3.5.1.Classification of firms

3.
5 Firms
3.5.1. Classification of firms

1. What is a characteristic of a public corporation?
A It issues shares to the general public.
B It is owned by the government.
C Its objective is to maximise profits.
D It is owned by more than twenty shareholders.
2. What makes Barclays Bank a public limited company?
A It experiences economies of scale.
B It has more than two directors.
C It is quoted on the London Stock Exchange.
D It operates in more than one country
3. Which activity takes place in the tertiary sector?
A assembling computers
B giving legal advice
C harvesting grain
D making bread
4. What is the main advantage that a public limited company has over a private limited
company?
A It operates in the public sector.
B Its shares can be sold on the stock exchange.
C It is managed by a director.
D Its shareholders have limited liability.
KANNAN NARAYANASAMY 1
kannanbw@yahoo.com
5. What is the function of a stock exchange?
A It enables shareholders to sell their shares.
B It fixes fair prices for shares.
C It promises to buy unsold shares.
D It sets the number of shares.
6. A French company employs French people, is located only in France, sells shares on the stock
exchange but uses other firms to transport its products to other countries.
What type of company is this?
A a co-operative
B a private company
C a public company
D a multi-national
7. What distinguishes a multinational company from other types of company?

A It exports its products.
B It imports its raw materials.
C It produces outside its country of origin.
D It promotes its products in trade fairs abroad.
8. C
9. What is a function of a stock exchange?

A It allows company shares to be traded.
B It enables tourists to purchase foreign currency.
C It provides a market for firms to sell their products.
D It sets the rate of interest in an economy.
10. Which statement about financial matters is correct?

A Commercial banks’ main activity is the finance of international trade.
B Paper banknotes possess all the desirable properties needed to act as money.
C Stock exchanges trade mainly in second-hand stocks and shares.
D The central bank acts as the lender of last resort to companies facing bankruptcy.
kannanbw@yahoo.com
11. A government in a developing country has given extra funds to promote trade in rural areas
by encouraging the establishment of small shops.
What is likely to increase as a result?
A primary industry in the private sector
B primary industry in the public sector
C secondary industry in the public sector
D tertiary industry in the private sector
12. In 2001 some countries, including India and Pakistan, criticised the European Union for
continuing to protect European farmers with a subsidy while expecting poorer African countries
not to restrict trade.
What are not involved in this situation?
A developing and developed economies

B free trade and protection
C market prices and official intervention
D multi-nationals and public corporations
13 Which type of business organisation has its shares quoted on a stock exchange?
A private company
B public company
C co-operative
D public corporation
14 Which occupation would suit a person who wanted to work in the public sector?
A a journalist for an independent newspaper
B a nurse in a government hospital
C a sales manager for a multi-national food business
D a teacher in a private fee-paying school
15 D
kannanbw@yahoo.com
16 Which of the following benefits does a stock exchange provide?
A a source of finance for private limited companies
B a safeguard against the risk of loss
C an opportunity to sell shares quickly
D an opportunity to purchase foreign currency
17 What would an individual be doing to be described as a worker in the secondary sector?
A working in a firm that grows fruit trees and plants
B working in a firm that produces machines for other firms
C working in a government passport office
D working in the reception area of a hospital
18 In an African country, large amounts of land were taken from farmers to make a national park
to protect rare animals and provide a tourist attraction with accommodation.
Which of the following is likely to decrease as a result of these changes?
A earnings from foreign visitors
B employment in the primary sector
C employment in the tertiary sector
D the price of land elsewhere
19 An Italian-owned tour operator needs its staff in Rome to be able to speak a number of
languages so it employs people from different countries. It also uses other firms in different
countries to provide tour guides and coach drivers. It is part of an organisation that has shares
issued on the stock exchange.
Which type of company is this?

