CHAPTER 1: Resource Utilization & Economics

Part I: Identification

Directions: Fill in the blanks.

____________________ 1. Refers to the scarce resources in demand.

____________________ 2. Considered the father of economics.

____________________ 3. The Greek word for economics.

____________________ 4. Developed the theory of political economy.

____________________ 5. Considered as the bible of economics.

____________________ 6. Developed the concept of IS-LM model.

____________________ 7. Refers to economics “as it is”.

____________________ 8. Science that manages limited resources in demand.

____________________ 9. Developed the theory of money, employment and interest.

____________________ 10. Refers to economics “as it should be”.

____________________ 11. A science related to economics, which deals with money.

____________________ 12. Denotes being productive.

____________________ 13. Refers to the creation of utility.

____________________ 14. Branch of economics that studies the behaviour of the economy as a whole.

____________________ 15. The foregone value of what you give up when you make choices.

____________________ 16. Refers to human effort exerted in producing goods.

____________________ 17. It means justice or fairness.

____________________ 18. A type of economic system wherein the production and distribution of commodities are owned and controlled by the government.

____________________ 19. Branch of economics concerned with individual decision making.

____________________ 20. Refers to man-made goods used in the production of other goods and services.

Part II: Research Analysis

1. Based on your personal observation, make a short discussion on the current status of the Philippine economy.

Guidelines:

Government system and its performance Various social unrest and crimes Environment status

Explanation:

The country’s local government code mandated significant devolution to local governments while local governments in the Philippines are tasked with bearing much of the burden of public administration and service provisions. The vast majority of localities are unable to effectively do so. We know that the Philippines is a good country and our performance has also increased; meaning, we are doing fine thanks to our politicians. The Philippine economy has experienced repeated 300M-AND-BUST cycles in the 5 decades since the nation achieved independence from the United States in 1946. During the 1950’s, during the presidency of Ferdinand Marcos, the nation experienced economic problems and social unrest; especially from the 1970’s during the dry season in the Philippines, they burn off the grass and fields. Roads are an insult with usually open sewers on the side and with only one decent highway from south to north. Lastly, the garbage disposal is only partly effective.

2. Briefly explain how you can apply economics in your daily life.

Guidelines:

Use of daily or weekly allowance Time management Chosen school and course.

Explanation:

My parents give an allowance of 2000 per week, plus 1000 per week for gas. I am able to save money when I bring my own food at school or when I eat cheap foods that cost only 40-60 pesos. I also bring my own container for my beverage, which helps me save more money than usual. It is great that my class every Monday and Friday is from 7:30-1:30 straight; this helps me save because I noticed that when having more breaks in school, one will tend to buy food or spend money on useless things. I can apply economics in my life by being able to save more money than usual and by being able to calculate how much I spend in my daily school life. I am currently studying in Mapua Institute of Technology. As to why I chose the school, I chose Mapua because of the schools excellence in the field of engineering. My course is also related to my parents business, which is a construction company. I want to someday, help my parents manage the business and that is the main reason why I chose Construction Engineering and

Management. Economics will help us save more money and will help our business grow even more.

Part III: Definition of Terms.

1. Economics – the efficient allocation of the scarce means of production toward the satisfaction of human needs and wants.

2. Microeconomics – the branch of economics, which deals with the individual decisions of units of the economy – firms and households, and how their choice determine relative prices of goods and factors or production.

3. Macroeconomics – the branch of economics that studies the relationship among broad economic aggregates like national income, national output, money supply, bank deposits, total volumes of savings, investment, consumption expenditure, general price level of commodities, government spending, inflation, recession, employment, and money supply.

4. Capitalism – economic system that is based on private ownership of the means of production and the creation of goods and services for profit.

5. Communism – a revolutionary socialist movement to create classless, money less, and stateless social order structured upon common ownership of the means of production as well as social, political and economics ideology.

6. Mixed Economy – economy that applies a mixture of three forms of decision-making.

7. Equity – justice and fairness.

8. Land – refers to all natural resources, which are given by, and found in nature, and are, therefore, not manmade.

9. Production – the problem of production is generally a concern of producers. They determine the needs, wants, and demands of consumers and decide how to allocate their resources to meet their demands.

