ECON 1050 Chapter 10: Economics-1 (1) (dragged) 4

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17 Sep 2016

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The proprietor also makes management decisions and receives the firm"s profit. Profits are taxed the same as the owner"s other income. A partnership is a firm with two or more owners who have unlimited liability. Partners must agree on a management structure and how to divide up the profits. Profits from partnerships are taxed as the personal income of the owners. A corporation is owned by one or more stockholders with limited liability, which means the owners who have legal liability only for the initial value of their investment. The personal wealth of the stockholders is not at risk if the firm goes bankrupt. The profit of corporations is taxed twice once as a corporate tax on firm profits, and then again as income taxes by stockholders receiving their after-tac profits distributed as dividends. Pros and cons of different types of firms. Each type of business organization has advantages and disadvantages.

Related Questions

Match Column A with Column B

1) Partnership	a) a business owned by one person who is personally liable for all losses
2) Proprietorship	b) An artificial being created by a state
3) Limited partnership	c) two or more persons combine their efforts for a single transaction
4) Corporation	d) created when shareholders elect to be treates as partners for tax purposes
5) legal capacity	e) created by an agreement between two or more persons who agree to share profits and losses
6) buy-and-sell agreement	f) provides for compensation to a deceased or withdrawing owner of a business in return for that owners interest.
7) Subchapter S corporation	g) the ability of an organization to sue or to own property
8) joint venture	h) exists when some partners are treated like shareholders for liability purposes
9) limited liability company	i) tax doctine that allows income to be taxed at the owner level, not the organization level
10) "pass through"	j) owners recieve limited liability and tax treatment as if they were a partnership without filing as a corporation.

46. In a proportional income tax system,

marginal tax rates increase as the level of taxable income increases.

marginal tax rates are the same regardless of the level of taxable income.

everyone pays the same dollar amount in taxes.

marginal tax rates decline as the level of taxable income declines.

47 A tax system that applies a lower marginal tax rate at higher levels of income is

backward.

regressive.

progressive.

proportional.

48 The average tax rate can be calculated by which of the following formulas?

The change in taxes due divided by the change in taxable income

The change in taxable income divided by the change in taxes due

Total taxable income divided by total taxes due

Total taxes due divided by total taxable income

49 Under a progressive income tax system, the marginal income tax rate paid by taxpayers

declines as their incomes increase

. is unrelated to their incomes.

rises as their incomes increase.

is unchanged as their incomes increase.

50 The tax base is the minimum amount of tax revenue that government must collect each year.

the maximum amount of tax revenue that government must collect each year.

the sum of all incomes earned in the United States.

the value of all goods, services, incomes, or wealth subject to taxation.

51 A capital gain is defined as the tax paid when one sells an asset.

the tax rate one pays when one moves into a higher tax bracket.

an unanticipated increase in income.

the positive difference between the sale price and the purchase price of an asset.

52 Corporate profits are

taxed twiceonce by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends.

taxed only when a stockholder sells his or her shares of stock.

taxed at too low a rate.

taxed three timesonce by the corporate tax system, again by the personal tax system, and again as capital gains.

53 Social Security taxes are regressive because

they apply only to rich people.

they are not applied to income beyond a certain amount.

they are applied to welfare recipients.

they are applied to retired people only.

54 The largest share of federal government tax receipts is derived from

excise taxes.

individual income taxes.

corporate income taxes.

social insurance contributions.

55 Local government expenditures depend on which taxes?

Social Security taxes

Local property, sales, and excise taxes

Capital gains taxes

Revenues from licenses and permits

56 When the purchase price of an asset is less than its sale price, then there is a

budget deficit.

corporate income tax.

capital gain.

capital loss.

57 The earnings that a corporation saves for investment in other productive activities are

transfers in kind. c

apital gains.

tax incidence.

retained earnings.

58 Tax incidence refers to

determining who sends the taxes into the government.

the distribution of tax burdens among groups, or who really pays a tax.

the tendency of some people to avoid paying taxes at all.

determining the marginal tax rate applied to any increase in income.

59 Social Security taxes are paid by

neither employers nor employees

both employers and employees.

employers only.

employees only.

ivoryfrog360

Question 1: Answer the following MC questions...

a).

Samuel F.B. Morse patented the (5 points)

A.	telegraph
B.	automobile
C.	audio recorder
D.	radio transmitter

b).

Your friend wants to open a clothing shop. A necessary capital resource is a (5 points)

	A. place to open the shop
	B. knowledgeable fashion manager
	C. license to conduct business
	D.highway billboard for advertising

c).

Jessica is a violinist who believes she can extend her method of learning music to early childhood education. She opens a preschool in her hometown, using her expertise to form an arts-based program. What factor of production is this? (5 points)

	A. Capital
	B. Entrepreneurship
	C. Labor
	D. Land

d).

Your friend hopes to expand her business to multiple locations. It would be best for her to create a (5 points)

	A. limited liability company
	B. sole proprietorship
	C. corporation
	D. partnership

e).

Root and Vine is a gardening collective and local delivery service started by two friends. Their clientele has grown, and they want to expand. The owners like the idea of protecting their personal property, but they want to maintain control of the business. Which type of organization might best suit their growth? (5 points)

	A. Sole proprietorship
	B. Partnership
	C. Limited liability company
	D. Corporation

f).

An oligopoly is a market for a good or service that (5 points)

	A. has few competitive firms
	B. is perfectly competitive
	C. has one buyer
	D. has one seller

g).

The greatest goal in advertising is to convince us (5 points)

	A. "wants" are unnecessary
	B. the firm has the best price
	C. a particular product is a "need"
	D. the product is the same as other firm's products

h).

"Don't be like John, who had no health insurance when he needed emergency surgery. We make health insurance easy and affordable." This advertisement targets your (5 points)

	A. fears
	B. rituals
	C. emotions
	D. social values

i).

Why do monopolies and oligarchies benefit producers over consumers? (5 points)

	A. Companies control price through demand.
	B. Competition is driven by factors other than price.
	C. Demand influences production more when competition is less.
	D. Few producers can generally control prices.

ECON 1050 Chapter 10: Economics-1 (1) (dragged) 4

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