1.2 GCSE Introducing Business Ownership Types

What is a mixed economy?

• An economy with only private organisations

• An economy with only public organisations

• An economy with both private and public organisations

• An economy with no organisations

Answer explanation

A mixed economy combines both private and public organizations, allowing for a balance between free market and government intervention. This is why the correct answer is 'An economy with both private and public organisations'.

Which of the following is a characteristic of a sole trader?

• Owned by shareholders with limited liability

• Owned by one person with unlimited liability

• Owned by the government

• Owned by two or more partners with limited liability

Answer explanation

A sole trader is owned by one person who has unlimited liability, meaning they are personally responsible for all debts. This distinguishes it from corporations, which are owned by shareholders with limited liability.

What type of business ownership is characterised by shares that cannot be bought by the public?

• Sole trader

• Partnership

• Private limited company

• Public limited company

Answer explanation

A private limited company is characterized by shares that cannot be bought by the public, unlike a public limited company where shares are available for public trading. Sole traders and partnerships do not issue shares.

Which type of business ownership allows shares to be purchased on the Stock Exchange?

• Sole trader

• Partnership

• Private limited company

• Public limited company

Answer explanation

A Public Limited Company (PLC) can sell shares to the public on the Stock Exchange, allowing for greater capital raising. In contrast, sole traders, partnerships, and private limited companies do not have this capability.

In a partnership, what is the liability status of the partners?

• Limited liability

• No liability

• Unlimited liability

• Government liability

Answer explanation

In a partnership, partners have unlimited liability, meaning they are personally responsible for all debts and obligations of the business. This contrasts with limited liability entities, where personal assets are protected.

Which sector of the economy is controlled by the government?

• Private sector

• Public sector

• Mixed sector

• Corporate sector

Answer explanation

The public sector is the part of the economy that is controlled by the government, encompassing government services and enterprises. In contrast, the private sector is owned by individuals or companies.

Which of the following is NOT a type of private sector business ownership?

• Sole trader

• Partnership

• Public limited company

• Government agency

Answer explanation

A government agency is a public sector entity, not a private sector business ownership type. Sole traders, partnerships, and public limited companies are all forms of private sector ownership.

What is the liability status of shareholders in a public limited company?

• Unlimited liability

• No liability

• Limited liability

• Government liability

Answer explanation

In a public limited company, shareholders have limited liability, meaning they are only responsible for the company's debts up to the amount they invested. This protects their personal assets from being used to settle company debts.

Which type of business ownership is typically involved in providing essential services to the public?

• Sole trader

• Partnership

• Private limited company

• Public sector

Answer explanation

The public sector is responsible for providing essential services to the public, such as healthcare, education, and public safety, unlike sole traders, partnerships, or private limited companies, which are typically profit-driven.

Which of the following is an advantage of being a sole trader?

• Limited liability.

• Easy to set up and manage.

• Access to large amounts of capital.

• Shared decision-making.