Chapter 7 test

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Total cost divided by quantity produced equals the

Average total cost

A business organization that can conduct business in its own name and can own property as if it were an individual is a

Corporation

At a fast food restaurant we might observe the law of diminishing marginal returns because

Crowded kitchen space reduces the productivity of new employees

Shirking could be described as

Doing less than equal share of tasks

The advantages of a sole proprietorship include

Ease of freedom, total control of decisions

Which of the business organizations combines two or more peoples specialization with equal decision making authority

Partnership

Which of the following business organizations combines two or more peoples specializations with equal decision making authority

Partnership

To purchase a franchise, the person or group buying it must

Pay an initial fee Pay a royalty or percentage of he profits for a number of years Agree to meet certainly

Shirking occurs because

People value leisure

Bond holders are different from stock holders because they

Receive predetermined interest

Which of the following is a variable cost Cost Raw materials Business tax Property tax Rent

Rent

The disadvantages of partnerships include

Shared decisions making, limited life, unlimited liability

A person or group that buys a franchise is called a

Franchisee

Corporations are able to borrow large sums of money by

Issuing bonds

The owners of a corporation are

It's stockholders

A firm will increase production when

Marginal cost is less than marginal revenue

Economists believe that the major goal of each form is to

Maximize profit

Profit or loss is computed by

Subtracting total cost from total revenue

Marginal revenue equals

The change in total revenue divided by the change in the quantity of output sold

When deciding whether or not to increase production a business owner should carefully consider

The marginal cost of additional units

The cost to a firm that changes according to the number of units produced is the

Variable cost


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