10. Opportunity Cost – refers to the forgone value of the nest best alternative.

CHAPTER 2: Demand and Supply and Equilibrium

Part I: Matching Type: Match the items in Column A with Column B by writing the letter on the answer sheet provided below.

A B

1. Profit a. He demands for goods and services

2. Market b. Higher demand, less suply

3. Equilibrium c. The main goal of firms

4. Shortage d. A state of balance

5. Satisfaction e. The place where buyers and sellers trade

6. Increase in demand f. When supply curve shifts to the left

7. Increase in supply g. When demand curve shifts to the right

8. A fall in demand h. When supply curve shifts to the right

9. Decrease in supply i. When demand curve shifts to the left

10. If there is surplus j. Price ceiling

11. Consumer k. Forces that affect the slope of demand

12. Changing incomes l. Floor price

13. Technological change m. Forces that affect the slope of supply

14. Changes in expectation n. The main goal of consumers

15. Population change

16. Weather condition

17. If there is shortage

18. Taste of preferences

19. Factors of production

20. Substitute goods.

Part II. Graphs and Computation: Show your solutions in Simplest form.

A. Graph the Demand and Supply schedules (individual graph)

B. Solve for the Qd and Qs

A. Draw separate graphs showing the demand and supply schedule indicated in Part B.

B. Solve for the Qd and Qs

Given: Demand Schedule

Situation

Price(P)

Quantity(Q) Qd

A 1120 168 48B 891 287 41C 672 308 100D 523 439 207E 394 558 301F 145 627 209

Solution:

Supply Schedule

Situation

Price(P)

Quantity(Q) Qs

G 1856 1043 1002H 1538 952 904I 1147 791 705J 956 662 660K 685 357 375L 314 144 138

Solution:

Part III. Computation: Show your solutions in Simplest Form.

A. Solve for equilibrium Pe and Qe.

B. Determination of shortage, surplus and equilibrium.

A. Solve for Equilibrium Pe and Qe

1. Qd = 233-105P Qs = 599+2515P

2. Qd = 2982-677P Qs=659+3215P

3. Qd = 169,712-22,893P Qs = 20,395P

Solution:

Price Qd   Qs  

Surplus/

Shortage  

65 -4492 -41023 -131833316407

420963

4132567

5 surplus surplus surplus

55 -3442 -1089402 -108940313892

411748

4112172

5 surplus surplus surplus

45 -2392 -27483 -86047311377

414533

4 917775 surplus surplus surplus

35 -1342 -20713 -631543 886411318

4 713825 surplus surplus surplus25 -292 -13943 -402613 63474 81034 509875 surplus surplus surplus15 758 -7173 -173683 38324 48884 305925 surplus surplus surplus

Solution:

Part IV. Discuss the movements of demand and supply curves relative to the forces that affect them.

1. What are the reasons why demand curve increase or decrease

Discussion:

A demand decrease results from a change in any of the five demand determinants. A supply increase results from a change in any of the five supply determinants. By itself, a demand decrease results in a decrease in equilibrium quantity and a decrease in equilibrium price. By itself, a supply increase results in an increase in equilibrium quantity and a decrease in equilibrium price. A simultaneous decrease in demand and increase in supply unquestionably generates a decrease in the price. However, the change in the quantity is indeterminate. It might decrease or increase depending on the magnitude of the demand and supply changes. First, on the demand side, second on the supply sides.

2. What are the reasons why supply curve increase or decrease?

Discussion:

Price is usually a major determinant in the quantity supplied for a particular good with all other factors held constant, a table can be constructed of price and quantity supplied based. There are several factors that may cause a shift in a good supply curve: Prices of other goods – the supply of one good may decrease if the price of the other good increases, causing producers to reallocate resources to produce longer quantities of more profitable goods. Numbers of sellers move sellers result in more supply, shifting the supply curve to the right prices of relevant inputs. If the cost of resources used to produce a good increases sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left. Technology advances that increase

product efficiency shifts the supply curve to the right. Expectations – if sellers expect prices to increase, they may decrease the quantity currently supplied at a given price in order to be able to supply more when the price increase, resulting in a supply curve shift to the left.

