Economics- Chapter 3

Which of the following is an example of a service cooperative? a. Greenville Teachers' Credit Union b. Association of Manufacturing Workers c. Better Business Bureau d. Mason Chamber of Commerce

a. Greenville Teachers' Credit Union

Who manages a corporation? a. board of directors and managers b. shareholders and banks c. original owners and shareholders d. the Securities and Exchange Commission

a. board of directors and managers

What is a major reason for conglomerate mergers? a. diversification b. unlimited life c. multinationals d. conglomeration

a. diversification

What is the term that refers to the payment made to a stockholder representing a portion of the corporate earnings? a. dividend b. cash flow c. net income d. stock

a. dividend

What is the main strength of the corporate form of business organization? a. ease of raising financial capital b. ease of management c. ease of establishment d. freedom from business income taxes

a. ease of raising financial capital

Which of the following is NOT a nonprofit organization? a. multinational b. chamber of commerce c. producer cooperative d. labor union

a. multinational

Host countries welcome multinationals because they _____. a. produce tax revenues b. export scarce resources c. pay low wages d. interfere with local businesses

a. produce tax revenues

The local chamber of commerce works to a. promote the welfare of its members and the community. b. earn dividends for members. c. protect its members from consumer complaints. d. aid member companies in negotiating with labor unions.

a. promote the welfare of its members and the community.

All of the following are examples of the government playing a direct role in the economy EXCEPT a. public utility regulation. b. court systems. c. police and fire protection. d. libraries.

a. public utility regulation.

What is the most common form of business organization in the United States? a. sole proprietorship b. corporation c. partnership d. limited partnership

a. sole proprietorship

Which of the following is NOT an example of a professional organization? a. the American Red Cross b. the American Medical Association c. the National Education Association d. the American Management Association

a. the American Red Cross

Why are government controls needed on public utilities? a. Public utilities are investor- or municipal-owned. b. Public utilities usually have no competition. c. Public utilities provide important public services. d. Public utilities are responsible for water and electric services.

b. Public utilities usually have no competition.

Why does the government carefully monitor horizontal mergers? a. It's possible for control to shift to a foreign-owned corporation. b. The resulting single firm might gain monopoly power in its market. c. Employee layoffs usually result. d. The new firm may discontinue some of the original firms' products.

b. The resulting single firm might gain monopoly power in its market.

A conglomerate is a. a large corporation that produces and sells its goods and services throughout the world. b. a business combination merging more than three businesses that make unrelated products. c. a corporation that sells stock on the open market. d. the combination of two or more firms involved in different stages of producing the same good or service.

b. a business combination merging more than three businesses that make unrelated products.

What term refers to the negotiation by a labor union with management over issues such as pay, working hours, and vacation? a. labor management b. collective bargaining c. arbitration d. round table negotiations

b. collective bargaining

A corporation that has at least four businesses, each making unrelated products, none of which is responsible for a majority of its sales, is called a a. multinational. b. conglomerate. c. horizontal corporation. d. vertical merger.

b. conglomerate.

All of the following are typical Chamber of Commerce activities EXCEPT a. educational programs. b. demonstrating against new housing developments. c. neighborhood clean-up campaigns. d. lobbying for favorable business legislation.

b. demonstrating against new housing developments.

What is the term that refers to the stock of finished goods and parts in reserve? a. leftovers b. inventory c. stockpile d. disposable goods

b. inventory

Unlike a general partnership, in a limited partnership a. all partners share equal financial responsibility for the firm's decisions. b. the inactive partner has limited liability for the business's debts. c. the partners must pay special business taxes. d. the business does not end with the death of a partner.

b. the inactive partner has limited liability for the business's debts.

Horizontal mergers involve a. two or more firms in different countries. b. two or more firms that produce the same kind of product. c. two or more firms involved in different steps of manufacturing or marketing. d. two or more firms that produce different products.

b. two or more firms that produce the same kind of product.

