Question Week 4: Midterm 1. Question : (TCO 1) The war on terrorism will: Student Answer: improve the confidence level of most consumers.

Week 4: Midterm
1. Question : (TCO 1) The war on terrorism will:

Student Answer: improve the confidence level of most consumers.

hurt the profitability of every business operating in the U.S.A.
help some businesses and hurt others.

stabilize the business sector.

2. Question : (TCO 1) As a factor of production, the term capital includes

Student Answer: stocks and bonds issued by corporations

natural resources such as land and water

tools, machinery, and buildings

services provided by the government that enable businesses to be more productive.

3. Question : (TCO1)____________ is the amount a business earns over and above what it spends for salaries and other expenses.

Student Answer: Profit

Revenue

Interest

Dividends

4. Question : (TCO 1) An increase in __________ means that a given number of workers can produce more output than before.

Student Answer: the CPI

structural unemployment

productivity

GDP

5. Question : (TCO 4) A difference between partnerships and sole proprietorships is that partnerships

Student Answer: are easier to form

are managed by an elected board of directors

have a greater chance of long term survival

have the advantage of limited liability

6. Question : (TCO 4) One of the major disadvantages of a sole proprietorship is the:

Student Answer: possibility of disagreements between owners.

unlimited liability the owner has for the debts of the firm.

fact that any income earned by this type of business is taxed twice.
high cost of starting or ending the company.

7. Question : (TCO 2) All of the following are reasons why a business should be managed ethically except

Student Answer: because it is the right thing to do

because strict global regulations require it

to attract new customers and retain existing customers.

to please customers, employees, and society

8. Question : (TCO 2) Three questions often help individuals and organizations in deciding whether their decisions are ethical. All of the following are ethics check questions except

Student Answer: Is it legal?

Is it balanced?

Has it been done before?

How will it make me feel about myself?

9. Question : (TCO 4) One result of taking a firm private is:

Student Answer: the firm’s stock is no longer available for purchase on the open market.
managers lose some control as the number of stockholders increases.
the public image of the firm will suffer.

the firm will have access to more capital.

10. Question : (TCO 4) Homer and Marge have decided to open a floral design shop, which they intend to run as co-owners. Both intend to take an active role in the management of their new business, and each will accept unlimited liability. Homer and Marge are planning to operate a:

Student Answer: joint venture.

general partnership.

limited partnership.

cooperative.

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