Macroeconomics 14th Canadian Edition By Mcconnell Et Al- Test bank

Macroeconomics 14th Canadian Edition By Mcconnell Et Al- Test bank

Economics – Canadian Edition, 15e (Ragan)
Chapter 7 Producers in the Short Run

7.1 What Are Firms?

1) A single proprietorship is a form of business organization which
A) has one owner-manager who is personally responsible for the firm’s actions and debts.
B) has a single owner but has directors who are responsible for the firm’s debts.
C) has limited liability.
D) has unlimited access to money capital.
E) allows easy transferability of ownership by the trading of shares.
Answer: A
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

2) Which of the following statements describes an advantage to the owner of a single proprietorship?
A) The owner’s liability is limited to the amount he or she actually invests in the firm.
B) He or she has limited liability.
C) The owner can readily maintain full and complete control over every aspect of the firm’s operation.
D) The firm has a legal existence separate from its owner.
E) Shares of the firm can be traded on any stock exchange.
Answer: C
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

3) A firm that has two or more owners who share decision-making power as well as the firm’s profits is called
A) a single proprietorship.
B) a partnership.
C) a corporation.
D) a non-profit organization.
E) a joint-stock company.
Answer: B
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

4) A limited partnership differs from an ordinary partnership by
A) having a limited number of partners.
B) having a limited number of partners, each with limited liability.
C) including some partners whose liability is restricted to the amount that they invested in the firm.
D) having limited liability of all partners.
E) having unlimited liability for all partners.
Answer: C
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

5) Which of the following items is part of a firm’s financial capital as distinct from its real capital?
A) a new bulldozer
B) a $500 000 balance in a bank account
C) a network of personal computers
D) a fleet of delivery trucks
E) inventory of goods valued at $1 000 000
Answer: B
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Applied
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

6) Which of the following statements is NOT true of a corporation?
A) It can enter into contracts.
B) It is an entity separate from the individuals who own it.
C) It can incur debt that is an obligation of the corporation but not of its individual owners.
D) It has the right to sue and be sued.
E) It is legally obliged to distribute all profits to shareholders.
Answer: E
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

7) A firm can raise financial capital without incurring debt by
A) issuing bonds.
B) making extra dividend payments.
C) issuing new shares.
D) increasing its bank loans.
E) investing in new capital equipment.
Answer: C
Diff: 2
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative

8) Which of the following statements about the organization of firms is true?
A) Partnerships are the most common form of business organization in Canada.
B) Owners of a corporation have unlimited liability.
C) Corporations have limited access to money markets.
D) Owners of a corporation are not personally liable for the firm’s actions, though its directors may be.
E) Crown corporations are never interested in increasing profits because they have other goals.
Answer: D
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can be financed.
User2: Qualitative