Multiple Choice Most industries in which the giant firms in the United States ar
ID: 1125710 • Letter: M
Question
Multiple Choice
Most industries in which the giant firms in the United States are found are
a.
perfectly competitive.
b.
monopolies.
c.
oligopolies.
d.
monopolistically competitive.
____ 52. A disadvantage of both proprietorships and partnerships is that
a.
in each, profit is taxed twice, as the income of the firm and the income of the owners.
b.
the owners cannot hire managers to help run the firms.
c.
the firms cannot pay dividends.
d.
the owners have unlimited liability for the debts of the firms.
____ 53. A corporation is legally owned by its
a.
chief executive officer.
b.
board of directors.
c.
bondholders.
d.
stockholders.
____ 54. The major advantage of the corporation is
a.
limited liability for owners.
b.
greater profit incentive than the other forms of business organization.
c.
lower taxes for owners, who are taxed only once.
d.
ability of owners to have hands-on management of the firm.
____ 55. A company's annual payment to stockholders is called the
a.
dividend.
b.
kickback.
c.
plowback.
d.
retained earnings.
____ 56. Julie is in the 28 percent tax bracket. She earns an 8 percent rate of return after taxes on a tax-free municipal bond. What will the after-tax rate of return be on a taxable bond (with equal risk)?
a.
36 percent
b.
28 percent
c.
14 percent
d.
8 percent
____ 57. A corporation may be reluctant to raise capital by issuing stock because
a.
issuing stock to obtain money for investment is riskier than selling bonds.
b.
holders of already-existing stock will gain more voting power in the corporation.
c.
obtaining government permission to issue stock can be time-consuming and expensive.
d.
All of the above are correct.
____ 58. A corporation is liable to pay to bondholders the
a.
current interest rate in the bond market.
b.
current yield on the particular bond.
c.
coupon rate on the bond.
d.
yield on the bond at maturity.
____ 59. The most heavily traded American stocks are traded on the
a.
New York Stock Exchange.
b.
American Stock Exchange.
c.
regional stock markets.
d.
"third market."
____ 60. What is true of stock exchanges in the United States?
a.
There are two major stock exchanges in New York, several smaller regional exchanges across the nation, and over-the-counter trading via NASDAQ.
b.
The New York Stock Exchange is the only stock exchange in the United States.
c.
There are only two stock exchanges, NYSE and AMEX.
d.
There are only three stock exchanges, NYSE, AMEX, and NASDAQ.
____ 61. Takeover of one firm by another
a.
ties up the nation's capital wastefully.
b.
uses up the economy's credit supply.
c.
reduces the value of the acquired firm.
d.
changes ownership of the acquired firm.
____ 62. The actions of speculators
a.
help smooth out price fluctuations.
b.
serve no useful economic purpose.
c.
make investment much more risky.
d.
cause severe shortages of some commodities.
____ 63. The concept of "random walk" applies most closely to predictions of
a.
consumer demand for a product after a price increase.
b.
the effects of a tax on the supply of oil.
c.
the effects of transfer payments on labor supply.
d.
the price of a particular stock one year from now.
____ 64. To determine whether a market is perfectly competitive, economists examine the
a.
number of firms in the market.
b.
similarities among the products of the different firms in the market.
c.
ease of entry and exit by firms in the market.
d.
All of the above are correct.
____ 65. A perfectly competitive firm is a price
a.
giver.
b.
taker.
c.
maker.
d.
leader.
____ 66. Firms in perfect competition are often described as price
a.
takers.
b.
makers.
c.
setters.
d.
leaders.
____ 67. Economists study perfect competition
a.
because many markets are perfectly competitive.
b.
for its descriptive realism.
c.
to establish a benchmark by which to measure the performance of the economy.
d.
All of the above are correct.
____ 68. A firm facing a horizontal demand curve
a.
cannot affect the price it receives for its output.
b.
always produces at an output at which P = MR.
c.
faces perfectly elastic demand for its product.
d.
All of the above are correct.
____ 69. The perfectly competitive firm has no influence over price because
a.
its output is so insignificant relative to the market as a whole.
b.
anti-trust laws constrain perfectly competitive firms.
c.
consumers establish the prices of products.
d.
it doesn't know its demand curve.
a.
perfectly competitive.
b.
monopolies.
c.
oligopolies.
d.
monopolistically competitive.
Explanation / Answer
Ans:
51) Option D
monopolistically competitive.
Gaint firms in the United states are found in a monopolistically competitive structure.
52) Option D
The owners have unlimited liability for the debts of the firms.
The disadvantage for both proprietorships and partnerships is that owners have unlimited liability for the debts of the firms.
53) Option D
stockholders.
The owners of a corporation are stockholders or shareholders. They are the ultimate owners of a corporation.
54) Option A
limited liability for owners.
The advantage in case of a corporation is that owners have limited liability for the debts of the corporation.
55) Option A
Dividend
Dividend is the payment paid by the company to the shareholders as part of distribution of profits.
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