When the owner of a business is personally and fully responsible for all losses and debts of the business, it is known as _____________. a. bankruptcy b. unlimited liability c. limited life d. unlimited partnership

b. unlimited liability

A merger of corporations involved in different steps of manufacturing or marketing is known as a a. multinational merger. b. vertical merger. c. horizontal merger. d. conglomerate.

b. vertical merger.

What is one of the first decisions an entrepreneur must make? a. how to form a sole proprietorship b. what kind of business organization will best serve his or her interests c. what kind of benefits to offer to employees d. to apply for liability insurance

b. what kind of business organization will best serve his or her interests

A non-profit organization sponsored by local businesses to provide general information on companies, maintaining records on consumer inquiries and complaints and sometimes offers various consumer education programs. a. American Business Association b. Chamber of Commerce c. Better Business Bureau d. Google Business

c. Better Business Bureau

This regulates the sale of stock in a corporation. a. labor unions b. stockbrokers c. Securities and Exchange Commission d. chamber of commerce

c. Securities and Exchange Commission

What term refers to the court-granted permission given to an individual or business to cease or delay paying debts? a. roll-over payment b. capital gain c. bankruptcy d. interest

c. bankruptcy

A government document granting permission to create a corporation is called a a. dividend. b. bond. c. charter. d. proxy.

c. charter.

What is the term that refers to the non-cash charge a firm takes for the general wear and tear on its capital goods? a. roll-over payment b. capital gain c. depreciation d. interest

c. depreciation

What term refers to an organization of workers formed to represent its members' interests in various employment matters? a. lobbyist b. board of directors c. labor union d. public service union

c. labor union

All of the following are strengths of the partnership form of business organization EXCEPT a. ease of management. b. ease of establishment. c. limited life. d. lack of special taxes.

c. limited life.

What is the term that refers to revenues minus expenses, including taxes? a. dividend b. cash flow c. net income d. stock

c. net income

An advantage of a corporation is that a. owners pay fewer taxes than owners of other forms of business. b. the business is subject to little government regulation. c. owners have limited liability for debt. d. owners have direct and immediate control over daily management of the business.

c. owners have limited liability for debt.

In its direct role as an economic organization, American government a. regulates public utilities. b. acts as an umpire to make sure the market operates smoothly. c. owns and manages public utilities. d. makes grants to people in the form of Social Security.

c. owns and manages public utilities.

In a general partnership, a. the business continues even if one partner dies. b. partners must pay specific business taxes. c. partners usually draw up legal papers called articles of partnership. d. partners are only liable for the business's debt up to the amount of their investment.

c. partners usually draw up legal papers called articles of partnership.

Non-profit organizations may a. issue stock. b. pay dividends. c. provide goods and services to members. d. pay income taxes

c. provide goods and services to members.

Which of the following statements is true? a. All conglomerates are multinationals. b. All multinationals are conglomerates. c. A conglomerate is another term for a multinational. d. A multinational is often a conglomerate.

d. A multinational is often a conglomerate.

Basic ownership of a corporation, including voting rights, takes the form of a. bonds. b. partnerships. c. preferred stock. d. common stock.

d. common stock.

Which of the following is most likely NOT a nonprofit organization? a. church b. public school c. neighborhood association d. corner grocery store

d. corner grocery store

What term refers to the price paid for the use of another's money? a. roll-over payment b. capital gain c. depreciation d. interest

d. interest

What term refers to an investor's responsibility for the debts of a business which is limited by the size of his or her investment in the business? a. sole proprietorship b. unlimited liability c. depreciation d. limited liability

d. limited liability

Which are important for their ability to move resources, products, and financial capital across national boundaries with relative ease? a. corporations b. mergers c. conglomerates d. multinationals

d. multinationals

Which of the following best illustrates the indirect role of government? a. a state park b. the Tennessee Valley Authority c. a city's fire department d. regulation of public utilities

d. regulation of public utilities

What term refers to the ownership certificates in a firm? a. dividend b. cash flow c. net income d. stock

d. stock