MicroEcon Ch. 8

What does limited liability mean?

The personal assets of the owners cannot be claimed if the business is bankrupt.

Which of the following must a firm in a market economy do today to succeed?

Market firms must do all of these things

Which type of business is the most difficult to start up?

corporation

Organizing a successful firm in a market economy has become _____ over the last century.

more difficult

In a typical year, _____ new firms open in the United States.

more than 400,000

Sole proprietorship are _____ type of business.

the most common

Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is considering setting up a business as a sole proprietorship. What is one advantage to Jeremy of setting up his business as a proprietorship?

As a sole proprietorship, Jeremy would have both ownership and control over the business.

How are corporate profits taxed in the United States?

Earnings are taxed first as corporate profits then as personal income after dividends are paid.

Unlike firms that sell stock in financial markets, which are known as _____ firms, companies which do not sell stock in financial markets are known as _____ firms.

Public; private

As a form of business, a partnership

cannot issue stock.

Stockholders are the owners of which type of business?

corporations

Which type of businesses earns the majority of profits in the United States?

corporations

Over ninety-five percent of all new businesses that open each year in the United States employ _____

fewer than 20.

Which of the following is an advantage of starting a new business as a corporation?

greater ability to raise funds

Which is the least common type of business?

partnerships

Stockholders

select the board of directors of a corporation

What type of business is the easiest to set up?

sole proprietorship

Which type of business has the least government rules and regulations affecting it?

sole proprietorship

A corporation is owned by its

stockholders.

Who hires the managers of a corporation?

the board of directors

A corporation is

the most difficult type of business to set up.