people earn for what they do depends on a matter of how many people are willing and able to do that job and if its in demand or not. the higher the price of labor, the smaller the quantity of labor demanded by employers Labor Supply- comes from people willing to work for wages. the higher the wage for a job, the more people will want to work there. Equilibrium Wage- when the supply of workers meets the demand for workers in the labor market

antitrust laws

Policies that keep firms from controlling the price & supply of important goods.

Externality

Positive- nice looking playgrounds in the area will increase your home value Negative- smog from a factory can lower the home values in the area

Unfair Business Practices

Price fixing Market allocation Predatory pricing

Federal Communications Commission (FCC)

Regulates communication industries (TV, cell phone)

Securities and Exchange Commission (SEC)

Regulates stocks and bonds markets

5.7 Analyze the reasons for the decline of the labor movement.

Reputations of unions suffered because they abused power and were connected to criminal activity. the right-to-work laws were passed which bans mandatory union membership there have been structural changes in the US economy--- decline in blue collar workers and increase in technology and machinery many unions already won what they were fighting for so they don't really have a purpose