CHAPTER 3: Elasticity of Demand and Supply

Part I. Analysis

Direction: Look for the price of the following products. Compare the estimated prices between year 2010 and year 2011, and price comment/s thereon.

Goods (P) 2010 (P) 2011 Comment/sPORK 165 180 The price increases

CHICKEN 110 130 The price increasesICE BLOCK 5 10 The price increasesCARROTS 16 25 The price increasesAPPLE 20 22 The price increases

Part II. Identification

____________________ 1. A change in price, which results in a greater change in quantity supplied.

____________________ 2. Degree of responsiveness of a demand for a good to a change in the price of a related good.

____________________ 3. A change in price, which results to a lesser change in quantity demanded.

____________________ 4. A change in price, which created no change in quantity demanded.

____________________ 5. The degree of responsiveness of quantity demanded to a small change in the income of the consumers.

____________________ 6. Reaction when there is a change in the prices of commodities.

____________________ 7. A change in price, which results to an equal change in quantity supplied.

____________________ 8. A situation wherein even without change in price, there is an infinite change in quantity supplied.

____________________ 9. The principal determinant of supply elasticity.

____________________ 10. Reaction or response of a buyer if the prices of goods and services change.

Part III. Computation (Show your solution)

Direction: Determine the elasticity in the given situation and indicate whether the same is elastic, inelastic or unitary.

Demand Schedule

Situation

Price(P)

Quantity(Q)

A 999 93B 875 123C 683 256D 424 367E 115 448F 98 517

1. Situations E and D2. Situations A and C3. Situations F and B

Solution:

Supply Schedule

Situation

Price(P)

Quantity(Q)

G 988 985H 832 763I 758 593J 533 425K 397 229L 227 98

1. Situations G and I2. Situations L and K3. Situations H and J

Solution:

CHAPTER 4: Consumer Behavior and Utility Maximization

Part I. Define the following terms:

1. Consumer – One who demands and consumes goods and services.

2. Goods – Anything that provide satisfaction to the needs, wants and desires of the consumer.

3. Consumer Sovereignty – Power to determine what us produced since we are the ultimate purchasers of goods and services.

4. Utility – Refers to the satisfaction or pleasure than an individual or consumer gets from the consumption of a good or service that he/she produced.

5. Consumer surplus – the difference between the total amount that we are willing and able to pay for a good or service and the total amount that we actually pay for that good or service.

6. Marginal Utility – defined as the additional satisfaction that an individual denies from consuming an extra unit of a good or service.

7. Marginal analysis – an examination of the additional benefits of an activity compared to the additional costs of that activity.

8. Total Utility – total satisfaction that a consumer denies from the consumption of a given quantity of a good or service in a particular time period.

9. LDMU – states that as consumption of something increases, the satisfaction (marginal utility) of having something decreases as every unit of that same thing is given to that same person.

10. Maximizing Utility – We are given the opportunity to maximize our satisfaction by continuously consuming more units of a certain good until our satisfaction falls down zero.

Part II: Essay

Directions: Answer the following questions briefly but thoroughly.

1. Explain the following concepts: Utility; Marginal utility; Total utility; the Law of Diminishing Marginal Utility; the Indifference curve; and the Budget line. Give examples to support your explanation.

Utility refers to the satisfaction or pleasure that an individual or consumer gets from the consumption of a good or service that he/she purchase. Marginal utility is defined as the additional utility satisfaction that an individual desires from consuming an extra unit of a good or service. Total utility is the total satisfaction that a consumer derives from the consumption of a given quantity of a good or service in a particular time period. LDMU states that as consumer gets more satisfaction in the long run, he experiences a decline in his satisfaction for goods and services, an indifference curve is a line that shows combination of goods among which consumer is indifferent. Budget line is a budget or consumption. Possibility line shows the various combinations of the products that can be purchased by the consumer with his income, given the price of the products.

