3.1 Market Structures and Business Organization

In a general partnership,

• the business continues even if one partner dies
• partners must pay specific business taxes on stock they issue
• partners usually draw up legal papers called articles of partnership.
• partners are only liable for the business' debt up to the amount of their investment

An advantage of a corporation is that

• owners pay fewer taxes than owners of other forms of business.
• the business is subject to little government regulation.
• owners have limited liability for debt.
• owners have direct and immediate control over daily management of the business.

Perfect competition is characterized by

• a large number of sellers and buyers.
• diverse products.
• sellers acting together to set prices.
• uninformed buyers and sellers.

A monopoly that is based on the ownership or control of a manufacturing method, process, or other scientific advance is a 

• geographic monopoly
• natural monopoly
• government monopoly
• technological monopoly

Under perfect competition,

• products are similar but not identical.
• numerous restrictions prevent firms from entering the market.
• no seller can sell a product above the prevailing market price.
• a single seller can affect price.

When a major car company lowers its prices, other car makers will probably 

• maintain existing prices.
• raise their prices.
• go out of business.
• lower their prices.

A market structure in which one firm has a monopoly because of its location is a 

• natural monopoly.
• geographic monopoly.
• technological monopoly.
• government monopoly.

Barry and two associates have been operating a business that is not going well. Barry is stressed out because the company is over $200,000 in debt and he knows that if it goes out of business, he and his two associates will have to pay it out of their own pockets. It sounds like Barry and his two associates have a 

• partnership.
• corporation.
• sole proprietorship.
• stock.

Susan, Phil, Robert, and Martina are all lawyers. After several years of working for big firms, they decide to pull their resources and start their own law practice together. The four of them will make all their business decisions together and will share all of the profits and financial risk. Their new law firm is a 

• partnership
• corporation
• sole proprietorship
• monopoly

Mr. Simpson is liable for all the debts of his company. Mr.Simpson has which type of business organization?

• sole proprietorship
• monopoly
• perfect competition
• corporation