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Law 531 Week 2 Practice Assignment

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

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Which of the following is not true of corporations?
• Directors will not be subject to lawsuit from shareholders as long as they act in a reasonable and prudent way.
• Executives are not subject to the same duty of care in carrying out the corporation’s purposes as the board of directors.
• The board of directors hires executives of a corporation.
• Executives carry out the day-to-day operations of the corporation.
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True or false: In a franchise agreement, the franchisor and the franchisee are separate legal entities.
TrueFalse

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Which of the following is not true of general partnerships?
• Partners have an equal right to engage in the management of the business.
• Partners have joint ownership of business assets.
• Partners must always agree to split the profits and losses evenly.
• Partners share profits and losses according to the partnership agreement.
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Corporations created to assist doctors, lawyers, accountants, and so on are known as _________________ corporations.
• not-for-profit
• closely held
• professional
• alien
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True or false: Profits and losses from an LLC must be distributed in the same proportion to all members.
TrueFalse

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Which of the following is true of general and limited partners in a limited partnership?
• Limited partners are not liable for partnership debts.
• General and limited partners are jointly responsible for partnership debt.
• General partners are not liable for partnership debts.
• General partners are required to invest capital and refrain from managing the business.
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Which of the following is not true of a business operating under sole proprietorship?
• If the owner dies, the business usually dies as well.
• A sole proprietor pays only personal taxes.
• A sole proprietorship is considered a separate legal entity.
• No government approval is required to set up a sole proprietorship.
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An administrative agency is prohibited from doing all but which of the following?
• extending beyond its authority
• violating judicial decisions
• making arbitrary laws
• exercising legislative power
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Which of the following is true of administrative agencies?
• Each state and local government has administrative agencies.
• All administrative agencies answer directly to the president.
• Administrative agencies may overrule judicial decisions.
• An existing administrative agency may not create a new law.
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_________________ establishes the protocol that must be followed by an administrative agency while enforcing a(n) _________________.
• Interpretive law; substantive law
• Substantive law; procedural law
• Substantive law; interpretive law
• Procedural law; substantive law
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True or false: Production cost may be used as a defense against a company accused of price discrimination.
TrueFalse

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The act of controlling prices for goods and services is known as _________________.
• dividing markets
• regulating competitive practices
• price fixing
• controlling output
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An agreement to refuse to deal with another business is known as a _________________.
• control
• split
• division
• boycott
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Which of the following is not a prerequisite to be considered a failing company prior to entering a merger?
• Its assets would evaporate but for a merger.
• There is no other reasonable alternative.
• No other buyer is available to rescue the company.
• Too much competition exists in a particular geographical area.
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Which of the following is a legitimate defense against a claim of exercise of monopoly power?
• The business acquired the monopoly innocently as an unintended consequence of another purpose.
• The business owns 75 percent of the product market.
• The business owns 25 percent of the geographical market.
• The business engaged in a tying arrangement with another business.
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One business having almost all of one product type or service within a geographical area is known as _________________ power.
• consolidated
• vertical
• monopoly
• horizontal
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True or false: The calculation of monopoly power rests squarely on a firm’s percentage of dominance in the relevant market.
TrueFalse

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The U.S. Supreme Court has developed two tests for determining the lawfulness of an agreement: the per se rule and the _________________.
• rule of competition
• rule of law
• rule of reason
• rule of trust
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In a(n) _________________, the distributor requires the purchaser of another product to buy another associated product.
• geographic allocation agreement
• exclusive dealing agreement
• tying arrangement
• price maintenance agreement
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