Name __________________________
Quiz Date / due date ______________
Business Organizations
Principles and Practices of Economics
Chapter 8 Study Guide
Directions: Referring to your text, read pages 185-204, and answer the following
questions. Use this as a reference when studying for the chapter quiz, and be prepared to
turn it in for credit prior to taking the quiz.
Section 1:
1. An establishment formed to carry on a commercial enterprise is known as a
_____________________ __________________________.
2. What is the most common form of business organizations? ________________
_________________
3. A sole proprietorship is a business owned and managed by how many people?
___________
4. About what percentage of all businesses in the U.S. are sole proprietorships? ____%
5. About what percentage of all sales do these businesses generate in the U.S.? ____%
6. Identify the five major advantages of sole proprietorships:
a. ___________________________________
b. ___________________________________
c. ___________________________________
d. ___________________________________
e. ___________________________________
7. What is the term for the type of laws that designate separate areas for residential use
and business use? _____________________
8.
Identify the three major disadvantages of sole proprietorships:
a. ___________________________________
b. ___________________________________
c. ___________________________________
9. The term for being legally obligated to pay debts is called ________________.
10. If a sole proprietor’s business fails, what might he have to sell to pay off debts in
addition to any remaining business assets? _________________________________
Section 2:
11. A business organization owned by two or more persons who agree on a specific
division of responsibilities and profits is known as a _________________________.
12. When partners share equally in responsibility and liability it is known as what kind of
partnership? _______________________
13. When a partnership is set up so that one person has unlimited liability and the other
partner contributes only money it is a ______________________ partnership.
14. Which partner can lose only the amount of his/her investment? _________________
15. Identify the four major advantages of partnerships:
a. ___________________________________
b. ___________________________________
c. ___________________________________
d. ___________________________________
16. Identify the two major disadvantages of partnerships:
a. ___________________________________
b. ___________________________________
Section 3:
17. The type of business organization that is a legal entity, owned by stockholders is
known as a _________________________.
18. As an entity, a corporation must pay _______________, can engage in business,
make contracts, sue other parties, and get sued by others.
19. About what percentage of all businesses in the U.S. are corporations? ____%
20. About what percentage of all sales do these businesses generate in the U.S.? ____%
21. Who makes the major decisions of a corporation? ________________________
22. A state license that must be filed for a company to incorporate is known as a
corporate charter or _____________________ ____ ________________________.
23. The portion of corporate profits paid out to stockholders is known as _____________
24. The federal agency that regulates the stock market and keeps records on corporations
is known as the _________________ ____ _______________ __________________
25. When corporations combine, the term for that combination is merge. There are three
types of mergers. Briefly describe each:
a. Horizontal Merger:
b. Vertical Merger:
c. Conglomerate:
26. What do trends suggest about Multinational Corporations?
Section 4:
27. A semi-independent business that pays fees to a parent company is known as a
business ____________________________.
28. Identify the five major advantages of franchises:
a. ___________________________________
b. ___________________________________
c. ___________________________________
d. ___________________________________
e. ___________________________________
29. Identify the four major disadvantages of franchises:
a. ___________________________________
b. ___________________________________
c. ___________________________________
d. ___________________________________
1. What is the name of the non-profit organization which is sponsored by
local businesses whose goal is to protect consumers by promoting a fair
and ethical marketplace? ___________________ ________________
_______________