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Commerce and BusinessbackBusinessbackPrinciples of EconomicsbackEconomicsbackPractice Set 2495back

Producers In The Short Run

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Question 1
Free
Multiple Choice

A single proprietorship is a form of business organization which

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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.

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Question 2
Free
Multiple Choice

Which of the following statements describes an advantage to the owner of a single proprietorship?

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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.

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Question 3
Free
Multiple Choice

A firm that has two or more owners who share decision-making power as well as the firm's profits is called

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A

a single proprietorship.

B

a partnership.

C

a corporation.

D

a non-profit organization.

E

a joint-stock company.

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Question 4
Free
Multiple Choice

A limited partnership differs from an ordinary partnership by

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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.

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Question 5
Free
Multiple Choice

Which of the following items is part of a firm's financial capital as distinct from its real capital?

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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

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Question 6
Multiple Choice

Which of the following statements is NOT true of a corporation?

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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.
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Question 7
Multiple Choice

A firm can raise financial capital without incurring debt by

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A
issuing bonds.
B
making extra dividend payments.
C
issuing new shares.
D
increasing its bank loans.
E
investing in new capital equipment.
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Question 8
Multiple Choice

Which of the following statements about the organization of firms is true?

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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.
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Question 9
Multiple Choice

Churches,the YMCA,the Salvation Army,and the Nature Conservancy are examples of

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A
single proprietorship.
B
partnership.
C
non-profit organizations.
D
limited partnership.
E
corporations.
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Question 10
Multiple Choice

An example of "real" capital is

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A
shares in a corporation.
B
corporate bonds.
C
a firm's balance in a bank account.
D
a firm's computer systems.
E
a firm's retained earnings.
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Question 11
Multiple Choice

Real capital includes

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A
a firm's physical assets.
B
corporate bonds.
C
corporate stock.
D
a firm's balance in its bank account.
E
owner's equity.
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Question 12
Multiple Choice

Undistributed profits of a firm are

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A
earnings that are used to pay dividends to shareholders.
B
earnings that are used to cover the costs of production.
C
earnings that are used to cover interest expenses of the firm.
D
profits that are paid out to owners of the firm.
E
profits that are available to be reinvested in the firm's operations.
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Question 13
Multiple Choice

When a corporation issues a bond

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A
the purchaser of the bond assumes ownership rights in the corporation.
B
it is making a promise to pay interest each year and to repay the principal at a stated time in the future.
C
it is called equity capital.
D
it is called financing through the stock market.
E
it is making a promise to pay interest each year but not repay the principal.
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Question 14
Multiple Choice

An example of debt financing for any form of business organization is

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A
issuing new stock.
B
buying back bonds.
C
borrowing from a bank.
D
using undistributed profits.
E
buying back previously issued stock.
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Question 15
Multiple Choice

It is assumed in standard economic theory that a firm makes decisions in an effort to

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A
become as large as possible.
B
have a highly diversified product.
C
be favoured politically.
D
maximize its revenue.
E
maximize its profits.
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Question 16
Multiple Choice

"An objective of firms is to maximize profits." This statement

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A
has been proven by empirical testing to be always true.
B
is an assumption used by economists to predict the behaviour of firms.
C
is a normative statement and thus cannot be tested.
D
applies only to corporations.
E
is an unrealistic assumption,and therefore of little use to economists.
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Question 17
Multiple Choice

The theory of the firm is based on the following two key assumptions:

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A
Firms seek to become as large as possible,and they seek to maximize total revenue.
B
Each firm has a highly diversified product,and this leads to profit maximization.
C
Firms seek to maximize profit,and to distribute the maximum value in dividends.
D
Firms seek to maximize profits,and the firm is a single,consistent decision-making unit.
E
Firms seek to maximize revenues,and to maximize undistributed profits.
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Question 18
Multiple Choice

Which of the following is the best example of an input to production that is an intermediate product?

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A
40 acres of farmland
B
the skills and training of a web designer
C
computer circuit boards
D
a textile factory
E
a sewing machine
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Question 19
Multiple Choice

The relationship between factors of production used in the production process and the resulting output is called a(n)

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A
consumption possibilities boundary.
B
economic function.
C
production boundary.
D
cost function.
E
production function.
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Question 20
Multiple Choice

Economists use the notation Q = f(L,K)to describe

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A
the flow of labour (L)and capital (K)services that are available when output is (Q).
B
the financial relationship between the inputs that a firm uses and the outputs that it produces.
C
the arithmetic relationship between the outputs that a firm uses and the inputs that it produces.
D
the technological relationship between the inputs that a firm uses and the outputs that it produces.
E
the level of output (Q)required to fully employ labour (L)and capital (K).
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