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Economics Ch. 8
Prentis Hall Economics New Ulm
| Question | Answer |
|---|---|
| Payment other than wages or salaries is a(n) | fringe benefit. Examples of fringe benefits include paid vacations and health insurance. |
| An establishment formed to carry on commercial enterprise is called a | business organization. Business organizations can be any type of business; sole proprietorships are the most common type of business organization. |
| The legally bound obligation to pay debts is known as a | liability. A sole proprietor is at risk of losing all his or her personal property if the business fails since owners of proprietorships are personally liable. |
| What is a disadvantage of owning a sole proprietorship? | You can lose all your personal property if your business fails. A sole proprietor is personally responsible for all the debt his or her business incurs. |
| What is an advantage to owning your own business? | You can respond quickly to changes in the marketplace. For example, if a product is not selling well, you don't need permission from anyone to put it on sale to get rid of it, nor are you required to buy any more of that product. |
| What is one of the first decisions an entrepreneur must make? | what kind of business organization will best serve his or her interests |
| A zoning law is a(n) | law in a city or town that designates separate areas for residency and for business. Zoning laws help keep residential neighborhoods quiet and safe by separating them from the traffic caused by customers. |
| An authorization to start a business issued by the local government is a | business license. |
| If business partners fail to establish articles of partnership, | they will fall under the Uniform Partnership Act. |
| A partnership in which only one partner is required to be a general partner is a | limited partnership. In a limited partnership, the limited partners have limited control and limited liability. |
| A partnership in which ALL partners are limited partners is a | limited liability partnership (LLP). |
| What is a partnership in which partners share equally in both responsibility and liability? | a general partnership. Partners in general partnerships usually divide the management, labor, and profits equally. |
| Assets are | money and other valuables belonging to an individual or business |
| What percentage of businesses in the United States are partnerships? | 7 percent |
| A conglomerate is | a business combination merging more than three businesses that make unrelated products. |
| The license to form a corporation issued by state government is a | certificate of incorporation. |
| The portion of corporate profits paid out to stockholders is | a dividend. |
| What is the Securities and Exchange Commission (SEC)? | a federal agency that regulates the stock market |
| Why does the government carefully monitor horizontal mergers? | The resulting single firm might gain monopoly power in its market. A monopoly is cause for governmental concern because competition could be severely hindered, which could adversely affect the economy. |
| A formal contract to repay borrowed money with interest at fixed intervals is a | bond. One way corporations raise money is by selling bonds. |
| A vertical merger is | the combination of two or more firms involved in different stages of producing the same good or service. |
| Who manages a corporation? | board of directors and managers |
| A nonprofit organization that promotes the interests of a particular industry is a | trade association. |
| An agricultural marketing cooperative that helps members sell their products is a | producer cooperative. Banding together in a cooperative allows farmers to concentrate on raising crops and livestock while getting the highest prices on their products. |
| A franchise owner's share of earnings given as a payment to a parent company is called | a royalty. Royalties differ from dividends in that they are payments made by franchise owners to the parent company; dividends are payments made by corporations to their stockholders. |
| What is a disadvantage faced by a franchise business owner that would not be encountered by an independent business owner? | is a disadvantage faced by a franchise business owner that would not be encountered by an independent business owner? |
| An institution that functions much like a business, but does not operate for the purpose of generating profits is a | nonprofit organization. Nonprofit organizations are usually organized for the benefit of society such as the American Red Cross, museums, and religious organizations. |
| What kind of organization is the Better Business Bureau? | business association. The Better Business Bureau promote the collective business interests for a city, state, or other geographical area, or for a group of similar businesses. |
| A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area is called a | business franchise. Business franchise owners are semi-independent because they rely on a parent company for support in areas such as advertising and management training. |
| In a limited partnership, | only one partner is required to be general partner. |
| Museums, public schools, and YMCAs are all | exempt from paying income taxes. |
| Almost all non-profit organizations | provide services rather than goods. |
| A disadvantage of a franchise is that the franchise owner must | sacrifice some freedom in return for the parent company's guidance. |
| Liability is the | legal obligation to pay debts. |
| In return for a fee to a franchiser, a business owner receives the right to | sell the franchiser's goods and services. |
| In a limited liability partnership, all partners | are limited from personal liability in certain situations. |
| The most important decisions in a corporation are made by the | board of directors. |
| One of the ways a corporation can raise money is by | selling stock on the stock market. |
| A partnership is a business organization owned by | two or more individuals. |
| Which type of business organization has shareholders? | corporation |
| The most common form of business organization is the | sole proprietorship. |
| Which of the following is an advantage of a sole proprietorship? | not highly regulated by the government |
| A merger that combines more than three businesses that make unrelated products is called a | conglomerate. |
| Most large businesses are | corporations. |
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gcowing
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