Economics practice test review 8-9

Sole proprietorships- 1 person. Most popular form of American business ownership.
Partnership- 2+ people. Least popular form of American business ownership. Some states don't require a written contract between partners.
Corporation- a separate entity created and recognized by law: immortality and individuality. Two types: private (citizens) and public (owned by general public and managed by government).

Which type of business is most open to governmental regulation?CorporationWhat is the economic term for someone to whom a debt is owed?CreditorWhat is a limited partner?One who invests money into the partnership but has no management responsibilities and makes no business decisions for the partnership. The only money he could lose is the amount he has invested.What does a company's stock represent?Ownership of a fraction of a companyIf a person becomes surety for a friend, what has he done?Pledged to undertake another's debtWhat two important qualities do corporations possess in the eyes of the law?Individuality and immoralityTrue or false: Around one-fourth of all new businesses fail within their first year.TrueTrue or false: Historically, sole proprietorships have the shortest lifespan of the three business typesTrueTrue or false: A corporation is more likely to obtain low-interest loans than a partnershipTrueTrue or false: The most popular business model in the United States today is the partnershipFalse- sole proprietorshipTrue or false: Corporations' great size can make workers feel unimportantTrueTrue or false: The greatest weakness of the partnership and the sole proprietorship is their limited management skills.False- unlimited personal financial liabilityTrue or false: Corporations' organizational structure can slow responses to the marketTrueTrue or false: A limited partner can lose only what he originally invested in a companyTrueTrue or false: A cosigner is someone to whom a debt is owedFalse- creditorThe stock market crash of 1929 was a result of ____________.A speculative bubbleWhat is the term for a corporation's first sale of stock?Initial public offering (IPO)The stock exchange famous for having no "floor"the NASDAQConsidered the best health indicator of American industryDJIAThe SEC was founded following which important historical eventThe Great DepressionBenefits of preferred stockIt carries less risk of loss, preferred stockholders receive dividends before common stockholders, and in the event of a company failure, the preferred stockholders receive compensation before the common stockholders.What is currently the most reputable stock exchange in the world?NYSE (New York Stock Exchange)The primary purpose of a stock index is to ______________.Track prices in an economyIPOs are often less than half the company's total stock. Why?They want to retain ownership.What are the two primary reasons that people buy stock?They can make profit and dividendsWhat is a stock exchange?A place where buyers and sellers come togetherWhat is the full name of the most reputable stock exchange in the world?New York Stock ExchangeWhy is the NYSE important?Because of it's history, location, and listings of companies on it.Describe a stock index and explain its purposeA stock index is used to group categories of stock and report the behavior of prices within these categories. It purpose is to identify stock trends in specific industries.Name two ways in which stock markets are important todayIt gives the opportunity to invest (corporations make money) and provides information about the market place.What does the abbreviation SEC stand for? Name one purpose of the organization.Securities and Exchange Commission: providing current and accurate information.What is a company's stock?Shares or portions of ownership in a corporation.What is a dividend?Distribution of a portion of the corporation's profits.In stock trading, what is commission?What a stockholder gets paid for bringing they seller and buyer together.What are mutual funds?Privately managed stock portfoliosWhat do investors call a collection of stocks from different individual corporations?Stock portfoliosWhat financial phenomenon led to the stock market crash of 1929?SpeculationWhat is an initial public offering (IPO)?The first time stock is offered to the public, usually less than 50%Which sock index is considered the best gauge of the health of American industry?Dow Jones Industrial AverageThe Great Depression led to the founding of what important regulatory institution?Securities and Exchange CommissionTrue or false: Stock markets are important to many American's retirement planningTrueTrue or false: A bear market is one in which the market is risingFalse- a bullTrue or false: Stockholders usually have no say in how the business is runFalse- they have little sayTrue or false: The NYSE was the first American stock exchangeFalse- PhiladelphiaTrue or false: The NASDAQ is famous for having no floorTrueTrue or false: The most prevalent type of stock is preferred stockFalse- common stockTrue or false: Shares of stock are portions of the profit of a companyFalse- they are just portions of the companyTrue or false: IPOs are often less than half of a company's stockTrueTrue or false: The DJIA consists of 50 companiesFalse- 30True or false: Mutual funds are privately managed stock portfoliosTrueFrom an economist's point of view, what is a marketThe arrangements that people make for tradingOn the continuum of market competition given in your text, what is characteristics of a monopolyGreat ability to control priceA true attribute of perfect competition is ________________.Ease of entryIn what industry did Andrew Carnegie earn his wealth?SteelIn what industry did John Rockefeller earn his wealth?OilWhat is the most well-known cartel today?OPECWhat are the characteristics of a monopoly?Difficult to exit the industry, little incentive to improve products, and sometimes beneficial for consumers. NOT absolute control over the product price.It is very common to find monopolies in the area of ______________.Public utilities (ex. electricity, gas)What was America's first major legislation against monopolies?The Sherman Antitrust ActWhat is an example of a possible barrier to entry?Obtaining an entryWhat is the economic definition of an industry? Give an exampleA group of businesses that share common concerns. Fast food industry, banking, automobile, etc.Name the four aspects that distinguish one industry from another.Number of firms, product differences, control of price, and entering/exiting the market.What is the distinction between differentiated and undifferentiated products?Making your product look different. Differentiated are visibly different.Explain the difference between a natural barrier to entry and an artificial barrier to entry.A natural barrier is when someone owns all the resources so there isn't any for you to be able to enter. An artificial barrier to entry is when the government puts out regulation (laws, patents, etc.).In imperfect competition a firm's ability to control prices results directly from what other ability?To differentiate the product.What is the definition of collusion? What type of competition is most prone to this behavior?Collusion is a group of producers reduce the output to increase price. An oligopoly is most prone to this behavior.What is the full name of the FTC, and what is its purpose?Federal Trade Commission; guarantee fair competition and protect the consumerDescribe one benefit of competitionPrice goes down and the quality of products go upTrue or false: Competition encourages both quality and efficiencyTrueTrue or false: Larger industries can more easily change pricesFalse- it is not easyTrue or false: Imperfect competition is the most prevalent form of competition in America todayTrue

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Suspecting that television repair shops tend to charge women more than they do men, Emily disconnected the speaker wire on her portable television and took it to a sample of 12 shops. She was given repair estimates that averaged $\$ 85$ , with a standard deviation of $\$ 28$ . Her friend John, taking the same set to another sample of 9 shops, was provided with an average estimate of $\$ 65$ , with a standard deviation of $\$ 21$ . Assuming normal populations with equal standard deviations, use the $0.05$ level in evaluating Emily's suspicion. Using the appropriate statistical table, what is the approximate $p$ -value for this test?