2. Discuss the relationship between utility and price.

Utility is the value of a good or service, which gives to the user. The marginal utility curve is gradually slowing (except for certain items like narcotics) meaning the more you get something; the less extra bit (the marginal amount) is actually worth to us. For example when you’re dehydrated, the first Liter is essential and of very high value, but the 50thliter does not do you much good and winds up the floor. Measuring the utility function is an academic exercise; since we can’t say for sure one person’s utility is larger or smaller than another’s. Demand curves are generally an aggregation of individuals’ demands for a good or service. One can imagine that the aggregation is actually a kind of summation of individual demand curves. The axes of demand curves are price and quantity.

Part IV. Fill in the blank spaces provided using the words provided below.

1. A ____________________ or ____________________ possibility line shows the various combinations of two ____________________ that can be purchased by the ____________________ with his ____________________ given the prices of the products.

2. The ____________________ curve represents all the ____________________ of two ____________________, which give equal ____________________ to a consumer.

3. This means that ____________________ of more successive units of the same good increases total ____________________, but at a decreasing ____________________ because marginal utility ____________________.

4. Consumer ____________________ is the difference between the ____________________ amount that we are ____________________ and able to ____________________ for a ____________________ or ____________________ and the ____________________ amount that we actually ____________________ for that ____________________ or service.

5. The ____________________ utility of a ____________________ is the increase in ____________________ utility or ____________________ derived from the ____________________ of an ____________________ or extra unit of such ____________________; it is the loss of the ____________________ or ____________________ if one unit less is consumed.

6. Our total ____________________ usually increases as we consume more and more of a ____________________ or ____________________, but generally the increase is at a slower or declining ____________________.

7. Utility is also measured by how much a ____________________ is willing to ____________________ for a good or ____________________.

8. ____________________ are the ____________________ made by us ____________________ as to which ____________________ or services to consume.

9. A ____________________ is one who demands ____________________ and ____________________.

10. Consumer ____________________ are the ____________________ that yield ____________________ directly to any ____________________.

Part V. Computation (Show your Solutions)

Direction: Determine the Marginal utility.

Hypothetical Utility Schedule for Chicken Sandwich

Unit Purchased Total Utility Marginal Utility11 204 18.5524 318 8.7732 456 17.2546 588 9.4352 624 668 784 1072 872 2288 990 7.3894 1046 9.33102 2010 120.5

Solution:

CHAPTER 5: Production and Cost

Part I. Identification

Direction: Fill in the blanks. Write the correct answer on the spaces provided.

____________________ 1. An economic activity which combines the factors of production like land, labor capital and entrepreneurship.

____________________ 2.These are the expenses which a producer or a firm incurs for the use of various factors of production,

____________________ 3. It refers to the physical quantity of a commodity produced by various inputs of factors of production.

____________________ 4. The amount of money a firm receives from the sale of its output.

____________________ 5. It is another term for variable cost.

____________________ 6. It is another term for fixed cost.

____________________ 7. It is the reward for the services of an entrepreneur.

____________________ 8. It holds that we will get less and less extra output when we add additional doses of an input while holding other inputs fixed.

____________________ 9. A technology that utilizes more labor resources than capital resources.

____________________ 10. It is any resource, the quantity of which cannot readily be changed when market conditions indicate that a change in output is desirable.

____________________ 11. It indicates a case where a change in all inputs leads to a proportional change in output.

____________________ 12. It is any economical resource, the quantity of which can be easily changed in reaction to changes in output levels.

____________________ 13. It is the functional relationship between quantities of inputs used in production and outputs to be produced.

____________________ 14.it is also known as the planning horizon.

____________________ 15. A technology that utilizes more capital resources than labor resources in the production process.

Part II. Computation (Show your solutions)

Based on the given data, solve for total cost (“TC”), marginal cost (“MC“), average cost (“AC”), average fixed cost (“AFC”), and average variable cost (“AVC”).

