EOC Review 2

An advantage of a corporation is that

• owners pay fewer taxes than owners of other forms of business.
• the business is subject to little government regulation.
• owners have limited liability for debt.
• owners have direct and immediate control over daily management of the business.

Perfect competition is characterized by

• a large number of sellers and buyers.
• diverse products.
• sellers acting together to set prices.
• uninformed buyers and sellers.

A monopoly that is based on the ownership or control of a manufacturing method, process, or other scientific advance is a 

• geographic monopoly
• natural monopoly
• government monopoly
• technological monopoly

Under perfect competition,

• products are similar but not identical.
• numerous restrictions prevent firms from entering the market.
• no seller can sell a product above the prevailing market price.
• a single seller can affect price.

A market structure in which one firm has a monopoly because of its location is a 

• natural monopoly.
• geographic monopoly.
• technological monopoly.
• government monopoly.

Which market structure is BEST indicated by the soda market?

• monopoly
• pure competition
• oligopoly
• natural monopoly

Ramon decided to open his own software business. He borrowed money from a bank to buy computers and office equipment, and he hired one assistant. What is one DISADVANTAGE of Ramon's type of business organization? 

• limited liability
• ease of start-up
• flexibility
• unlimited liability

The MOST LIKELY reason for an entrepreneur to start a new business is 

• to make a profit.
• to risk financial failure.
• to create a new social benefit.
• to discover a new product.

Which type of business organization has the advantage of limited liability but the disadvantage of less control over business decisions?

• perfect competition
• partnership
• sole proprietorship
• corporation

An industry that is dominated by a few large firms is 

• monopolistic competition.
• a monopoly.
• perfect competition.
• an oligopoly.