True/False
Indicate whether the
statement is true or false.
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1.
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Typically, firms prefer to put a considerable amount of distance between their
location and their competition.
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2.
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The U.S. Department of Commerce reports that the failure rate is about 12 times
higher for franchises than for independently owned businesses.
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3.
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Stocks and corporate bonds are two different forms of ownership in a
corporation.
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4.
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Partnerships are similar to sole proprietorships, but with more than one
owner.
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5.
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The triangle symbol when used in economics represents “divided
by.”
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6.
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Labor is an example of a variable cost.
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7.
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Marginal decision making involves making incremental decisions.
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8.
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It is very important to understand marginal cost when deciding how much of a
good to produce.
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9.
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Although marginal benefits and marginal costs are useful in economic analysis,
the concepts cannot be applied to personal decisions.
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10.
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If the additional output produced by a worker is greater than the wage you would
pay the worker, you should hire the worker.
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11.
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Economists believe that a business should continue to produce additional units
of its good until MR is equal to MS.
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12.
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To compute total revenue, multiply the price of the good times the cost of the
good.
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13.
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If MR > MC, businesses should not produce any more goods.
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14.
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Business firms are organizations that use resources to produce goods and
services that are sold to consumers, other businesses, or the government.
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15.
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Individuals working alone can produce more than the sum of production of people
working together.
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16.
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Specialization increases production.
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17.
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A monitor is another term for shirker.
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18.
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Sole proprietorships are easy to form and to dissolve.
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19.
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Decision-making power resides with the sole proprietor and his or her
partners.
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20.
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Sole proprietorships pay corporate income taxes.
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21.
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Sole proprietorships pay only personal income taxes on the income from their
business.
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22.
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The major disadvantage of a sole proprietorship is limited liability.
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23.
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It is difficult for sole proprietors to raise funds for business expansion
because lenders are not eager to lend money to a business that depends upon one person.
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24.
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An advantage of sole proprietorships is that they have a limited life.
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25.
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One of the advantages of corporations is that they are easy to set up.
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26.
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A partnership is similar to a sole proprietorship with more than one
owner.
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27.
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Partnerships have the advantage of combining the specializations of each of the
partners.
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28.
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Both general and limited partners face unlimited liability.
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29.
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An advantage of franchise ownership is the national advertising provided.
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30.
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Fixed costs may change as quantity of output changes.
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31.
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A marginal cost represents a change in the cost of production for the additional
unit produced.
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32.
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Producers should continue to produce an extra unit even if the difference
between the marginal cost and marginal revenue is one penny.
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33.
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When a person receives the full benefits of his shirking but pays only a
fraction of the costs, shirking is likely to increase.
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34.
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Sole proprietorships account for the largest percentage of total business
receipts.
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35.
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Only personal income taxes apply to the profit of a partnership, which is the
income of the partners.
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36.
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Unlimited liability is a more severe disadvantage in a sole proprietorship than
in a partnership.
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37.
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Experience has shown that competing firms will frequently be located next to
each other.
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38.
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Purchasing a franchise is a sound economic decision that guarantees financial
success.
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39.
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Consumer advocates and economists agree on the ethical and social
responsibilities business should provide.
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40.
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The board of directors is responsible for choosing a corporation's
president.
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