Ch. 7 Business Organizations Test

A cost, or expense, that changes with the number of units of a good produced is a(n)...

• sunk cost
• marginal cost
• variable cost
• fixed cost

A9n) ________ is a contract by which a firm (usually a corporation) lets a person or group use its name and sell its goods in exchange for payments.

• Franchise agreement
• Licensing agreement
• Partnership contract
• Distribution agreement

A business that is owned and operated by one person is a...

• partnership
• corporation
• limited liability company
• sole proprietorship

A business that is owned and operated by two or more individuals is a...

• partnership
• limited liability company
• corporation
• sole proprietorship

A legal entity that can conduct business in its own name in the same way an individual does is a(n)...

• corporation
• limited liability company
• sole proprietorship
• partnership

The legal responsibility of a sole proprietor or partners to pay any money owed by the business is which of the following?

• Limited liability
• Unlimited liability
• Corporate liability
• No liability

If additional units of a scarce resource are added to another resource in fixed supply, eventually the additional output will decrease. This is known as...

• increasing returns
• fixed supply effect
• resource allocation efficiency
• diminishing marginal returns

What does the total cost equal?

• Total cost is the highest individual cost.
• Total cost is the sum of all variable and fixed costs.

• Total cost is the difference between costs and revenues.
• Total cost is the average of all costs.

What is the formula to calculate profit/loss?

• Profit/Loss = Total Revenue - Total Costs
• Profit/Loss = Total Revenue + Total Costs
• Profit/Loss = Total Costs - Total Revenue
• Profit/Loss = Total Revenue / Total Costs

What is the additional cost of producing an additional unit of a good called?

• Total cost
• Marginal cost
• Average cost
• Fixed cost