Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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Although a sole proprietorship is the least-regulated form of business
organization, which type of regulation do these business owners face that may keep them from
operating out of their homes?
a. | eminent domain laws | c. | fringe benefits | b. | zoning laws | d. | a site permit |
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2.
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As a sole proprietor, Jessica took out a loan to buy equipment for her in-home
business. If Jessica’s business does not make enough money to pay back her loan, she will have
to sell personal property to cover her outstanding obligation. Which of the following conditions
affects sole proprietors but not other business organizations?
a. | unlimited personal liability | c. | proprietary
liability | b. | personal obligation | d. | obligatory property |
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3.
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What is the difference between a general partnership and a limited liability
partnership (LLP)?
a. | In an LLP, all partners are limited from personal liability in certain
situations. | b. | In a general partnership, all partners are exempt from personal
liability. | c. | In an LLP, only one partner is required to be a general partner. | d. | In a general
partnership, only one partner has unlimited personal liability for the firm’s
actions. |
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4.
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In which kind of business organization should you participate if you can afford
to lose only the amount of your initial investment?
a. | dual partnership | c. | limited partnership | b. | sole proprietorship | d. | general
partnership |
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5.
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Who faces limited liability for the firm’s debts in a corporation?
a. | the corporation, but not its owners | b. | individual stockholders | c. | No one; only general
liability can be faced. | d. | the chief executive
officer |
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6.
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Which of the following is an important personal financial consideration that
keeps many firms from incorporating?
a. | Corporation dividends are subject to government regulation, but dividends paid to
partnerships are not. | b. | Boards of directors must be paid according to
the income of the firm. | c. | Stock is nontransferable, and stockholders
therefore could lose considerable money if a company failed. | d. | Stockholders must
pay personal income tax on dividends. |
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7.
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When two giant automakers, Chrysler Corporation and Daimler-Benz, merged to form
a single corporation, which type of merger was it?
a. | vertical | c. | parallel | b. | horizontal | d. | conglomerate |
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8.
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Which of the following is a reason franchising has become popular in recent
years?
a. | Franchise owners are free to set their own rules and operating standards, but they
benefit from national ad programs. | b. | Small franchise owners enjoy a degree of
control and can benefit from the support of the parent company. | c. | Because they are
owned by a group of individuals for their shared benefit, franchises spread the
liability. | d. | Franchising fees and royalties are generally low, and large profits can be made for
minimal investment. |
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9.
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What has happened to employment since 1986, according to the graph?
a. | Production of services is increasing at an equal rate with production of
goods. | b. | Production of services is increasing faster than production of
goods. | c. | Production of goods and services both continue to progress
rapidly. | d. | There is a decrease in the nonlabor work force. |
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10.
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Look at the bar graph. How does it demonstrate the learning effect?
a. | Men earn more than women, regardless of education. | b. | More women are in
the labor force than men. | c. | Increases in education result in higher
wages. | d. | As income increases, men and women earn the same
amount. |
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11.
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How can competition in a scarce labor market affect wages?
a. | Wages will go down because productivity is lower. | b. | Wages will remain
level because firms want to keep supplies even and costs under control. | c. | Wages will go up to
attract workers to a firm and to keep existing workers. | d. | Wages will go down
to discourage new, nonskilled labor from entering the labor force. |
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12.
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Compare the graphs of wages for doctors and construction workers. Which of the
following accounts for the difference between the equilibrium wages for these two professions?
a. | The supply of construction workers is relatively low and the demand is relatively
high, but the supply of doctors is high relative to the demand for them. | b. | The equilibrium wage
for construction workers is lower because doctors have a higher education level and are in the
professional labor force. | c. | The equilibrium wage for doctors is lower
because the working conditions for construction workers involves a higher level of danger and
physical stress. | d. | The supply of doctors is relatively low and the demand is relatively high, but the
supply of construction workers is high relative to the demand for
them. |
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13.
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Why have minorities historically tended to earn lower salaries and wages than
their white counterparts, despite nondiscrimination laws?
a. | There are fewer minorities in the labor force. | b. | Minorities must
compete with women, who are flooding the labor force. | c. | Whites have had access to more education and
work experience. | d. | There are foreign workers taking their jobs. |
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14.
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Beginning in the 1800s, labor unions have had a strong influence on the
nation’s economy. What event and industry initiated the labor union movement in the United
States?
a. | the Civil War and importing | b. | the Industrial Revolution and
manufacturing | c. | the American Revolution and farming | d. | the Spanish-American War and
exporting |
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15.
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Which of the following was an effect of the Taft-Hartley Act of 1947?
a. | The act was an effort to curb union power, and mandatory union membership could be
banned. | b. | The act attempted to equalize pay for men and women, allowing women the right to
compete for equal pay in equal jobs. | c. | The act was an effort to strengthen union
power, and mandatory union membership in some industries could be required. | d. | The act attempted to
encourage more African American membership in unions, but the right-to-work laws had the opposite
effect. |
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16.
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To which of the following categories do collective bargaining, mediation, and
arbitration belong?
a. | transactions between unions and labor organizers | b. | contractual
obligations of labor management | c. | negotiations between unions and company
leaders | d. | settlement techniques involving a neutral mediator |
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