Question 1

Which of the following is not an advantage of starting a new business as a proprietorship?

Accepted Answer

A) The owner has complete control over the business. 
B) A proprietorship has few government rules and regulations to comply with. 
C) Business profits are only taxed once,not twice. 
D) A proprietorship can easily attain additional funding. 
A) The owner has complete control over the business. 
B) A proprietorship has few government rules and regulations to comply with. 
C) Business profits are only taxed once,not twice. 
D) A proprietorship can easily attain additional funding.

Question 2

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

Accepted Answer

A) corporate taxation. 
B) structure composition theory. 
C) structural behavior. 
D) corporate governance. 
A) corporate taxation. 
B) structure composition theory. 
C) structural behavior. 
D) corporate governance.

Question 3

Who selects the board of directors of a corporation?

Accepted Answer

A) the state where the corporation is chartered 
B) employees 
C) stockholders 
D) managers 
A) the state where the corporation is chartered 
B) employees 
C) stockholders 
D) managers

Question 4

What was the source of the problems encountered by many financial firms during the late 2000s?

Accepted Answer

The primary source of the problems was t

Question 5

Anything owed by a person or a firm is

Accepted Answer

A) an asset. 
B) a liability. 
C) a bond. 
D) equity. 
A) an asset. 
B) a liability. 
C) a bond. 
D) equity.

Question 6

When a business is set up as a sole proprietorship,the owner of the business faces unlimited liability.

Accepted Answer

A) True 
 B)False

Question 7

Goodwill is listed as an asset on a firm's balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

Owners of a corporation share in the profits of the firm

Accepted Answer

A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds. 
A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds.

Question 9

What is the most common type of business?

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) They are equally represented because of Federal laws. 
A) corporation 
B) partnership 
C) sole proprietorship 
D) They are equally represented because of Federal laws.

Question 10

The existence of ________ increases the risk of buying stock in a corporation.

Accepted Answer

A) the principal-agent problem 
B) corporate governance 
C) unlimited personal liability 
D) employee-owned corporations 
A) the principal-agent problem 
B) corporate governance 
C) unlimited personal liability 
D) employee-owned corporations

Question 11

Raising funds through financial intermediaries is called

Accepted Answer

A) direct finance. 
B) corporate finance. 
C) indirect finance. 
D) dividend reinvestment. 
A) direct finance. 
B) corporate finance. 
C) indirect finance. 
D) dividend reinvestment.

Question 12

Corporate managers and shareholders always have the same goals.

Accepted Answer

A) True 
 B)False

Question 13

Members of management serving on the board of directors of a corporation are referred to as outside directors.

Accepted Answer

A) True 
 B)False

Question 14

What is economic profit?

Accepted Answer

A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as accounting profit 
A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as accounting profit

Question 15

On average,jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts.

Accepted Answer

A) higher; more 
B) lower; more 
C) higher; less 
D) lower; less 
A) higher; more 
B) lower; more 
C) higher; less 
D) lower; less

Question 16

What is a secondary market?

Accepted Answer

A) a market where factory seconds and damaged merchandise are sold 
B) a market where newly issued bonds are sold to initial buyers by the borrowing firm 
C) a market where a newly issued stocks are sold to initial buyers by the borrowing firm 
D) a market where you can sell any stocks you own as a private investor 
A) a market where factory seconds and damaged merchandise are sold 
B) a market where newly issued bonds are sold to initial buyers by the borrowing firm 
C) a market where a newly issued stocks are sold to initial buyers by the borrowing firm 
D) a market where you can sell any stocks you own as a private investor

Question 17

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

Accepted Answer

Ease of fo

Question 18

What can be done to deal with the principal-agent problem?

Accepted Answer

A) threaten to liquidate the firm 
B) link top manager salaries to the profits of the firm or the price of the firm's stock 
C) have the CEO be a rotating position 
D) forbid managers from owning any company stock 
A) threaten to liquidate the firm 
B) link top manager salaries to the profits of the firm or the price of the firm's stock 
C) have the CEO be a rotating position 
D) forbid managers from owning any company stock

Question 19

Why is a dollar today more valuable than a dollar a year from now?

Accepted Answer

A) The dollar today can be immediately used to buy something. 
B) A dollar a year from now will likely have less purchasing power because of inflation. 
C) The unknown future is riskier than the known present. 
D) all of these 
A) The dollar today can be immediately used to buy something. 
B) A dollar a year from now will likely have less purchasing power because of inflation. 
C) The unknown future is riskier than the known present. 
D) all of these

Question 20

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What is his economic profit?

Accepted Answer

A) $14,000 
B) $24,000 
C) $32,000 
D) $34,000 
A) $14,000 
B) $24,000 
C) $32,000 
D) $34,000

Which of the following is not an advantage of starting a new business as a proprietorship?

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

Who selects the board of directors of a corporation?

What was the source of the problems encountered by many financial firms during the late 2000s?

Anything owed by a person or a firm is

When a business is set up as a sole proprietorship,the owner of the business faces unlimited liability.

Goodwill is listed as an asset on a firm's balance sheet.

Owners of a corporation share in the profits of the firm

What is the most common type of business?

The existence of ________ increases the risk of buying stock in a corporation.

Raising funds through financial intermediaries is called

Corporate managers and shareholders always have the same goals.

Members of management serving on the board of directors of a corporation are referred to as outside directors.

What is economic profit?

On average,jobs at small firms pay wages than jobs at large firms and are likely to offer fringe benefits such as health insurance and retirement accounts.

What is a secondary market?

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

What can be done to deal with the principal-agent problem?

Why is a dollar today more valuable than a dollar a year from now?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What is his economic profit?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 8: Firms, the Stock Market, and Corporate Governance

Which of the following is not an advantage of starting a new business as a proprietorship?

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

Who selects the board of directors of a corporation?

What was the source of the problems encountered by many financial firms during the late 2000s?

Anything owed by a person or a firm is

When a business is set up as a sole proprietorship,the owner of the business faces unlimited liability.

Goodwill is listed as an asset on a firm's balance sheet.

Owners of a corporation share in the profits of the firm

What is the most common type of business?

The existence of ________ increases the risk of buying stock in a corporation.

Raising funds through financial intermediaries is called

Corporate managers and shareholders always have the same goals.

Members of management serving on the board of directors of a corporation are referred to as outside directors.

What is economic profit?

On average,jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts.

What is a secondary market?

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

What can be done to deal with the principal-agent problem?

Why is a dollar today more valuable than a dollar a year from now?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What is his economic profit?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

On average,jobs at small firms pay wages than jobs at large firms and are likely to offer fringe benefits such as health insurance and retirement accounts.