FREE ECONOMICS AND STUDY GAMES ABOUT ECON UNIT

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FREE ECONOMICS AND STUDY GAMES ABOUT ECON UNIT

3 TEST

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -26 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: What is a "proprietorship"?

Answer:

This is also called a "sole proprietorship". It is a business owned and run by a single person. They are the smallest kind of business. (Pg. 62)

Question 2: What are "labor unions"?

Answer:

These are organizations that workers form to protect and represent its member's interests in various employment matters (such as pay and benefits). (Pg. 81) Question 3: What is the difference between a "horizontal" and a "vertical" merger?

Answer:

A horizontal mergers occur when firms that make the same kind of product join forces. Vertical mergers occur when companies involved in different stages of manufacturing or marketing join forces. (Pg. 78)

Question 4: What are the two (2) kinds of "partnerships"?

Answer:

1.) "General partnership" - all partners are responsible for the management & financial obligations of the business. 2.) "Limited partnership" - At least one partner is not active in the daily running of the business. (Pgs. 64 & 64)

Question 5: What is a "common stock"? List one (1) benefit of having a common stock.

Answer:

It represents basic ownership of a corporation. One benefit is that people who own common stock usually get one vote for each share of stock. (Pg. 67)

Question 6: List one (1) advantage and one (1) disadvantage of a partnership.

Answer:

1.) Advantage - Ease of management. 2.) Each partner is fully responsible for the acts of all other partners. If one partner causes the firm to suffer a loss, all partners are fully & personally responsible.(Pgs. 65 & 66)

Question 7: What is a "stock"?

Answer:

An ownership certificate for a corporation. (Pg. 67)

Question 8: How are "mutual funds" operated?

Answer:

These are operated by large financial corporations such as T. Rowe Price. Each mutual fund has an "investment manager" assigned to make decisions about which stocks to buy or sell.

Question 9: What is a "chamber of commerce"?

Answer:

This is an organization that promotes the welfare of its member businesses. They sponsor activities ranging from educational programs to lobbying for favorable business legislation. (Pg. 81) Question 10: What is a "limit order" and what is the benefit of using it when buying stocks?

Answer:

This type of order is an order to buy a set number of shares of stock at a specified price. This ensures that investors buy stock at the price they're comfortable paying.

Question 11: What does the term "depreciation" refer to?

Answer:

This term refers to the noncash charge that firms (corporations) take for the general wear and tear on its capital goods (such as machinery and other equipment it owns). (Pg. 73)

Question 12: What is "collective bargaining"?

Answer:

This term refers to times when unions participate in negotiations with management over pay, working hours, benefits, health care coverage, etc. (Pg. 80)

Question 13: What is a "partnership"?

Answer:

This is a kind of business owned by two or more people. (Pg. 64)

Question 14: How are "conglomerates" formed?

Answer:

These are formed when corporations become very large through mergers and acquisitions. (Pg. 76)

Question 15: What is a "conglomerate"?

Answer:

This is a firm that has at least four businesses, each making unrelated products and more responsible for a majority of its sales. (Pg. 76)

Question 16: What does the term "P/E Ratio" mean?

Answer:

It stands for "Profit - to - Earnings Ratio".

Question 17: What is a "preferred stock"?

Answer:

This is a share of stock that does not carry with it any voting privileges within the corporation. (Pg. 68)

Question 18: What are "multinationals"? Give one (1) example.

Answer:

A "multinational" is a corporation that has manufacturing or service operations in a number of different countries. One example is the General Motors Corporation. (Pgs. 76 & 77)

Question 19: What is a "corporation"?

Answer:

This is a form of business organization recognized by law as a separate legal entity with all the rights of an individual. (Pg. 67)

Question 20: List one (1) advantage and one (1) disadvantage of a "proprietorship".

Answer:

Advantage = They are very easy to set up. Disadvantage = The owner has "unlimited liability", which means that if the business fails, they are solely responsible for any and all debts that remain. (Pgs. 62 & 63)

Question 21: What is a "bond"?

Answer:

This is a written promise to repay the amount of money a person borrows at a later date. (Pg. 69)

Question 22: What is a "dividend"?

Answer:

This is money - usually in the form of a check - that transfers a portion of a corporation's earnings to each stockholder. (Pg. 67)

Question 23: What does the P/E Ratio of a stock tell an investor?

Answer:

It tells investors how a stock's current price relates to its per - share earnings. It is calculated by dividing the Earnings Per Share (EPS) by the current Market Value per Share.Question 24: What is a "stop order" and what is the benefit of using it when buying stocks?

Answer:

This type of order is an order to sell stock when the price reaches a certain point. This ensures a greater chance of being able to sell stock at a certain price. It limits an investor's losses.

Question 25: What are "non-profit organizations"?

Answer:

These are organizations that work in a businesslike way to promote the collective interests of its members rather than seeking any type of financial gain. (Pg. 79) Question 26: What is the difference between a "stock" and a "mutual fund"?

Answer:

A share of stock represents ownership in one (1) particular corporation or business while a share in a mutual fund includes investments in many different corporations or sectors of the stock market.