ECON CHAPTER 6

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

As a sole proprietor, 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

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

Market firms today must do all of these things

What type of business is the easiest to set up?

Sole proprietorship

What does limited liability mean?

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

As a form of business, a partnership

cannot issue stock

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

corporation

Oranizing 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

Which is the least common type of business?

partnership

Who hires the managers of a corporation?

the board of directors

Sole proprietorships are _________ type of business

the most common

A corporation is

the most difficult type of business to set up

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

Corporations

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

Sole proprietorship

Stockholders are the owners of which type of business

corporations

Over ninety-five percent of all new business that open each year in the United States employ ___________ workers

fewer than 20

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

greater ability to raise funds

Unlike firms that sell stock in financial markets, which are known as ________ firms, companies which do no sell stock in financial markets are known as ________ firms.

public; private

Stockholders

select the board of directors of a coporation

A corporation is owned by its

stockholders