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Macroeconomics Ch 6-7 Dr. Z Online Review

Which type of business is the most difficult to set up?
Corporation
How do a sole proprietorship and a corporation differ?
1. Corporations face more taxes than do proprietorships
2. Corporations can issue stocks and bonds, while proprietorships cannot
3. Proprietorships have unlimited liability while corporations have limited liability
Assume that you set up a sole proprietorship and your lawyer tells toy that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. That means a sole proprietorship
Faces unlimited liability
Who controls a sole proprietorship?
The owner
A corporation is owned by its
Stockholders
How does the owner of a sole proprietorship relate to the business?
The owner and the business are not separate legal entities
In a typical year, ____ of new jobs are created by small firms.
40%
85% of all firms employ __ workers.
Fewer than 20
The owners of a ___ have a separate legal distinction from the business.
Corporation
Limited liability
The personal assets of the owners cannot be claimed If the business is bankrupt
How are corporate profits taxed in the United States?
Earnings are taxed first as corporate profits then as personal income after dividends are paid
Which type of business earns the majority of it profits in the United States?
Corporations
What controls a partnership?
The owners
The interest payment on a bond is called
The coupon payment
A tariff is tax posed by a government on
Imports
Goods and services bought domestically but produced in other countries are referred to as
Imports
Exports are domestically produced goods and services
Sold to other countries
Absolute advantage is
The ability to produce more of a good or service than competitors when using the same amount of goods and services
____ is the ability if an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors
Comparative advantage
Under autarky, the dead weight loss is
$0
Suppose the government allows imports of leather footwear into the united sates. What happens to the market price and what is the quantity of imports?
Price falls to $18
Imports go up to 10
Under autarky, consumer surplus is represented by the area
Above the equilibrium price and below the demand curve
A tariff is
A tax imposed by a government in goods imported into a country
A numerical limit imposed by a governed on the quantity is a good that can be imported into the country is called a
Quota
A tariff
Makes domestic consumers worse off
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. The tax revenue collected by the government equals the area
T/E. the government tariff revenue
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. The impact of the tariff is shown by
K 42 million lbs
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. Without the tariff in place, the United States produces
I 9 million lbs
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. With the tariff in place, the United States
F-E 16 million lbs
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. As a result of the tariff, domestic producers increase their quantity supplied by
E-I 6 million lbs
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. The increase in domestic producer surplus as a result is the tariff is equal to the area
C
Suppose the u.s. government imposes a $.40 per pound tariff in rice imports. The tariff causes domestic consumption of rice
Fall by 11 million
The main purpose of most tariffs and quotas is to
Reduce the foreign competition that domestic firms face

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