Economics Chapter 8

Entrepreneurs bring about creative change in each of the following ways except

• they improve the quality of existing products

• they introduce new products

• they find ways to eliminate competition

• they introduce new production methods

Once established, most entrepreneurs are able to maintain a substantial profit on the products they produce and sell.

• True

• False

Competitors are attracted to a market that yields

• a profit

• unlimited liability

• lower prices for consumers

• higher tax revenues

Which of the following examples demonstrates entrepreneurship?

• A scientist invents a long lasting paint and starts a business to produce it

• A government official creates a new tax form that is easier to complete

• A technician discovers a new type of wax, and the firm that employees her uses it in manufacturing its products

• A student cuts his elderly neighbor's lawn for free

Sole proprietorships are the most common form of business organization in the United States.

• True

• False

Sole proprietors enjoy each of the following advantages except

• they receive all the profit their businesses earn

• it usually is easy for them to gather large amounts of financial capital

• they can make business decisions quickly

• it usually is easy for them to form their business.

Owners of sole proprietorships have ____ for the firm's debts if the firm fails to pay its bills.

• Limited Liability

• No Risk

• Unlimited Liability

• None of the above

Corporations are

• the most common type of business organization

• the easiest form of business to start

• the type of business organization that is best able to raise financial capital

• the least-regulated form of business organization

Most large businesses in the United States are corporations.

• True

• False

A corporation's stockholders are held responsible to pay off all the firms debts if the firm files for bankruptcy.

• True

• False