Question

question 1 (1 point)
preferred stock represents the nonvoting ownership of a corporation.
true
false

question 2 (1 point)
limited liability is one characteristic of the corporate form of business organization.
true
false

question 3 (1 point)
investors in corporations have unlimited liability for the companys debts.
true
false

question 4 (1 point)
unlike a general partnership, in a limited partnership
a the inactive partner has limited liability for the businesss debts.
b all partners share equal financial responsibility for the firms decisions.
c the partners must pay special business taxes.
d the business does not end with the death of a partner.

question 5 (1 point)
a merger of corporations involved in different steps of manufacturing or marketing is known as a
a vertical merger.
b horizontal merger.
c multinational merger.
d conglomerate.

question 6 (1 point)
an advantage of a corporation is that
a owners have direct and immediate control over daily management of the business.
b the business is subject to little government regulation.
c owners have limited liability for debt.
d owners pay fewer taxes than owners of other forms of business.

question 7 (1 point)
perfect competition is characterized by all of the following except
a well - informed buyers and sellers.
b identical products.
c a large number of buyers and sellers.
d sellers acting together to set prices.

Explanation:

• Question 1: Preferred stockholders usually do not have voting rights, so it represents non - voting ownership.
• Question 2: Limited liability is a key feature of the corporate form where owners' personal assets are generally protected from corporate debts.
• Question 3: Investors in corporations have limited liability, not unlimited liability for the company's debts.
• Question 4: In a limited partnership, the inactive (limited) partner has limited liability for the business's debts.
• Question 5: A merger of corporations at different steps of manufacturing or marketing is a vertical merger.
• Question 6: One of the main advantages of a corporation is that owners have limited liability for debt.
• Question 7: In perfect competition, sellers are price - takers and do not act together to set prices.

Answer:

Question 1: True
Question 2: True
Question 3: False
Question 4: a. the inactive partner has limited liability for the business's debts.
Question 5: a. vertical merger.
Question 6: c. owners have limited liability for debt.
Question 7: d. sellers acting together to set prices.