Question 1

The most commonly accepted objective for a firm is

Accepted Answer

A)  to stay in business at all cost.
B)  to maximize total revenue.
C)  to maximize economic profit.
D)  to minimize the variable cost outlay.E) C) and D)
F) A) and D)

Question 2

A disadvantage of the corporate form of business organization is

Accepted Answer

A)  double taxation.
B)  limited access to capital.
C)  that the corporation can only do business in the state where it was incorporated.
D)  unlimited liability for shareholders.E) B) and C)
F) C) and D)

Question 3

Amber has opened a coffee shop for many years on a piece of land that she has also owned. She has also made accounting profits from the coffee shop. This year, rents in the area rose considerably, and Amber responded by deciding to sell the land and the coffee shop to an apartment builder. How can you explain Amber's decision to sell her business?

Accepted Answer

Even though Amber has been making accoun...

Question 4

The higher the expected rate of inflation,

Accepted Answer

A)  the lower is the nominal rate of interest.
B)  the higher is the real rate of interest.
C)  the higher is the nominal rate of interest.
D)  the higher the real and nominal rates of interest.E) A) and C)
F) C) and D)

Question 5

The part of corporate profits that is paid to the shareholders of a corporation is

Accepted Answer

A)  retained earnings.
B)  shareholders.
C)  dividends.
D)  business revenue.E) None of the above
F) A) and B)

Question 6

Accounting profit will always be

Accepted Answer

A)  more than economic profit.
B)  equal to sunk costs.
C)  less than economic profit.
D)  equal to implicit costs.E) All of the above
F) A) and C)

Question 7

A payment for the use of an input that exceeds the opportunity cost of the input is known as

Accepted Answer

A)  real interest.
B)  economic profit.
C)  economic rent.
D)  economic cost.E) A) and B)
F) All of the above

Question 8

Which of the following is not a principal method of financing today?

Accepted Answer

A)  Common stock
B)  Bond
C)  Reinvestment
D)  The entrepreneur's wealthE) None of the above
F) A) and D)

Question 9

By definition, a proprietorship is

Accepted Answer

A)  owned by many shareholders.
B)  a large manufacturing concern.
C)  owned by a single individual.
D)  managed by a large group called the "board of directors."E) B) and C)
F) C) and D)

Question 10

Which of the following is a disadvantage of the corporate form of business organization?

Accepted Answer

A)  Limited liability
B)  Limited financing
C)  Double taxation
D)  Unlimited liabilityE) C) and D)
F) A) and B)

Question 11

All of the following are characteristics of a proprietorship EXCEPT

Accepted Answer

A)  the business is owned by one individual.
B)  one person is responsible for all the debts of the firm.
C)  one person gets all of the profits.
D)  the firm can form a corporation to protect itself against the debts.E) A) and B)
F) C) and D)

Question 12

The present value of a sum to be received in the future is greater

Accepted Answer

A)  the greater the interest rate.
B)  the less the time period before receiving the sum.
C)  the greater the inflation rate.
D)  the greater the discount rate.E) None of the above
F) A) and D)

Question 13

Accounting profits are total revenues minus

Accepted Answer

A)  all relevant opportunity costs.
B)  explicit and implicit costs.
C)  explicit costs and all other relevant opportunity costs.
D)  explicit costs.E) A) and C)
F) All of the above

Question 14

Joanne left her last job, in which she was earning $50,000, in order to form her own consulting business. Her revenues for the first year of consulting were $200,000. During that year, she hired two assistants for $25,000 each and spent $25,000 on office equipment. In addition, she incurred $75,000 in miscellaneous expenses. Her economic profit that first year was

Accepted Answer

A)  $0.
B)  $50,000.
C)  $200,000.
D)  $75,000.E) A) and D)
F) None of the above

Question 15

The most prestigious stock market in the world is the

Accepted Answer

A)  New York Stock Exchange.
B)  Chicago Mercantile Exchange.
C)  London Stock Exchange.
D)  Tokyo Stock Exchange.E) B) and C)
F) A) and C)

Question 16

An advantage of the corporate form of business organization is

Accepted Answer

A)  unlimited liability.
B)  easier access to capital.
C)  that profits are taxed only on one level.
D)  government supervision of its activities.E) A) and B)
F) A) and C)

Question 17

Which of the following is not a disadvantage of a proprietorship?

