Question 1

Accounting profit is the sum of a firm's revenue and its opportunity costs.

Accepted Answer

A) True 
 B)False

Question 2

The decline in starting new businesses

Accepted Answer

A) is not concentrated in one geographic area. 
B) is concentrated in the Northeast states. 
C) is concentrated in the Gulf Coast states. 
D) is concentrated in the Rust Belt. 
A) is not concentrated in one geographic area. 
B) is concentrated in the Northeast states. 
C) is concentrated in the Gulf Coast states. 
D) is concentrated in the Rust Belt.

Question 3

In the United States,sole proprietorship profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Accepted Answer

A) True 
 B)False

Question 4

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

Accepted Answer

A) faces limited liability. 
B) faces unlimited liability. 
C) has little chance of succeeding. 
D) is not a good type of business to set up. 
A) faces limited liability. 
B) faces unlimited liability. 
C) has little chance of succeeding. 
D) is not a good type of business to set up.

Question 5

Dividends are

Accepted Answer

A) the interest payments on bonds. 
B) the principal payments on bonds. 
C) fixed payments to bondholders. 
D) payments by a corporation to its shareholders. 
A) the interest payments on bonds. 
B) the principal payments on bonds. 
C) fixed payments to bondholders. 
D) payments by a corporation to its shareholders.

Question 6

Explain if a business would be expected to survive in the long run if it earned a positive accounting profit but a negative economic profit.

Accepted Answer

Regardless of its accounting profit,a fi

Question 7

What is the primary difference between a sole proprietorship and a partnership?

Accepted Answer

A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms. 
A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms.

Question 8

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so.This is an example of using ________ for her expansion plans.

Accepted Answer

A) direct finance 
B) indirect finance 
C) coupon payments 
D) retained earnings 
A) direct finance 
B) indirect finance 
C) coupon payments 
D) retained earnings

Question 9

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

Accepted Answer

A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million 
A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million

Question 10

Because a firm has implicit costs as well as explicit costs

Accepted Answer

A) its economic profit is usually the same as its accounting profit. 
B) its accounting profit is always less than its economic profit. 
C) its economic profit is usually more than its accounting profit. 
D) its economic profit is usually less than its accounting profit. 
A) its economic profit is usually the same as its accounting profit. 
B) its accounting profit is always less than its economic profit. 
C) its economic profit is usually more than its accounting profit. 
D) its economic profit is usually less than its accounting profit.

Question 11

Georgia's great uncle gave her a $5,000 savings bond as a wedding gift.The bond pays $5,000 at maturity,which is in 10 years.If the interest rate is 4%,the bond has a present value of $ 3,377.82

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is one of the most widely followed stock indexes in the United States?

Accepted Answer

A) the Dow Jones Industrial Average 
B) the Chicago Mercantile Exchange 
C) the Fortune 500 
D) the Securities and Exchange Commission 
A) the Dow Jones Industrial Average 
B) the Chicago Mercantile Exchange 
C) the Fortune 500 
D) the Securities and Exchange Commission

Question 13

Of the types of business organizations in the United States,partnerships account for the ________ percentage of firms and ________ percentage of profits.

Accepted Answer

A) smallest;the smallest 
B) smallest;neither the largest nor smallest 
C) largest;the smallest 
D) largest;neither the largest nor smallest 
A) smallest;the smallest 
B) smallest;neither the largest nor smallest 
C) largest;the smallest 
D) largest;neither the largest nor smallest

Question 14

Why do financial markets depend on accurate accounting and disclosure practices?

Accepted Answer

Investors in primary and secondary marke

Question 15

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She asks her sister,Lisette,if she'd like to join her in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Lisette should consider?

Accepted Answer

A) Lisette should realize that her profits in the partnership will always be less than Torrie's profits,since Torrie had the idea to start the business. 
B) Lisette should realize that,as an owner of the business,she will be personally responsible for the debts of the business. 
C) Lisette should realize that only Torrie will be allowed to own stock in the business as the founding partner. 
D) Lisette should realize that Torrie will have complete control over the business because it was her idea. 
A) Lisette should realize that her profits in the partnership will always be less than Torrie's profits,since Torrie had the idea to start the business. 
B) Lisette should realize that,as an owner of the business,she will be personally responsible for the debts of the business. 
C) Lisette should realize that only Torrie will be allowed to own stock in the business as the founding partner. 
D) Lisette should realize that Torrie will have complete control over the business because it was her idea.

Question 16

As a result of the 2007-2009 financial crisis,which two firms became bank holding companies,allowing them to engage in commercial banking activities?

Accepted Answer

A) Enron and WorldCom 
B) Freddie Mac and Fannie Mae 
C) Morgan Stanley and Goldman Sachs 
D) Lehman Brothers and Merrill Lynch 
A) Enron and WorldCom 
B) Freddie Mac and Fannie Mae 
C) Morgan Stanley and Goldman Sachs 
D) Lehman Brothers and Merrill Lynch

Question 17

In the late 1970s,________ of all firms were less than a year old.In recent years,________ were.

Accepted Answer

A) almost half;less than one-quarter 
B) less than 5 percent;more than 40 percent 
C) more than 15 percent;only about 8 percent 
D) about 40 percent;about 20 percent 
A) almost half;less than one-quarter 
B) less than 5 percent;more than 40 percent 
C) more than 15 percent;only about 8 percent 
D) about 40 percent;about 20 percent

Question 18

How do unlimited and limited liability differ?

Accepted Answer

Unlimited liability means that

Question 19

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations. 
A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations.

Question 20

Who operates and controls a corporation in its day-to-day activities?

Accepted Answer

A) the board of directors 
B) stockholders 
C) employees 
D) management 
A) the board of directors 
B) stockholders 
C) employees 
D) management

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

Accounting profit is the sum of a firm's revenue and its opportunity costs.

The decline in starting new businesses

In the United States,sole proprietorship profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

Dividends are

Explain if a business would be expected to survive in the long run if it earned a positive accounting profit but a negative economic profit.

What is the primary difference between a sole proprietorship and a partnership?

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so.This is an example of using ________ for her expansion plans.

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

Because a firm has implicit costs as well as explicit costs

Georgia's great uncle gave her a $5,000 savings bond as a wedding gift.The bond pays $5,000 at maturity,which is in 10 years.If the interest rate is 4%,the bond has a present value of $ 3,377.82

Which of the following is one of the most widely followed stock indexes in the United States?

Of the types of business organizations in the United States,partnerships account for the ________ percentage of firms and ________ percentage of profits.

Why do financial markets depend on accurate accounting and disclosure practices?

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She asks her sister,Lisette,if she'd like to join her in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Lisette should consider?

As a result of the 2007-2009 financial crisis,which two firms became bank holding companies,allowing them to engage in commercial banking activities?

In the late 1970s,________ of all firms were less than a year old.In recent years,________ were.

How do unlimited and limited liability differ?

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Who operates and controls a corporation in its day-to-day activities?

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

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Of the types of business organizations in the United States,partnerships account for the percentage of firms and percentage of profits.

In the late 1970s, of all firms were less than a year old.In recent years, were.