Unit 2 Test Review

Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?

• Product Market

• Factor Market

• Firms

• Individuals

What do businesses provide for consumers according to the circular flow model?

• goods and services
• only goods
• only services
• taxes

What do households provide to the resource market?

• land, labor, capital 
• money
• people
• income

In the circular flow model, the product market describes _____.

• firms that sell goods and services to households

• the government paying for public goods
• households selling their labor to businesses
• households receive income from businesses

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

• Factor Market

• Product Market

• Firms

• Individuals

Sole proprietors have ____________, a situation in which a business owner is responsible for all the losses, debts, and other claims against the business.

• unlimited liability

• limited liability

• legal immunity

• dividend

A __________ is a form of business organization recognized by law as a separate legal entity having all the rights of an individual. It has the right to buy and sell property, enter into legal contracts, and sue and be sued.

• corporation

• partnership

• conglomerate

• proprietorship

What is a dividend?

• the part of the corporate debt owed by the stockholders

• the part of the corporation most available to stockholders

• the part of the corporate profits paid to a stockholder

• the part of the corporation owned by a stockholder

Which is an example of a general partnership?

• Bob runs the business using money invested by Bill, Carrie, and Laura.

• Pedro and Ramon each invested in the business, but neither is responsible for the other's actions or debts.

• Jan and Marie invest equal amounts of money and share all profits and losses.

• Lee makes all the decisions in the business, but Trung works just as many hours as Lee does.

What do many people consider to be the chief advantage of sole proprietorship?

• The owner does not have to obey labor laws.

• The owner has unlimited startup funds.

• The owner keeps all the profits.

• The owner has unlimited liability.