Cost of Production

Q TFC TVC TC MC AFC AVC ATC78 420 525 945 0 0 0 12.12112 420 798 1218 8.03 3.75 7.13 10.88265 420 936 1356 0.9 1.58 3.53 5.12339 420 1256 1676 4.32 1.24 3.71 4.94477 420 2799 3219 11.18 0.8 5.87 6.75582 420 3008 3428 1.99 0.72 5.17 5.87665 420 4288 4708 15.42 0.63 6.45 7.08780 420 5367 5787 9.38 0.54 6.88 7.42

Solution:

Part III. Draw a graph showing the following: Total cost, marginal cost, average cost, average fixed cost and average variable cost.

Explanation:

This figure shows the relationship of total cost, marginal cost, average cost, average fixed cost and average variable cost.

CHAPTER 6: Profit, Loss and Perfect Competition

Part I. Define the following terms:

1. Profit – defined as the differences that arises when a firm’s total revenue is greater than its total cost.

2. Marginal revenue – thus is because marginal revenue is the increase in total revenue when output sold goes up by one unit.

3. Marginal cost – is the cost of producing one additional unit of outputs. Marginal analysis asks how much it costs to produce an additional unit of output.

4. Efficiency – efficiency is such an important economic concept that it is part of the definition of economics.

5. Perfect Competition – is a market structure with many well-informed sellers and buyers of an identical product and no barriers to entering or leaving the market.

6. Revenue – the total income produced by a given source.

7. Maximization – is the concept in economics that refers to individuals being provided incentive to relinquish something.

8. Profit Maximization – is the process by which a firm determines the price and output level that returns the greatest profit.

9. Loss – A negative difference between vet ail price and cost of production.

10. Average cost – average cost or unit cost is equal to total cost divided by the number of goods produce (the output quantity, Q). It is also equal to the sum of average variable costs.

Part II: Essay

Directions: Answer the following questions briefly but thoroughly.

1. Explain how profit maximization works in the business. State an example that will thoroughly discuss profit maximization.

Profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. Consider how profit maximization might work for the wacky willy company. Suppose that the wacky willy company generates $ 100,000.00 of profit by producing 100,000.00 stuffed amigos. This profit is the difference between $ 1,000,000.00 of revenue and $ 900,000.00 of cost.

If profit falls from this $ 100,000.00 level when the wacky willy company produces more (100,001) of fewer (99,999) stuffed amigos then it is maximizing profit at 100,000.00 Alternatively, if profit can be increased by producing more or less, then the wacky willy company is not maximizing profit.

2. Discuss how perfect competition differs from the other types of Market Structures. Do some research in advance.

In economics, market structure (also known as the number of firms producing identical products). Monopolistic competition, also called competitive market where there are a larger number of firms, each having a small proportion of the market share and slightly differentiated products. Oligopoly in where a market is dominated by a small number of firms that together control the majority of the market share. Monopoly, where there is only one, provider of a produce or service. Perfect competition is a theoretical market structure that features unlimited contestability (or no barriers to entry), an unlimited number of producers and consumers, and a perfectly elastic demand curve.

CHAPTER 7: Monopoly Market

Part I. Characteristics of Monopoly Market

Direction: Complete the table and explain thoroughly each characteristic in the given space provided.

Market Structures

Number of Sellers

Product Differences

Imposition of Prices

In and Out in the Industry Example

Monopoly 1 Unique Dictated No need for advertising Meralco

Explanation:

Monopoly is a market situation where there is only one seller of producer supplying unique goals and services. A monopoly market is compromised; a unique product means that there are no close substitutes for the monopolist product as such the monopolist forces little or no completion. The monopolist definitely makes price for his products or services. In other words it is the monopoly who dictates the prices of his commodities because the products or services offered are unique and have no class substitute in the market; in addition there is no need for an extensive advertising or sales promotion depending on the good or the service of the monopolist.

Part II. Research

Direction: Briefly discuss the background, current owner/s, existing competition, and market economic status of the following companies:

MARALCO (Philippines)

Explanation:

The wad MERALCO is an acronym for Manila electric Railroad and light Company, which was the company’s original name from 1903 to 1919. Meralco is metro manila’s only electric power distributor and holds the power distribution franchise for some 22 cities and 39 municipalities including the whole of metro manila and mega manila region. Marvel M. Lopez chairman; Manuel V. Pangilinan, president and CEO; Oscar S. Reyes, COO; Charles M. Swift, founder. The economic statues of meralco is more likely to go up then go down, why? Because the whole NCR and some parts of Luzon are under Meralco and NCR is one of the places where there is a huge amount of consumers consuming electricity in the Philippines.

