LAW 531T Week 2 Practice Assignment

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Week 2 Practice Assignment

1. True or false: Some small businesses may issue stocks to employees instead of compensation when money is tight.

 True False

2. Which of the following is not true of corporations?

o Executives are not subject to the same duty of care in carrying out the corporation's purposes as the board of directors.

o The board of directors hires executives of a corporation.

o Directors will not be subject to lawsuit from shareholders as long as they act in a reasonable and prudent way.

o Executives carry out the day-to-day operations of the corporation.

3. True or false: In a franchise agreement, the franchisor and the franchisee are separate legal entities.

 True False

4. Which of the following is not true of general partnerships?

o Partners have an equal right to engage in the management of the business.

o Partners must always agree to split the profits and losses evenly.

o Partners share profits and losses according to the partnership agreement.

o Partners have joint ownership of business assets.

5. Corporations created to assist doctors, lawyers, accountants, and so on are known as _________________ corporations.

o not-for-profit

o closely held

o alien

o professional

6. True or false: Profits and losses from an LLC must be distributed in the same proportion to all members.

 True False

7. Which of the following is true of general and limited partners in a limited partnership?

o General and limited partners are jointly responsible for partnership debt.

o Limited partners are not liable for partnership debts.

o General partners are not liable for partnership debts.

o General partners are required to invest capital and refrain from managing the business.

8. Which of the following is not true of a business operating under sole proprietorship?

o A sole proprietor pays only personal taxes.

o A sole proprietorship is considered a separate legal entity.

o If the owner dies, the business usually dies as well.

o No government approval is required to set up a sole proprietorship.

9. An administrative agency is prohibited from doing all but which of the following?

o extending beyond its authority

o making arbitrary laws

o violating judicial decisions

o exercising legislative power

10. Which of the following is true of administrative agencies?

o All administrative agencies answer directly to the president.

o Administrative agencies may overrule judicial decisions.

o An existing administrative agency may not create a new law.

o Each state and local government has administrative agencies.

11. _________________ establishes the protocol that must be followed by an administrative agency while enforcing a(n) _________________.

o Substantive law; procedural law

o Interpretive law; substantive law

o Procedural law; substantive law

o Substantive law; interpretive law

12. True or false: Production cost may be used as a defense against a company accused of price discrimination.

 True False

13. The act of controlling prices for goods and services is known as _________________.

o dividing markets

o controlling output

o regulating competitive practices

o price fixing

14. An agreement to refuse to deal with another business is known as a _________________.

o boycott

o split

o control

o division

15. Which of the following is not a prerequisite to be considered a failing company prior to entering a merger?

o No other buyer is available to rescue the company.

o Too much competition exists in a particular geographical area.

o There is no other reasonable alternative.

o Its assets would evaporate but for a merger.

16. Which of the following is a legitimate defense against a claim of exercise of monopoly power?

o The business acquired the monopoly innocently as an unintended consequence of another purpose.

o The business owns 75 percent of the product market.

o The business owns 25 percent of the geographical market.

o The business engaged in a tying arrangement with another business.

17. One business having almost all of one product type or service within a geographical area is known as _________________ power.

o horizontal

o monopoly

o consolidated

o vertical

18. True or false: The calculation of monopoly power rests squarely on a firm’s percentage of dominance in the relevant market.

 True False

19. The U.S. Supreme Court has developed two tests for determining the lawfulness of an agreement: the per se rule and the _________________.

o rule of reason

o rule of competition

o rule of trust

o rule of law

20. In a(n) _________________, the distributor requires the purchaser of another product to buy another associated product.

o exclusive dealing agreement

o tying arrangement

o geographic allocation agreement

o price maintenance agreement