BUS X100 Ch. 1-4 Practice Questions

If the value of the Canadian dollar increases substantially relative to other currencies, what is the likely result? -Canadian exports and imports will increase -Canadian exports and imports will decrease -Canadian exports will increase and imports will decrease -Canadian exports will decrease and imports will increase -No change in exports or imports

Canadian exports will decrease and imports will increase

Which of the following business forms does NOT require you to register the business with the Indiana Secretary of State: -LLC (Limited Liability Company) -General Partnership -Limited Partnership -S-Corporation -C-Corporation

General Partnership

Suppose Brazil, Argentina, Columbia, Peru, and Chile decide to form the South American Union to increase trade among each other. This would be an example of a(n): -world trade organization. -peace agreement. -economic community. -regional conflict. -global marketplace.

economic community

In all states except the one in which it is incorporated, a business is known as a(n)______________ corporation. -domestic -S- -resident -foreign -public

foreign

American automakers are concerned about the availability of so many foreign cars to U.S. consumers, which they fear could cause loss of jobs in the American auto industry. To address the situation, they encourage Congress to: -increase export quota. -enact export embargo. -decrease import tariffs. -increase import tariffs. -increase import quota.

increase import tariffs.

The partner who can lose only what he or she has invested in a business is the -employee. -manager. -sole proprietor. -limited partner. -general partner.

limited partner

You run a fitness studio that trains individual clients and small groups. Since you are the only trainer, you run the business as a sole proprietorship. A client was injured and sues you for $1,000,000. You have no liability insurance on the business. What is your personal liability if you lose the lawsuit? -$0 -$50,000, because that is how much money you have in the business account -$500,000, because that is how much your landlord paid for the building you are in -$1,000,000 -None of the choices are correct

$1,000,000

Which of the following statements about corporations is true? -Corporations must distribute profits at the end of each year. -Corporate tax rates are always higher than individual tax rates. -Corporations utilize pass-through taxation. -Corporations can deduct certain business expenses that other forms of business can't, which could lower the amount of money subject to taxes. -None of the choices are correct.

Corporations can deduct certain business expenses that other forms of business can't, which could lower the amount of money subject to taxes

A publicly traded 'open' corporation -must be chartered in its state of incorporation. -pays its own income taxes on profits. -files annual and quarterly reports as required by the SEC. -may pay dividends to shareholders. -All of the above.

All of the above

Which of the following business forms are created under state law and require registration with the Secretary of State? -Corporations -Limited Liability Companies -Limited Partnerships -Limited Liability Partnerships -All of the above

All of the above

You and four friends are opening a studio to create new Xbox games. You hope to raise $500,000 early on by selling equity in the business. You'll then reinvest profits back into the business to drive growth and minimize taxes. Within 5 years, you hope to sell the majority of the business to an angel investor or venture capital firm. Which form of business best fits your needs? -Sole proprietorship -Partnership -Corporation -LLC -Pass-through proprietorship

Corporation

With regard to taxation of partnerships, which of the following statements is true? -Profits are taxed twice. -Each partner is taxed in the same way as a sole proprietor. -Taxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of profits. - A partnership is exempt from taxes. -The partnership is taxed as a separate entity.

Each partner is taxed in the same way as a sole proprietor.

As Rachel Smith and her friends prepare to graduate from college, they are faced with numerous job offers that include starting salaries better than they could have imagined. Based on this information, what is the economy's most likely stage in the business cycle? -Depression -Expansion -Recession -Trough -Contraction

Expansion

You manufacture construction equipment. The price of steel has increased by 30%, forcing you to increase the price of your equipment by the same amount. What is the likely effect? -Demand will increase -Demand will decrease -Demand will remain unchanged -Profits will increase -Profits will decrease

demand will decrease

When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc., of the United States, Sony made a(n): -countertrade with Columbia Pictures. -licensing agreement in the United States. -direct investment in the United States. -joint venture with Columbia Pictures. -exporting agreement with the United States.

direct investment in the United States

All business forms require -a formal, written agreement. -a charter and registartion with the secretary of state. -filing tax returns with the IRS. -filing with the SEC. -all of the above.

