Chapter 1 Business

The Scott Company decided to sell stock to raise capital. Under what form of business organization does the company operate?

corporation

Which of the following is a potential problem in market economies

financial loss

If all of the individuals who own a business share unlimited liability for the business's losses, these individuals are part of a(n)

general partnership

In a communist command economy, who decides how the economic questions will be answered?

government

In a socialist economic system, who tends to answer the question of how products will be produced?

government and business

One of the reasons that a country needs an economic system is because it

has a limited supply of resources

Friendship would be considered a(n) __________ want.

noneconomic

Which of the following items is found in all economic systems:

participants

John, Robert, and Charles were college friends who wanted to start a business. John has creative ability, Robert's expertise is selling, and Charles' expertise is management. However, each has limited capital. The ideal business ownership for these young men is a

partnership

Communist command economies are most likely to experience which of the following problems

poor quality products

What type of corporation may be owned by just a few people and does not offer its shares for sale to the general public?

private

In order for consumption to occur, goods and services must be

produced

One reason a physicians' practice might form a partnership as an LLP is to

protect innocent partners from the malpractice of another partner

What type of corporation sells millions of shares and must furnish complete information about its earnings, assets, and debts?

public

Consumers are typically most willing to pay more for goods and services that bring them greater

satisfaction

A gap between unlimited wants and limited resources creates a condition known as

scarcity

Government owns the basic means of production, but there is some private ownership of businesses under

socialism

A major problem for individuals and private businesses in a socialist command economy is

taxes

Which of the following cultures has a traditional economic system

Amazon rainforest communities

Two factors in determining the value of a resource, good, or service, is

Availability and demand

What action do consumers take that determines what will be produced in a market economy?

Cast economic votes

The government controls the economic system and does not allow private ownership of the means of production and distribution in a __________ economy

Communist command

The ultimate goal of all economic activity is

Consumption

If a business was worth $10,000, would an owner of a sole proprietorship, corporation, or a partnership be liabile for the smallest portion of the $10,000?

Corporation

Into what two categories can wants be divided?

Economic and noneconomic

A partnership includes only two people.

False

Wendy's sells the right to operate its restaurants to individuals who meet the company's criteria. The arrangement between Wendy's and these individuals is an example of

Franchising

The way in which an economic system answers the basic economic questions depends upon the country's

Government

People are considered to be __________ resources.

Human

Which of the following statements is true regarding joint ventures:

Joint venture arrangements are usually short-term relationships

ABC Specialty Wear is the only company that has written permission to use a national football team's logo on its sportswear. This is an example of a

Licensing agreement

Lois and Lora plan to open a florist shop. Lois is unable to devote full time to the daily operations of the shop but wishes to provide financial support. Which form of business partnership is most likely to appeal to Lois?

Limited

Individuals and businesses own the means of production and distribution with limited government regulation in a __________ economy.

Market

The most common medium of exchange in modern economic systems is

Money

John only had $40 to spend and couldn't decide whether to buy a new pair of jeans or to go to an amusement park. He finally decided to spend his money on the amusement park. What was the opportunity cost of his decision?

New pair of jeans

A country that currently has a communist command economic system is

North Korea

What do business owners consider when they select a business ownership structure?

Personal circumstances, financial needs, and the type of business

Distribution examines how income is divided between

Producers and resource owners

To form my business, I used all of my savings, borrowed from the bank, and I'm personally liable for all of the debts." This is an example of which of the following forms of business ownership:

Sole proprietorship

An example of a country that has a socialist command economy is

Sweden

Why are resources considered limited?

There are not enough available so that everyone can have as much of them as desired.

A manager is willing to accept the production of fewer quantities of a product as long as her workers produce higher quality products. The manager is making a(n)

Trade-off

Which of the following types of economic systems adopts the fewest new ideas or improvements

Traditional

A corporation is defined by law as a seperate entity and is considered a person with the same rights as a human person

True

A disadvantage of sole proprietorship is that the owner has unlimited liability, which means his/her personal assets could be taken as payment towards debt.

True

A sole proprietorship has one owner only.

True

In a traditional economic system, the question of what to produce is answered by producing

What has always been produced

What are the three basic economic questions?

What will be produced, how will it be produced, how will products be allocated

In economics, the term capital goods includes

buildings and equipment

Jake wanted to run his own business but was unsure that he had adequate business skills to be successful. Which type of business would give Jake the help he needs?

business format franchise

The heart of economics is

decision making

Seeing a movie at a theatre would be considered a(n) __________ want.

economic

What type of economic system is used in the United States?

market

Water and air are examples of __________ resources

natural

One of the characteristics of the form of business ownership known as an LLC is that

the owners' personal property cannot be taken to pay the business's debts.

What do consumers, producers, and the owners of resources do with money payments to create a flow of resources, goods, services, and money payments?

to exchange

Which of the following is the best reason for studying economics

to prepare for effective decision making and responsible citizenship

Lack of economic growth is a major problem for __________ economic systems

traditional

Which one of the following groups of words best describes wants:

unlimited, changing, and competing