Economics Quiz Chapter 8

1.

______________________is a situation where a business closes when owner dies or retires.
- A.
  
  Limited life
- B.
  
  Limited liability
- C.
  
  Life End
- D.
  
  Freedom to end
Correct Answer
A. Limited life

Explanation
Limited life refers to a situation where a business closes when the owner dies or retires. This means that the business has a predetermined lifespan and will not continue to operate beyond the owner's involvement. Unlike businesses with unlimited life, which can be passed on to heirs or continue under new ownership, a business with limited life is dependent on the owner's presence and ceases to exist once the owner is no longer able to run it. This concept is important in understanding the potential risks and limitations associated with businesses that have a finite lifespan.

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2.

________ is having total responsibility for running the business.

Correct Answer
Unlimited liability

Explanation
Unlimited liability refers to the legal obligation of an individual or entity to be personally responsible for all debts and liabilities incurred by a business. In this context, it means that the person mentioned in the blank has complete responsibility for running the business and is liable for any financial obligations or losses that may arise. This concept is often associated with sole proprietorships and partnerships, where the owners' personal assets can be used to settle business debts.

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4
3.

All of the following are disadvantage of a sole proprietorship except:
- A.
  
  Few regulations
- B.
  
  Unlimited liability
- C.
  
  Limited life
- D.
  
  Limited funds
Correct Answer
A. Few regulations

Explanation
A sole proprietorship is a type of business structure where an individual owns and operates the business. One disadvantage of a sole proprietorship is unlimited liability, which means that the owner is personally responsible for all debts and legal obligations of the business. Limited funds and limited life are also disadvantages, as the business may struggle to raise capital and may cease to exist upon the owner's death or retirement. However, few regulations can be seen as an advantage of a sole proprietorship, as there are typically fewer legal requirements and formalities compared to other business structures such as corporations.

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4.

_________________ is a business owned by 2 or more owners
- A.
  
  Partnership
- B.
  
  Partners
- C.
  
  Co-business
Correct Answer
A. Partnership

Explanation
A partnership is a business owned by 2 or more owners. In a partnership, the owners, known as partners, share the profits, losses, and responsibilities of the business. They contribute capital and resources, and work together to achieve the goals of the business. This type of business structure allows for shared decision-making and a division of labor among the partners. It is a common form of ownership for small and medium-sized businesses, where the partners have a close working relationship and often complementary skills or expertise.

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5.

Which type of partnership is this? Marc and Andrew start a marketing advertising agency, they are the only partners and share equally all work, profits and losses
- A.
  
  General partnership
- B.
  
  Limited liability partnership
- C.
  
  Limited partnership
Correct Answer
A. General partnership

Explanation
This is a general partnership because Marc and Andrew are the only partners in the marketing advertising agency and they share equally in all aspects of the business, including the work, profits, and losses. In a general partnership, all partners have equal rights and responsibilities in running the business and are personally liable for any debts or obligations of the partnership.

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6.

What type of partnership is this? Laila and Fouad carefully review expansion plans after new partners provide extra funds. However, they know that they remain fully liable if their decision fail.
- A.
  
  Limited partnership
- B.
  
  General Partnership
- C.
  
  Limited liability partnership
Correct Answer
A. Limited partnership

Explanation
This is a limited partnership because Laila and Fouad have brought in new partners who have provided extra funds for expansion. In a limited partnership, there are two types of partners: general partners who are fully liable for the partnership's debts and obligations, and limited partners who have limited liability and are not fully liable for the partnership's debts. Laila and Fouad remain fully liable for the partnership's debts, indicating that they are the general partners in this scenario.

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7.

A merger between Coca-Cola and the Pepsi beverage division, to create opportunities to join certain operations, such as manufacturing, and reduce costs. what type of merging is this?
- A.
  
  Horizontal
- B.
  
  Vertical
- C.
  
  Competitive
- D.
  
  Diagonal
Correct Answer
A. Horizontal

Explanation
This merger between Coca-Cola and the Pepsi beverage division is classified as a horizontal merger. Horizontal mergers occur when two companies operating in the same industry and producing similar products or services combine their operations. In this case, both Coca-Cola and Pepsi are beverage companies, and the merger would allow them to streamline their manufacturing processes and potentially reduce costs by eliminating duplicate operations.

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8.

An automobile company joining with a parts supplier. which type of merging is this?
- A.
  
  Vertical
- B.
  
  Supplying
- C.
  
  Horizontal
Correct Answer
A. Vertical

Explanation
This is a vertical merging because it involves a collaboration between an automobile company and a parts supplier, where both companies operate at different stages of the supply chain. In a vertical merger, companies from different levels of the supply chain come together to enhance efficiency, reduce costs, and gain better control over the production process. By joining forces, the automobile company can ensure a steady supply of parts from the supplier, leading to improved coordination and potentially increased profits.

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9.

Google's headquarters are in mountain view, California, but it has branch offices in many other countries. This is an example of________________
- A.
  
  Multinational
- B.
  
  International
- C.
  
  Global
- D.
  
  Business administration
Correct Answer
A. Multinational

Explanation
This is an example of a multinational company because Google has its headquarters in one country (Mountain View, California) but also has branch offices in many other countries. A multinational company operates in multiple countries and has a presence in various locations around the world.

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Economics Quiz Chapter 8

______________________is a situation where a business closes when owner dies or retires.

________ is having total responsibility for running the business.

All of the following are disadvantage of a sole proprietorship except:

_________________ is a business owned by 2 or more owners

Which type of partnership is this? Marc and Andrew start a marketing advertising agency, they are the only partners and share equally all work, profits and losses

What type of partnership is this? Laila and Fouad carefully review expansion plans after new partners provide extra funds. However, they know that they remain fully liable if their decision fail.

A merger between Coca-Cola and the Pepsi beverage division, to create opportunities to join certain operations, such as manufacturing, and reduce costs. what type of merging is this?

An automobile company joining with a parts supplier. which type of merging is this?

Google's headquarters are in mountain view, California, but it has branch offices in many other countries. This is an example of________________