filing tax returns with the IRS

Perfect competition is characterized by: -many buyers and many sellers. -few buyers and few sellers. -few buyers and many sellers. -many buyers and few sellers. -a few companies that control the market.

many buyers and many sellers

By law, the minimum capital requirements for beginning a sole proprietorship are -established by the laws of each state. -nonexistant generally. -at least $1,000. -at least $5,000. -at least $10,000.

nonexistant generally

Exxon Mobil and Shell are two of the relatively few sellers in the oil-refining industry. Due to the tremendous capital investment required to enter this industry, these companies are insulated significantly from the threat of new competitive entrants and thus have considerable control over price. This market situation is referred to as a(n): -cartel -pure market -natural monopoly -oligopoly -trusts

oligopoly

Someone in support of trade restrictions would argue that: -trade restrictions can protect new or weak industries. -trade restrictions reduce the number of domestic jobs. -trade restrictions damage the health of citizens in your country. -trade restrictions can damage national security. -trade restrictions restrict consumer choices.

trade restrictions can protect new or weak industries

Which of the following scenarios most accurately describes Adam Smith's view of an economic system that best serves the interests of society? -Individuals are selected to fill certain positions within the economy of their nation according to the needs of the nation as a whole. -Markets are carefully regulated to ensure that all individuals within a nation are treated fairly and charged standardized prices. - A country only has a limited amount of space for college students and uses a type of lottery system to determine who gets these spaces. - Government scarcely exists in this country, and transactions are based on a system of barter, or trading goods, for other goods. -Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for them.

Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for them.

Three college graduates want to start an auto shop. Two of the partners will do most of the work, so they plan to share 40% of the profits each. The remaining partner will get 20% of the profits. Because working with other people's cars can create liabilities, they want a form of business that provides liability protection. Which form of business best fits their needs? -Sole proprietorship -Partnership -S-Corporation -LLC -Pass-through corporation

LLC

You and four friends are investing $10,000 each to start a business. To keep things even, you will all own 20% of the business and will contribute 20% of the work required to make the business successful. If the business makes a profit, you'll each get 20%. However, you all agree that the business must provide liability protection and feature pass-through taxation. Which form of business best meets your needs? -Joint venture -LLC -Sole proprietorship -Partnership -Corporation

LLC

If Indonesia enacts an embargo on all goods from the U.S. and changes average import tariffs from 10% to 30%, what is the expected impact in Indonesia? -Increased imports from the U.S. -Increased exports to the U.S. -More consumer choice -Less consumer choice -Lower prices for Indonesian consumers

Less consumer choice

Suppose Gillette is seeking a manufacturer in Bangladesh who will produce and market Gillette razors in that country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for Gillette? -Export/import merchant agreement -Export/import agent agreement -Joint venture -Licensing -Multinational agreement

Licensing

What are the two benefits of importing? Less access to resources, higher consumer prices -Less access to resources, lower consumer prices -Lower consumer prices, less consumer choice -Higher consumer prices, increased access to resources -More consumer choice, lower consumer prices

More consumer choice, lower consumer prices

As a farmer, Gary Forsythe is familiar with the economics of perfect competition. How is the price at which he sells his corn determined? -It is determined by Gary because he has a product that many people want. -The price is determined by combining the actions of all buyers and all sellers together. -The price he will receive is primarily determined by a few buyers at the local grain bin. -The government sets the price of the corn to level the playing field for everyone. -The price will be approximately 25 percent higher than what other farmers are selling the same corn for because Gary is an astute businessperson.

The price is determined by combining the actions of all buyers and all sellers together.

Exchange rates between countries are usually determined by: -a number of factors including interest rates, inflation, and imports/exports for the countries. -the average interest rates for the two countries plus GDP. -inflation in the first country, divided by interest rate in the second country. -an agreement between the two countries plus an interest rate exchange. -the International Monetary Fund.

a number of factors including interest rates, inflation, and imports/exports for the countries

The price of computers drops by 20%. What is the most likely impact on supply and demand? -demand down, supply down -demand up, supply up -demand down, supply up -demand up, supply down

demand up, supply down

When Toyota experienced declining sales, it began offering price incentives to new car buyers. Nearly immediately, Ford and General Motors began similar promotions. These businesses: -represent an oligopoly in which there are few sellers, and sellers often match the prices of competitors. - represent a monopoly in which only one firm supplies a product or products. - are engaging in monopolistic competition in which there are many buyers as well as a relatively large number of sellers that differentiate their products from those of competitors. -are engaging in pure competition, in which no single seller is powerful enough to affect prices. -are engaging in monopolistic competition, in which the products are very similar.

represent an oligopoly in which there are few sellers, and sellers often match the prices of competitors.

