economics topic 5

Based on the table, which of the following is an accurate statement about nonfarm sole proprietors in the industrial sectors shown?

• Most professionals and scientists are sole proprietors.

• Unemployment is greatest among workers in transportation and warehousing.

• Many construction workers and real estate agents earn a living as sole proprietors.

• More workers are employed by sole proprietors in arts, entertainment, and recreation than by sole proprietors in retail trade.

The board of directors and the officers of a corporation make decisions that have a major impact on the corporation’s earnings, which may result in profits and losses. In either case, the corporation’s stockholders will hold management accountable for the company’s performance.

Under what circumstances might stockholders be displeased with a corporation’s performance?

• if the company’s stocks are bought on the stock exchange

• if the company’s stocks are sold on the stock exchange

• if the company’s stocks increase in value on the stock exchange

• if the company’s stocks lose value on the stock exchange

Julia plans to become a sole proprietor who upholsters furniture in her home. Which statement about Julia’s plan is true?

• Julia will have to obtain a business license if required by law to do so.

• Julia will have to obtain a site permit for her business.

• Julia will not have to pay income tax, because she is the sole receiver of profit.

• Julia will have limited liability for any losses she incurs because she is working from home.

Which of these businesses could be the partnership described in the bottom row of the table?

• A convenience store is owned by equal partners,a mother, a father, and their adult daughter. All three work full time at the convenience store.

• A dry-cleaning establishment is owned and operated by one man. His brothers have invested some money in the business but don’t have any responsibilities for it.

• A canoe rental shop is owned and operated by one woman. She has taken out loans from two different banks.

• An art gallery is owned and operated by a woman whose husband helps part-time. They have hired an assistant to help run the gallery.

What incentive does a parent company have for providing training and support to a franchise owner?

• Royalties might increase because a better-trained franchise owner will make more money.

• Royalties might decrease because a better-trained franchise owner will make more money.

• Standard fees might increase because a better-trained franchise owner will make more

  money.

• Standard fees might decrease because a better-trained franchise owner will make more money

Assuming all companies shown in the diagram sell office products, what is the best description of the merger illustrated by the diagram?

• a vertical merger

• a series of vertical mergers

• a horizontal merger

• a series of horizontal mergers

What type of business organization does this table represent?

• sole proprietorship

• partnership

• corporation

• cooperative

Corporate shares were offered for sale to the public for the first time yesterday. According to the company’s founders, they hope to use the funds raised in this initial public offering to invest in building several new factories.

Based on the excerpt from a news story, which statement is true?

• The corporation is raising money by selling bonds.

• The corporation is raising money by selling stocks.

• The corporation is raising money by building new factories.

• The corporation is raising money by becoming a closely-held corporation

Suppose a firm that makes appliances merges with a company that produces running shoes, and it later also buys a dairy. What is this combination called?

• franchise

• horizontal merger

• cooperative

• conglomerate

What does this kind of business organization have in common with a corporation?

• It pays out some of its earnings to its owners.

• It markets the goods produced by its owners.

• It keeps its owners up to date on industry trends.

• It funds itself by selling shares of stock to its owners