Question 1

The more widely power is distributed within a firm, the more cautious it is likely to be.

Accepted Answer

A) True 
 B)False

Question 2

Asymmetric information is said to be the main cause of the principal- agent problem.

Accepted Answer

A) True 
 B)False

Question 3

What are private limited companies?

Accepted Answer

They are joint- stock companies. They ar...

Question 4

Consider a production manger of a multi- model automotive company. The manager is responsible for the production line that assembles one car. How may this manager's objectives conflict with shareholder objectives?

Accepted Answer

This manager will be concerned with prod...

Question 5

If a firm is cautious, will it survive?

Accepted Answer

There are no guarantees. It is possible ...

Question 6

What are the main advantages of being a public limited company?

Accepted Answer

A key advantage of a public limited comp...

Question 7

It is common for a consortium to be formed for projects that hold relatively low risk.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is often an advantage for a sole proprietor?

Accepted Answer

A)   Good scope for rapid expansion
B)   Unlimited liability
C)   Can adapt relatively rapidly to market conditions
D)   Limited liabilityE) A) and B)
F) B) and D)

Question 9

Limited liability means that, legally, shareholders cannot take part in the running of the firm in which they have shares.

Accepted Answer

A) True 
 B)False

Question 10

If a business pursues a single strategy in different countries, business economists call this an integrated international enterprise.

Accepted Answer

A) True 
 B)False

Question 11

The principal- agent problem arises because of

Accepted Answer

A)   scarcity.
B)   countervailing power
C)   moral hazard.
D)   asymmetric information.E) A) and B)
F) A) and C)

Question 12

Larger firms tend to adopt either U- form or 'flatter' organisational structures.

Accepted Answer

A) True 
 B)False

Question 13

Cautious firms do not survive. Discuss.

Accepted Answer

Cautious firms may find that they lose o...

Question 14

If a business holds controlling interests in a number of other companies or subsidiaries, economists call this

Accepted Answer

A)   a transnational association.
B)   a holding company.
C)   an integrated enterprise.
D)   global outsourcing.E) A) and B)
F) A) and C)

Question 15

The purpose of forming a private limited company is to encourage people to invest in large enterprises with relatively little risk.

Accepted Answer

A) True 
 B)False

Question 16

When economists talk about business organisations they are referring to

Accepted Answer

A)   public corporations.
B)   private sector firms.
C)   co- operatives.
D)   all of the aboveE) None of the above
F) B) and C)

Question 17

If a business is owned by_________it is called a_________.

Accepted Answer

A)   the state; public limited company
B)   shareholders; public corporation
C)   one person; sole proprietor
D)   customers; partnershipE) C) and D)
F) A) and C)

Question 18

Why may managers not operate in the interests of owners?

Accepted Answer

The existence of the principal- agent pr...

Question 19

If a business is owned by_________it is called a_________.

Accepted Answer

A)   shareholders; public corporation
B)   the state; public limited company
C)   customers; co- operative
D)   one person; partnershipE) C) and D)
F) A) and B)

Question 20

An 'M- form' firm has_________and a 'U- form' firm has_________.

Accepted Answer

A)   a major principal- agent problem; no principal- agent problem
B)   unitary structure; managerial structure
C)   strong shareholders; weak shareholders
D)   managerial structure; unitary structureE) A) and D)
F) C) and D)

Exam 3: Business Organisations

Which of the following is often an advantage for a sole proprietor?

Correct AnswerverifiedShow Answer

If a business is owned by_________it is called a_________.

Correct AnswerverifiedShow Answer

Cautious firms do not survive. Discuss.

Correct AnswerverifiedCautious firms may find that they lose o...View AnswerShow Answer

Consider a production manger of a multi- model automotive company. The manager is responsible for the production line that assembles one car. How may this manager's objectives conflict with shareholder objectives?

Correct AnswerverifiedThis manager will be concerned with prod...View AnswerShow Answer

Why may managers not operate in the interests of owners?

Correct AnswerverifiedThe existence of the principal- agent pr...View AnswerShow Answer

If a business is owned by_________it is called a_________.

Correct AnswerverifiedShow Answer

Asymmetric information is said to be the main cause of the principal- agent problem.

Correct AnswerverifiedShow Answer

If a business pursues a single strategy in different countries, business economists call this an integrated international enterprise.

Correct AnswerverifiedShow Answer

What are private limited companies?

Correct AnswerverifiedThey are joint- stock companies. They ar...View AnswerShow Answer

The principal- agent problem arises because of

Correct AnswerverifiedShow Answer

When economists talk about business organisations they are referring to

Correct AnswerverifiedShow Answer

The purpose of forming a private limited company is to encourage people to invest in large enterprises with relatively little risk.

Correct AnswerverifiedShow Answer

What are the main advantages of being a public limited company?

Correct AnswerverifiedA key advantage of a public limited comp...View AnswerShow Answer

If a business holds controlling interests in a number of other companies or subsidiaries, economists call this

Correct AnswerverifiedShow Answer

Limited liability means that, legally, shareholders cannot take part in the running of the firm in which they have shares.

Correct AnswerverifiedShow Answer

An 'M- form' firm has_________and a 'U- form' firm has_________.

Correct AnswerverifiedShow Answer

The more widely power is distributed within a firm, the more cautious it is likely to be.

Correct AnswerverifiedShow Answer

If a firm is cautious, will it survive?

Correct AnswerverifiedThere are no guarantees. It is possible ...View AnswerShow Answer

It is common for a consortium to be formed for projects that hold relatively low risk.

Correct AnswerverifiedShow Answer

Larger firms tend to adopt either U- form or 'flatter' organisational structures.

Correct AnswerverifiedShow Answer

Correct Answer
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If a business is owned by_it is called a_.

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Correct Answer
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Cautious firms may find that they lose o...
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This manager will be concerned with prod...
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Correct Answer
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The existence of the principal- agent pr...
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If a business is owned by_it is called a_.

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They are joint- stock companies. They ar...
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Correct Answer
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A key advantage of a public limited comp...
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Correct Answer
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An 'M- form' firm has_and a 'U- form' firm has_.

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Correct Answer
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There are no guarantees. It is possible ...
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Correct Answer
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Correct Answer
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