Which of the following is a feature of laissez-faire capitalism? -Right to extensive government intervention -Right to own private property and resources -Right to government wealth creation -Right to own another person's property -Right to economic dominance

right to own private property and resources

The relationship between sales and profits can be written as: -sales revenues + expenses = profit. -loss + profit = sales revenue. -profit - expenses = sales revenue. -expenses + loss = sales revenue + profit. -sales revenue - expenses = profit.

sales revenue - expenses = profit

If a corporation makes $100,000 in profit, how will that profit be taxed if the money is all distributed to the owners? -$100,000 will be taxed at the individual tax rate of each owner. -Corporations don't pay taxes as a company, but "pass through" the profits to owners. -$100,000 will be taxed at the corporate rate only. -$100,000 will be taxed at the corporate rate, then those after-tax profits will be taxed again as dividends when distributed to each owner. -$100,000 will be taxed at the corporate rate, then those after-tax profits will be taxed again at the corporate rate when distributed to each owner.

$100,000 will be taxed at the corporate rate, then those after-tax profits will be taxed again as dividends when distributed to each owner.

You invested $80,000 into a consulting partnership and have a 50% stake in the business. Your partner didn't invest anything, but brings management expertise to the business. After a year, the business racks up $100,000 in debts and must close down. Based on this information, what is the total personal loss for you and your partner in the business? -$0 -$40,000 -$80,000 -$100,000 -$180,000

$180,000

Nicole is 50% owner in a manufacturing company that runs as an LLC. She invested $25,000 when the business started and has received no money from the business since then. The company just lost a $1,000,000 patent infringement lawsuit and will have to shut down. What is Nicole's personal loss on this business? -$0 -$25,000 -$500,000 -$1,000,000 -$1,025,000

$25,000

You are 50% partner in a general partnership. The business has outstanding debts of $250,000 and is closing due to the death of your only partner. What is your personal liability? -$0 -$125,000 -$250,000 -$325,000 -$500,00

$250,000

Big Box Corporation has two owners who share the work equally. Susie owns 80% of the company stock and Sheryl owns 20% of the company stock. Susie invested 60% of the money required to start the business. If the company makes $100,000 profit this year and decides to distribute it all to the owners, how much will Susie get? -$0 -$20,000 -$60,000 -$80,000 -$100,000

$80,000

Which form of business is the easiest to start? -Corporation -Partnership -Entrepreneurship -Sole proprietorship -S-corporation

Sole proprietorship

Juan and Carl have a small medical practice that operates as a partnership. Juan does 70% of the work and Carl does 30%. However, Carl invested 60% of the money required to start the business. If the company makes $100,000 in profit this year, how much will each partner receive? -Juan will receive $70,000; Carl will receive $30,000 -Juan will receive $40,000; Carl will receive $60,000 -Juan will receive $50,000; Carl will receive $50,000 -Juan will receive $60,000; Carl will receive $40,000 -Profits will be shared in the proportion specified in the partnership agreement

Profits will be shared in the proportion specified in the partnership agreement

Suppose that last year it cost 1,000 British pounds to buy an American-made bicycle from the U.S. Due to changes in the currency exchange rate, a few months later the same bicycle only cost 800 British pounds to purchase. This change: -will likely have no effect on the number of these bicycles imported from the U.S. into Great Britain. -will likely increase the number of exports of these bicycles to the U.S. -will likely increase the number of imports of these bicycles to Great Britain. -will likely decrease the number of imports of these bicycles to Great Britain. -will likely decrease the number of exports of these bicycles to the U.S.

will likely increase the number of imports of these bicycles to Great Britain.