A a co-operative
B a private company
C a public company
D a multi-national
20 What would an individual be doing to be described as a worker in the secondary sector?
A working in a firm that grows fruit trees and plants
B working in a firm that produces machines for other firms
C working in a government passport office
D working in the reception area of a hospital
21 What is an advantage if a region specialises in a narrow range of products?
A Other regions will become over-dependent on the region.
B Scarce resources are used more efficiently.
C The level of production in the region will decrease.
D The region’s system of transport is improved.
22 What is a characteristic of a public company?
A It is owned and controlled by its members.
B It is owned and controlled by its partners.
C It is owned and controlled by its shareholders.
D It is owned and controlled by the government.
kannanbw@yahoo.com
23 A
24. B
25. C
kannanbw@yahoo.com
26. B
27 Who is definitely employed in the primary sector?
A a person in a firm producing goods for other firms to use

B a person in a firm engaged in agricultural production
C a person in an organisation which first deals with any imports into the country
D a person in the head office of a company
28 Three doctors decide to work together in one health centre.
What form of business organisation are they most likely to choose?
A a partnership
B a private company
C a public company
D a public corporation
29 A
kannanbw@yahoo.com
30 Prices tend to be lower in a competitive industry than in a monopoly.
Why is this?
A A monopoly has less influence on the market.

B Competitive industry has more economies of scale.
C New firms are free to enter the competitive industry.
D Profits are lower in a monopoly
31.The directors of a firm have to discuss the following topics.
Which topic is least likely to be directly affected by the government’s influence on the firm?
A health and safety laws

B the interest it pays on borrowed money
C the minimum wage it must pay its workers
D the replacement of the director of finance
32. A stock exchange is a market in which
A a system of barter operates.

B the interest rate is fixed.
C the value of the exchange rate is determined.
D shares are bought and sold.
33. What is the most likely reason for a worker preferring to be employed by the government
rather than by a firm in the private sector?
A more chance of a fast changing environment

B more chance to work in a large organisation
C more opportunity to gain from successful risk taking
D more possibility of productivity bonuses
34 Cathay Pacific, Hong Kong’s largest airline, flies to a number of countries.
Shares in the firm are owned by both individuals and other firms in a number of countries. The
shares are traded on the Hong Kong Stock Exchange.
Which type of business organisation is Cathay Pacific?
A a partnership
B a private limited company
C a public corporation
D a public limited company
kannanbw@yahoo.com
35. Which type of business organisation has its shares quoted on a stock exchange?
A co-operative
B private company
C public company
36. Amit and Pardeep set up in business together. Each has half of the shares in the business and
limited liability.
What type of business organisation is this?
A a co-operative
B a partnership
C a private company
D a public company
37. 17 In August 2008, Infosys, an Indian information technology company, bought Axon, a UK
information technology company.
Which type of integration is this?
A conglomerate
B horizontal
C vertical backwards
D vertical forwards
38 In a city, both large and small shops sell clothes.

Why do large and small shops exist together?
A Large clothing shops create barriers to entry.

B Small shops always sell clothes at lower prices.
C The market for clothing operates under perfect competition.
D There is demand from consumers for a range of fashions.
39. 39 of the 42 largest Chinese firms are described as state-owned enterprises.

What form of organisation will these enterprises have?
A co-operative
B partnership
C public company
kannanbw@yahoo.com
40. C
41. B
42. In some countries, former nationalised utilities, such as electricity, have been replaced by
several public limited companies.
Which change has occurred in the electricity market?
A All profits are reinvested into the business by public limited companies.
B Governments decide which company consumers must use.
C Market prices are fixed by governments.
D Public limited companies pay dividends to shareholders.
kannanbw@yahoo.com
43. Sohrab bought shares in a French telecommunications company operating in many countries.
Joel owns and runs a mobile telephone accessories and repair shop.
What is not identified above?
A multinational company
B partnership
C public company
D sole proprietor
44. C
45. Which type of business organisation is necessarily in the public sector of the economy?
A multinational company
B public limited company
C public corporation
D sole trader
46. D
THE END
kannanbw@yahoo.com
kannanbw@yahoo.com

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3.

3.5.1. Classification of firms

7. What distinguishes a multinational company from other types of company?

9. What is a function of a stock exchange?

10. Which statement about financial matters is correct?

A developing and developed economies

Which type of company is this?

27 Who is definitely employed in the primary sector?

A a person in a firm producing goods for other firms to use

A A monopoly has less influence on the market.

A health and safety laws

A a system of barter operates.

A more chance of a fast changing environment

Which type of business organisation is Cathay Pacific?

38 In a city, both large and small shops sell clothes.

A Large clothing shops create barriers to entry.

39. 39 of the 42 largest Chinese firms are described as state-owned enterprises.

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