Microsoft Corporation (Unites States of America)

Explanation:

Microsoft was established to develop and sell basic interpreters for the altar 8800. It rose to dominate the personal computer corporation system market with MS DOS, in the mid 1980’s, followed by the Microsoft windows line of operating systems. The company’s 1926 initial public offering, and subsequent rise in it’s same price, created an estimated three billionaires and 12,000 millionaires from Microsoft employees. Since the 1990’s, it has increasingly diversified from the operating system market and has made a number of corporate acquisitions. In May 2011, Microsoft acquired Skype technologies for $8.5 billion in its largest acquisition to date. Steve Balmer, CEO while Bill Gates as the chairman. Revenue - up versus $73.72 billion; operating income – down versus $21.76 billion; Net income – down versus $16.97 billion; total assets – up $121.2 billion, up 66.36 billion.

CHAPTER 8: Monopolistic Competition

Part I: Essay

Direction: Answer the following questions briefly but thoroughly.

1. What is required for a market to be considered monopolistically competitive? Give examples.

Monopolistic competition is a type of market structure characterized by: (1) many small firms, (2) differentiated products, (3) easy market entry and exit.

2. Do you think it might be efficient for an industry to be monopolistically competitive rather than perfectly competitive? Define your answer.

No, because perfectly competitive have well-informed sellers buyers of identical product and there are no barters to entry and exit the market.

3. A monopolistic competitor faces a downward-sloping firm demand curve. Why is this so?

Because of the motion that the firm can change its prices without losing any of its business because buyers do not see any perfect substitutes. The fewer the substitutes, the less elastic the demand curve will be.

4. Monopolistic competition is defined by product differentiation. Explain.

Product differentiation is the process of creating real or apparent differences between goods and services sold on the market. Monopolistically competitive market, the product of one firm can be differentiated from that of another.

Part II: Situational Analysis

Monopolistically competitive demand. Would the following factors increase or decrease the ability of domestic auto manufacturers to raise prices and profit margins? Why?

A. Decreased imports quotas

Increase, since the domestic auto manufacturers cannot bring as much cars in the shop, they would increase their price in the hopes of making some sort of profit.

B. Increased price automobile advertisement

Increase, since the price of automobile advertisement has increased, the auto manufacturers would increase their prices because they know the car is well advertised therefore, more people would see the advertisement and would maybe get interested in buying the automobile.

C. Increased imports tariffs (Taxes)

Increase; the auto manufacturers would have to increase the prices because the taxes have increased. In order for them to make a decent amount of money, they would have to increase their prices.

D. A rising value of the dollar, which has the effect of lowering import car prices

Decrease; it is already stated that “a rising value” would in fact “lower import car prices”. The car manufacturers have no choice but to decrease their price. It may not be bad for them because it just means that their money is getting stronger therefore, prices of goods and services are getting lower.

CHAPTER 9: Oligopoly

Part I. research Analysis

1. Research about the various models of Oligopoly – Cournot Model, Stackelberg Model and Bertrand Model.

Cournot Model is the simplest Oligopoly model. It shows that there are two regularly positioned firms. Bertrand Model is essentially the current model concept the strategic variable and price rather than quantity. Stackelberg model fits a demand curve at a cutting price.

2. Differentiate the concept of competition versus collusion.

Collision is when one firm has a clear dominant position in the market and the firm with fewer market shares. Competition on the other hand is reverse; they have, as the term states, competition. They are not dominating in the position in the marker and in the firm.

3. What are cartels?

A cartel is a formal agreement among competing firms. It's a formal organization where there is a small number of sellers and usually involve homogenous products.

4. Research on the conditions for a successful cartel

Lower cost, many small buyers, cartel controls the market and the cartel can be maintained.

Part II: Essay

Direction: Answer the following questions briefly in an oligopolistic market.