Accepted Answer

A)  How profits are taxed
B)  Ability to raise capital
C)  Unlimited liability
D)  The disposition of the firm when the owner diesE) B) and D)
F) None of the above

Question 18

Any business wanting to attract financial capital must expect to

Accepted Answer

A)  earn a positive economic profit.
B)  keep implicit costs as close to zero as possible.
C)  pay a normal rate of return.
D)  pay a below normal rate of return in order to make a positive rate of return itself.E) A) and D)
F) A) and C)

Question 19

Let us suppose that if Oprah Winfrey was not a superstar she would have been a judge making $100,000 per year. If she makes $63 million dollars this year, her economic rent is

Accepted Answer

A)  $63.0 million.
B)  $63.1 million.
C)  $100,000.
D)  $62.9 million.E) All of the above
F) A) and B)

Question 20

Present value is

Accepted Answer

A)  the value of a future amount expressed in today's dollars.
B)  the value of a dollar received a year from now, expressed in terms of its future value.
C)  the inverse of the interest rate.
D)  the nominal value instead of the real value of something.E) B) and C)
F) A) and B)

Exam 21: Rents, Profits, and the Financial Environment of Business

Which of the following is a disadvantage of the corporate form of business organization?

Correct Answer
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Which of the following is not a principal method of financing today?

Correct Answer
verified

The most prestigious stock market in the world is the

Correct Answer
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An advantage of the corporate form of business organization is

Correct Answer
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Which of the following is not a disadvantage of a proprietorship?

Correct Answer
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By definition, a proprietorship is

Correct Answer
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The part of corporate profits that is paid to the shareholders of a corporation is

Correct Answer
verified

Present value is

Correct Answer
verified

Let us suppose that if Oprah Winfrey was not a superstar she would have been a judge making $100,000 per year. If she makes $63 million dollars this year, her economic rent is

Correct Answer
verified

All of the following are characteristics of a proprietorship EXCEPT

Correct Answer
verified

Correct Answer
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Even though Amber has been making accoun...
View Answer

Any business wanting to attract financial capital must expect to

Correct Answer
verified

Accounting profits are total revenues minus

Correct Answer
verified

The most commonly accepted objective for a firm is

Correct Answer
verified

A disadvantage of the corporate form of business organization is

Correct Answer
verified

Accounting profit will always be

Correct Answer
verified

The present value of a sum to be received in the future is greater

Correct Answer
verified

A payment for the use of an input that exceeds the opportunity cost of the input is known as

Correct Answer
verified

The higher the expected rate of inflation,

Correct Answer
verified

Correct Answer
verified

Exam 21: Rents, Profits, and the Financial Environment of Business

Which of the following is a disadvantage of the corporate form of business organization?

Correct AnswerverifiedShow Answer

Which of the following is not a principal method of financing today?

Correct AnswerverifiedShow Answer

The most prestigious stock market in the world is the

Correct AnswerverifiedShow Answer

An advantage of the corporate form of business organization is

Correct AnswerverifiedShow Answer

Which of the following is not a disadvantage of a proprietorship?

Correct AnswerverifiedShow Answer

By definition, a proprietorship is

Correct AnswerverifiedShow Answer

The part of corporate profits that is paid to the shareholders of a corporation is

Correct AnswerverifiedShow Answer

Present value is

Correct AnswerverifiedShow Answer

Let us suppose that if Oprah Winfrey was not a superstar she would have been a judge making $100,000 per year. If she makes $63 million dollars this year, her economic rent is

Correct AnswerverifiedShow Answer

All of the following are characteristics of a proprietorship EXCEPT

Correct AnswerverifiedShow Answer

Correct AnswerverifiedEven though Amber has been making accoun...View AnswerShow Answer

Any business wanting to attract financial capital must expect to

Correct AnswerverifiedShow Answer

Accounting profits are total revenues minus

Correct AnswerverifiedShow Answer

The most commonly accepted objective for a firm is

Correct AnswerverifiedShow Answer

A disadvantage of the corporate form of business organization is

Correct AnswerverifiedShow Answer

Accounting profit will always be

Correct AnswerverifiedShow Answer

The present value of a sum to be received in the future is greater

Correct AnswerverifiedShow Answer

A payment for the use of an input that exceeds the opportunity cost of the input is known as

Correct AnswerverifiedShow Answer

The higher the expected rate of inflation,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Even though Amber has been making accoun...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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