BUSINESS-ENVIRONMENT-AND-CONCEPTS Online Practice Questions and Answers

Correct Answer: C

Choice "c" is correct. When a judgment is obtained against both a partnership and an individual general partner, the plaintiff must proceed against the partnership assets first and then the assets of any individual general partner. The partnership assets must be exhausted before any general partner's individual assets can be attached. Choices "a", "b", and "d" are incorrect, per the above rule.

Correct Answer: D

Choice "d" is correct. If a corporation enters into a contract and a director has a conflict of interest in the transaction, the contract is voidable unless the director makes full disclosure of all of the facts to the disinterested directors or the shareholders, who then approve the transaction, or the director can prove that the transaction was fair to the corporation. The stationery purchase was fair to Quick, since it was purchased at a below-market price. Thus, the contract is valid. Choice "a" is incorrect. A director's self-dealing does not automatically make a contract voiD. The contract can be upheld if it was fair. Choice "b" is incorrect. A director's self-dealing does not automatically make a contract voiD. The contract can be upheld if it was fair. Choice "c" is incorrect. If a corporation enters into a contract and a director has a conflict of interest in the transaction, the contract is voidable unless the director makes full disclosure of all of the facts to the disinterested directors or shareholders, who then approve the transaction, or the director can prove that the transaction was fair. Mere disclosure after the contract was adopted does not automatically render the contract valid.

Correct Answer: D

Choice "d" is correct. Illegal dividends from an insolvent company must be repaid to the corporation for the benefit of the creditors. A shareholder who knowingly accepts an illegal dividend is liable to return it. Choices "a" and "b" are incorrect. If a director does not breach any duties in approving a distribution, the director is protected by the business judgment rule and is not liable for the distribution whether the corporation is solvent or insolvent. Choice "c" is incorrect. A shareholder of a solvent corporation who unknowingly accepts an illegal distribution is not obligated to repay the distribution.

Correct Answer: B

Choice "b" is correct. As aggregate demand falls, the unemployment rate rises so employment would

decrease.

Choice "a" is incorrect. The price level would fall, not rise.

Choice "c" is incorrect. Real GDP would fall, not rise.

Choice "d" is incorrect. The unemployment rate would rise, not fall.

Correct Answer: C

Choice "c" is correct. When the economy is operating at full employment, there is no cyclical

unemployment. When the economy is operating at full employment, there is still some unemployment

known as the natural rate of unemployment, which does not include cyclical unemployment.

Choice "a" is incorrect. There is still some unemployment (frictional, structural, and seasonal) when the

economy is operating at full employment.

Choice "b" is incorrect, per the above Explanation.

Choice "d" is incorrect, per the above Explanation.

Correct Answer: D

Choice "d" is correct. Demand is elastic if a decline in price (P) results in an increase in total revenue (TR);

or if an increase in P results in a decline in TR. On the other hand, if demand is inelastic, a decline in P will

result in a decline in TR or an increase in P will result in an increase in TR.

First, the total revenues at both the new and the previous rate must be computed. The (new or previous)

rate* average games played (AGP) = the total revenue. As a result, TR at the previous rate (PR) is 800 for

regular weekday (RW), 900 for senior citizen (SC), and 3315 for the weekend (WE). TR at the new rate

(NR) is 770 for RW, 656 for SC, and 4460 for WE.

So, demand for RW and SC is elastic because the increase in P results in a decline in total revenue. The

demand for WE is inelastic because the increase in P results in an increase in TR.

As a result, choices "a", "b", and "c" are incorrect.

Note: if TR remains constant after a change in P, the demand is unit elastic.

Correct Answer: D

Choice "d" is correct. The total cost for a standard account is:

Cost per year for premium is cost of the extra amount ($2,000) that Kemple must maintain in the account.

Total per year premium (10% ?$2,000) = $200

The premium account will save $16.

Choices "a", "b", and "c" are incorrect, per the above calculation.

Correct Answer: D

Choice "d" is correct. Obsolescence is an example of a carrying cost. Choices "a", "b", and "c" are incorrect. Carrying cost is not:

A. Disruption of production schedules.

B. Quantity discounts lost.

C. Handling costs.