1. Discuss the concept of price rigidity in an oligopolistic market.

Price rigidity theory was simultaneously, but independently developed by Paul Sweeny in the U.S.A. and Hall and Hitch in the U.K. around 1939. They observed that oligopolistic situations lead to price changes. Besides, unlike other market forms, firms under oligopoly are guided more by competitor’s behavior than by the objective demand and cost conditions.

2. How does a firm achieve price leadership in an oligopolistic market?

Price-leadership is a form of oligopoly in which one dominant firm sets prices and all the smaller firms in the industry follow its pricing policy.

3. Do you think there is a need for the Philippines to adopt or legislate similar anti-trust law that of the U.S.? Justify.

Yes, because it can help to supplement economic productions.

4. How is oligopoly different from perfect competition?

Oligopolies have relatively large firms while perfect competition are relatively small firms. Some oligopolies produce differentiated products. There are entry and exit barriers in Oligopoly due to which firms are able to earn abnormal profits even in the long run. The consumers or buyers of the product doughnut have perfect information regarding the pricing or other such things about the product.

CHAPTER 10: Business Organizations

Part I. Multiple choice

Direction: Encircle the best answer.

____________ 1. Which of these is not an advantage of sole-proprietorship?

a. Financial operations are complicated.

b. It is easy to organize.

c. It has unlimited liability.

d. The owner acquired all the profits.

e. None of the above

____________ 2. Which of these disadvantages of partnership does not belong to the group?

a. possibility of conflict and quarrels in the business

b. It has a limited life

c. It has unlimited liability.

d. Net income is a subject to tax whether distributed or not.

e. none of the above.

____________ 3. Which of these is not a disadvantage of sole-proprietorship?

a. It lacks stability

b. limited ability to raise capital

c. limited ability to expand the business.

d. business is entirely a responsibility of the owner.

e. none of the above

____________ 4. Which of these advantages of corporation does not belong to the group?

a. management is centralized

b. most efficient management

c. it has limited liability

d. it has legal capacity

e. none of the above

____________ 5. Among these disadvantages of a corporation, which does not belong to the group?

a. it is complicated and not easy to organize.

b. higher income tax rate

c. it has limited powers

d. may be subject to abuses of corporate officials

e. none of the above

____________ 6. An association of at least two persons who agree to place their money property or industry in a common fund, with the aim of sharing profits among themselves:

a. partnership

b. sole proprietorship

c. corporation

d. small and medium enterprises

e. none of the above

____________ 7. A business organization in which the owners are called stockholders:

a. partnership

b. sole proprietorship

c. corporation

d. small and medium enterprises

e. none of the above

____________ 8. One important advantage of this business is limited liability:

a. partnership

b. sole proprietorship

c. corporation

d. small and medium enterprises

e. none of the above

____________ 9. What is the main purpose of a business?

a. to create customers

b. to create goods

c. to earn profit

d. to create services

e. all of the above.

____________ 10. Business creates ______________________ in te economy?

a. investments

b. employment

c. production

d. income

e. all of the above

Part II. Library work and research

Direction: Name at least three business falling under each of the four business organization types, and provide a brief background and explanation as to why you chose it.

Sole-proprietorship

1. Sterling bank of Asia personal loan/ Women loan2. Company negotiations for partnership/ Corporation3. UCPB Auto loan

Explanation:

Those companies are owned by a single person. One person can manage it, the bulk of self employed people are single proprietors. The owner acquires all the profits. The owner has all the freedom to enjoy the profits.

Partnership

1. Avida2. UNO Business Opportunity3. V-mobile

Explanation:

Those companies associate atleast two persons and they agree to place money, property or industry in a common fund with the aim of sharing profits among themselves.

Corporation

1. Meralco2. Cebu Pacific Air3. Allied Bank

Explanation:

The owners have a dividend ownership share in the assets of the corporation upon its dissolution and share its profits corresponding to the amount of shares of stock which they own.

Cooperatives

1. Dairy Farmers2. ZEN-NOH3. Agricultural supply cooperatives

Explanation:

Organizations composed primarily of small producers and consumers who voluntarily join together to form business enterprises which, they themselves own.