DO NOT WRITE ON THIS TEST

PUT ALL ANSWERS ON YOUR OWN SHEET OF PAPER

Test: Unit 6: Business Organizations & Market StructuresEconomics

Multiple Choice: Choose the best answer and put it on your answer sheet. (2 points each – 50 points total)

  1. The most common type of business organization in the United States is the
  1. Corporationb. Partnership c. Sole proprietorshipd. Multinational
  1. Which of the following is NOT an advantage of a partnership?
  1. They are relatively easy to establish and manage
  2. They can raise capital by selling stocks and bonds
  3. They provide an opportunity for specialization in management
  4. They often are more efficient than sole proprietorships
  1. Which is one of the major disadvantagesof a corporation?
  1. Loss of controlb. Limited funds c. Limited lifed. Unlimited liability
  1. Which is a disadvantage of sole proprietorships?
  1. Owners must make all of their own decisions.
  2. There are few government regulations.
  3. Employees get a percentage of profits.
  4. Owners are personally responsible for all business debts.
  1. A vertical merger combines companies
  1. in many different countries
  2. that offer the same or similar goods or services
  3. involved in different steps of producing or marketing a product
  4. that produce unrelated goods and services
  1. Unlike partnerships and sole proprietorships, a corporation
  1. is recognized by the government as a legal entity separate from the people who own and run it
  2. has no individual owners
  3. faces few government regulations
  4. is managed by the people who own the company
  1. One characteristic of perfect competition is that
  1. government regulations control how businesses enter and exit the market
  2. sellers offer a standardized (identical) product
  3. sellers have a lot of influence over price
  4. there are not many buyers or sellers
  1. Which of the following would be the best example of a perfect competition market structure?
  1. Pepsi and Coca Cola
  2. Utility Companies
  3. The restaurant industry
  4. A farmer’s market
  1. What kind of monopoly exists when a firm controls a manufacturing method or invention?
  1. natural monopoly
  2. government monopoly
  3. technological monopoly
  4. geographic monopoly
  1. Monopolistic competition occurs when
  1. sellers cannot differentiate products
  2. sellers offer similar, but not standardized products
  3. consumers reject brand name products
  4. there are no close substitutes for a product
  1. The practice of setting prices below cost to drive smaller competitors out of a market is known as
  1. price fixing b. territorial allocation c. predatory pricing d. output restriction
  1. What federal agency is in charge of monitoring the stock market?
  1. Food and Drug Administration
  2. The Federal Trade Commission
  3. The Federal Communications Commission
  4. The Securities and Exchange Commission
  1. Pepsi and Coca Cola are examples of companies that best fit into what type of market structure?
  1. Oligopolyb. Perfect Competitionc. Monopolistic Competitiond. Monopoly
  1. In a limited partnership
  1. The government is heavily involved
  2. All partners have equal responsibility in the daily running of the business
  3. At least one partner is not active in the daily business operations
  4. Profits are not shared among the partners
  1. Which of the following best describes a person who buys a franchise?
  1. They receive start- up funds from the corporate franchise
  2. The get training in how to run the business from the corporate franchise
  3. They have total control over how their business operates
  4. They can set whatever prices they want and buy from any supplier they choose
  1. Which of the following market structures must rely heavily on advertising in order sell products and make a profit?
  1. Perfect competition
  2. Monopolistic competition
  3. Natural monopoly
  4. Government monopoly
  1. An example of a public disclosure law is
  1. Advertising sales
  2. Price tags
  3. Requiring content labels on food products
  4. Price wars
  1. Which of the following companies was found guilty of being a monopoly and violating the Sherman Antitrust Act in 2000?
  1. Microsoft b. Pepsic. McDonald’sd. Samsung
  1. Which of the following market structures is said to exist in theory only?
  1. Perfect competition
  2. Monopolistic competition
  3. Oligopoly
  4. Monopoly
  1. What is a major advantage of sole proprietorships?
  1. Owners can raise funds by selling stocks and bonds
  2. Owners have limited liability
  3. Owners are wealthy and can afford to hire professional managers to run the business
  4. Owners get to keep all of the profits
  1. A gas station in the middle of a desert is an example of this type of monopoly
  1. Naturalb. Geographicc. Technological d. Government
  1. Which of the following would be the best example of a franchise?
  1. J.P. Fitzgerald’sb. Main Street Ice Creamc. Subwayd. Tina’s Italian Kitchen
  1. Which of the following businesses are allowed to become limited liability partnerships (LLP’s)?
  1. Medical practices
  2. Plumbers
  3. Restaurant owners
  4. Hair salons
  1. The U.S. Postal Service was once an example of this type of monopoly
  1. Naturalb. Geographicc. Technologicald. Government
  1. The best part about May is
  1. Mother’s Day b. Warmer weather c. Flowers blooming d. Summer is getting closer

Matching: For questions #26-30,match the situation with the correct business organization. Put your answers on your own sheet of paper by writing the correct letter of your choice next to the number. One choice will be used more than once. (2 points each – 10 points total)

  1. Vertical MergerB. Multinational CorporationC. Conglomerate D. Horizontal Merger
  1. ______Ford operates plants in Canada, Mexico and the U.S.
  1. ______Chevron Corporation owns the production, distribution and marketing facilities involved with crude oil and natural gas.
  1. ______A merger between two companies that produce similar products.
  1. ______General Electric produces airplane turbine engines, home appliances, medical diagnostic equipment and light bulbs.
  1. ______Adidas bought Reebok in 2005.

Short Answer: Choose ONLY FIVE of the following questions and answer them on a separate sheet of paper. (8 points each – 40 points total).

  1. Define each of the following monopolies and give an example of each one.

Natural monopolyTechnological monopoly

  1. Explain TWO specific characteristics associated with monopolistic competition. Give the name of a corporation or type of business that would be an example of this market structure.
  1. Explain TWO specific characteristics associated with an oligopoly. Give the name of a corporation that would be an example of this type of market structure.
  1. Explain the difference between price fixing and predatory pricing.
  1. Choose TWO of the following agencies and describe what their purpose is:

Federal Trade Commission Consumer Product Safety CommissionFood and Drug Administration

  1. What is a multinational corporation? Explain ONE advantage and ONE disadvantage of a multinational.
  1. What is a partnership? Explain ONE advantage and ONE disadvantage of a partnership.
  1. What is the difference between a vertical merger and a horizontal merger? Explain by defining both.