An advantage of proprietorships is
A) the ease with which they can be formed and dissolved.
B) their ability to raise large amounts of equity capital.
C) the fact that their profits are not taxed.
D) the breadth of management expertise that comes from having a board of directors.
Answer: A
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In the short run, if the price level rises, then the overall economy can temporarily produce beyond its nominal capacity. One reason for this is that
A) existing capital equipment can be used more intensively. B) the unemployment rate usually rises dramatically along with the price level. C) workers can be switched from counted to uncounted production. D) wage rates rise almost simultaneously with the price level.
The most important function of the Fed is to
A) provide a system for collecting and clearing checks. B) regulate the money supply. C) collect taxes. D) support the federal government's deficit spending by buying government securities.
How does Adam Smith's idea of the "invisible hand" apply to the various parts, made by many different manufacturers in many different countries, that are used by Apple to produce an iPad?
What will be an ideal response?
Related to the Economics in Practice on page 318: A company selling iced tea discovers that as sugar is added to tea, customers' opinions of the taste of the tea rises for the first few grams of sugar and then drops. Even so, the company chooses not to add the amount sugar that would result in the best-tasting tea. Which of the following would explain why adding less sugar could be a wise decision?
A. Teas with less sugar are more likely to appeal to health-conscious consumers. B. Many products in the cold drink market are sold with substitutes for sugar, such as high fructose corn syrup. C. Manufacturers of tea are required to clearly indicate the amount of sugar in their products. D. The price of sugar added to tea is much less significant than the price of other ingredients, such as tea leaves.