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Chapter 14 Practice Test
1. Please name two advantages of a corporation.
See circuit
2. According to the law of supply, if the price of a good or service increases, the
quantity supplied INCREASES
3. In the circular flow model, please name four items that are exchanged.
GOODS, SERVICES, MONEY, LAND, LABOR, CAPITAL
4. Please name two disadvantages of a partnership.
See circuit
5. What type of business is owned by one person?
SOLE PROPRIETORSHIP
6. T or F Advertising can affect the demand for a product.
7. Producers give WAGES to workers in exchange for their labor.
8. Why have large corporations grown in importance?
CAN PRODUCE ITEMS WITH LESS EXPENSE
PRODUCE 90% OF ITEMS SOLD IN THE u.s.
9. Please name two advantages of a sole proprietorship.
See circuit
10. Why do entrepreneurs start a business?
HOPE TO CREATE A SUCCESSFUL BUSINESS THAT WILL MAKE A PROFIT
11. What are the three types of businesses?
CORPOATION, PARTNERSHIP, SOLE PROPRIETORSHIP
12. Which type of business produces the greatest amount of goods and services?
CORPORATION
13. In the circular flow model, businesses pay RENT in return for land.
14. According to the law of demand, if the price of a good or service increases, the
quantity demanded DECREASES
15. Which type of business sells stock?
CORPORATION
16. T or F Yellow-dog contracts are weapons used by laborers.
17. Name three things that unions want to improve about their member’s employment.
WAGES, WORKING CONDITIONS, BENEFITS
18. Why do corporations sell stock?
RAISE MONEY TO HELP THE BUSINESS GROW
19. Please name two advantages of a partnership.
See circuit
20. According to the law of supply, if the price of a good or service decreases, the
quantity supplied DECREASES
21. T or F Styles of fashion can influence the demand for products.
22. How is the market price of a good or service determined?
WHERE SUPPLY AND DEMAND MEET—NEGOTIATION BETWEEN BUYERS
AND SELLERS
23. Who owns a corporation?
STOCKHOLDERS
24. Please name two disadvantages of a corporation.
See circuit
25. How does a corporation act in the legal system?
AS A SINGLE PERSON
26. Please name three examples of service industries.
WAITER/WAITRESS, HOUSEKEEPER,
27. Why did labor unions begin?
IINDIVIDUAL WORKERS HAD LITTLE CONTROL OVER WAGES & WORKING
CONDITIONS
28. According to the law of demand, if the price of a good or service decreases, the
quantity demanded INCREASES
29. T or F
The popularity of brands affects the demand of goods and services.
30. Which type of business has the most risk for its owners? Why?
SOLE PROPRIETOSHIP—ALL RESPONSIBILITY FOR BUSINESS DEBTS
31. What industry or sector has seen the greatest growth in the past 10 years?
SERVICE
32. Please name two disadvantages of a sole proprietorship.
See circuit
33. When you buy more of a product because the price is low, you are demonstrating
what economic law?
DEMAND
34. Why type of business can produce goods and services most efficiently?
CORPORATIONS
35. What type of business is owned by two or more people?
PARTNERSHIP
36. Why is labor different from the other factors of production?
CARE ABOUT WAGES, WORKING CONDITIONS, REWARDS FOR PERFORMANCE
37. Producers make more shirts to sell at $100 than they did when the price was $50.
This shows which economic law?
SUPPLY
38. What payment do producers exchange for use of capital?
INTEREST
39. Graph the demand curve.
41. Identify and label the market price/equilibrium.
42. Label a value at which a surplus occurs.
40. Graph the supply curve.
43. Label a value at which a shortage occurs.
Market for Bushels of Corn
Price
$10
$20
$30
$40
$50
Total Quantity
Demanded
400
275
100
60
30
Price
$10
$20
$30
$40
$50
Total Quantity
Supplied
20
80
100
300
430