Economics Practice Test – Business Organisations

A major difference between a state-owned enterprise and a private enterprise is that the former _____ (JAMB 1990) 

A. is not expected to cover its costs of production while the latter is 
B. ¡s not always expected to maximize profits while the latter is
C. has shareholders while the latter does not
D. has a board of directors while the latter does not

When a business has unlimited liability _______ (JAMB 1985) 

A. all its profits can be taxed away by the government
B. all its assets are owned by the members of its board of directors.
C. the business ceases to exist at the death of one of its owners
D. the owners are responsible for all its financial debts

In a limited liability company, the greatest risk is borne by ______ (JAMB 1980) 

A. debenture holders
B. company executives
C. ordinary shareholders
D. preference shareholders

The most important limitation on the partnership as a form of business enterprise is the ______ (JAMB 1988)

A. implication for partners’ liability
B. legal limitation placed on the number of partners
C. difficulties arising from having two co-ordinate heads of a firm
D. fact that each partner regardless of the capital he contributes must have the same voting rights.

In the event of a limited liability company going into liquidation each ______ (JAMB 1983) 

A. shareholder may lose the maximum of the amount he has invested
B. shareholder loses nothing
C. shareholder loses everything including his house
D. shareholder’s liability becomes unlimited