Chapter 5: Business and Labor

Which of the following statements is accurate, based on this graph?

• Nearly 90 percent of sole proprietorships earned less than $100,000 per year.

• Nearly 90 percent of sole proprietorships earned less than $50,000 per year.

• Nearly 70 percent of sole proprietorships earned from $10,000 to $25,000 per year.

• Nearly 30 percent of sole proprietorships earned from $50,000 to $500,000 per year.

Shania and Nick own a convenience store together. They share equal responsibility and liability for their business, and each person receives 50 percent of the profits. What kind of business organization is it?

• sole proprietorship

• partnership

• cooperative

• nonprofit

Ivers Paint, founded in 1999, is a corporation that manufactures paint supply products. On Friday, officials announced that the company would merge with the Kildare Paint Supply Store, a partnership started in 1995 by the Kildare brothers. “This merger will benefit consumers because Ivers will be able to operate more efficiently and offer our products at a lower price at the Kildare Paint Supply Store,” said a representative from Ivers Paint.

Based on the excerpt from a news story, which statement best describes the merger of Ivers Paint and Kildare Paint Supply?

• It is a conglomerate merger because one company is involved in manufacturing and the other in selling.

• It is a partnership merger because one of the companies is a partnership.

• It is a horizontal merger because both companies are involved in the paint supply business.

• It is a vertical merger because the two companies are involved in different stages of the paint supply business.

What is a KEY reason that an entrepreneur might choose to establish a corporation rather than a partnership or a sole proprietorship?

• no personal liability

• limited start-up costs

• equal sharing of profits

• ability to pass the business on to children

Which of the following is true about the structure of a corporation?

• The stockholders elect the board of directors, who appoint a chief executive officer.

• The employees elect the board of directors, who appoint the chief executive officer of the corporation.

• The chief executive officer appoints the board of directors, who make key decisions by majority vote.

• The employees elect managers who oversee the general operation of the corporation.

Some businesses are not organized to maximize profits. Instead their goals are to work for the good of all their members or to work for the good of society in general.

What types of businesses is this passage describing?

• franchises and multinationals

• cooperatives and nonprofits

• general and limited partnerships

• horizontal and vertical mergers

What does the cartoon suggest about why a nonprofit might hire lobbyists to promote the interests of its organization?

• Nonprofits need the approval of Congress to expand their business.

• Nonprofits have no other way to attract the attention of legislators.

• Lobbyists are key members of most business and trade associations.

• Lobbyists generally have ready access to lawmakers.

Which type of business organization might offer low-interest loans to its members?

• a business association

• a trade association

• a consumer cooperative

• a service cooperative

What is the MOST LIKELY cause of the peaks in the unemployment rate?

• economic downturns

• increases in “discouraged workers”

• increases in the retirement age

• lengthy periods of warfare

Which statement about the median weekly earnings of a worker with a doctoral degree is most accurate?

• They are about twice the median weekly earnings of a worker with an associate’s degree.

• They are about three times the median weekly earnings of a worker with a high school diploma.

• They are about five times the median weekly earnings of a person with less than a high school diploma.

• They are greater than the median weekly earnings of a worker with a professional degree.