BUS 250 TEST 3 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Sole Proprietorship - Answers Easiest business to form; owned by one person; unlimited liability;
pass-through taxation
General Partnership - Answers Business owned by 2+ people; all partners have unlimited liability;
shared management; pass-through taxation
Limited Partnership - Answers Has general partners (unlimited liability) and limited partners (limited
liability); only general partners manage
Limited Liability Company (LLC) - Answers Hybrid structure with limited liability and pass-through
taxation; flexible management
Corporation - Answers Separate legal entity; limited liability; managed by board of directors; double
taxation unless S-corp
Ease of Formation - Answers How simple it is to legally create a business (sole prop easiest,
corporation hardest)
Unlimited Liability - Answers Owners are personally responsible for business debts
Limited Liability - Answers Owners are not personally responsible for business debts
Pass-Through Taxation - Answers Business income is taxed on owners' personal tax returns
Double Taxation - Answers Corporation pays taxes, and shareholders pay taxes on dividends
LLC Advantages - Answers Limited liability, pass-through taxation, flexible management
LLC Disadvantages - Answers More paperwork than sole prop, fees, harder to raise capital
Utilitarianism - Answers Ethical theory focused on outcomes; greatest good for greatest number
Deontology - Answers Ethical theory focused on duty and rules; actions are right or wrong regardless
of outcome
Express Authority - Answers Authority clearly given to an agent
Implied Authority - Answers Authority based on a person's role or position
Apparent Authority - Answers Authority that appears to exist based on the situation
Why Confirm Authority - Answers To ensure contracts are valid and avoid legal issues
S Corporation Limitations - Answers Max 100 shareholders; must be U.S. citizens/residents; one class
of stock; limited eligibility
Tenant Duties - Answers Pay rent, avoid damage, follow lease terms
Landlord Duties - Answers Provide habitable property, make repairs, comply with housing laws
BATNA - Answers Best Alternative to a Negotiated Agreement; your backup plan if no deal is reached
Reservation Price - Answers The lowest (or highest) point you are willing to accept; your walk-away
point
ZOPA - Answers Zone of Possible Agreement; overlap between both parties' acceptable ranges
Value Creation - Answers Making trade-offs so both parties benefit
Nine Steps to a Deal - Answers 1) Know goals 2) Identify value opportunities 3) Know BATNA 4)
Improve BATNA 5) Identify decision-maker 6) Study other side 7) Stay flexible 8) Use objective criteria
9) Control process
Sherman Antitrust Act - Answers Prohibits monopolies and restraint of trade
Clayton Act - Answers Prevents specific unfair business practices (price discrimination, mergers)
Per Se Violations - Answers Automatically illegal actions (e.g., price fixing)
Rule of Reason - Answers Case-by-case analysis of whether behavior is anti-competitive
Patent - Answers Protects inventions
Copyright - Answers Protects creative works
Trademark - Answers Protects brand names and logos
USPTO - Answers U.S. Patent and Trademark Office; handles patents and trademarks
Patent Requirements - Answers Must be new, useful, and non-obvious
Business Judgment Rule - Answers Courts will not second-guess business decisions made in good
faith and with reasonable care
Tenants in Common - Answers Ownership with no right of survivorship
Joint Tenancy - Answers Ownership with right of survivorship
Eminent Domain - Answers Government can take private property for public use with compensation
Kelo v. City of New London - Answers Expanded public use to include economic development
Lease - Answers Contract allowing tenant to use property owned by landlord
Tenant Interest - Answers Right to possess property
Landlord Interest - Answers Ownership of property
Sole Proprietorship - Answers Easiest business to form; owned by one person; unlimited liability;
pass-through taxation
General Partnership - Answers Business owned by 2+ people; all partners have unlimited liability;
shared management; pass-through taxation
Limited Partnership - Answers Has general partners (unlimited liability) and limited partners (limited
liability); only general partners manage
Limited Liability Company (LLC) - Answers Hybrid structure with limited liability and pass-through
taxation; flexible management
Corporation - Answers Separate legal entity; limited liability; managed by board of directors; double
taxation unless S-corp
Ease of Formation - Answers How simple it is to legally create a business (sole prop easiest,
corporation hardest)
Unlimited Liability - Answers Owners are personally responsible for business debts
Limited Liability - Answers Owners are not personally responsible for business debts
Pass-Through Taxation - Answers Business income is taxed on owners' personal tax returns
Double Taxation - Answers Corporation pays taxes, and shareholders pay taxes on dividends
LLC Advantages - Answers Limited liability, pass-through taxation, flexible management
LLC Disadvantages - Answers More paperwork than sole prop, fees, harder to raise capital
Utilitarianism - Answers Ethical theory focused on outcomes; greatest good for greatest number
Deontology - Answers Ethical theory focused on duty and rules; actions are right or wrong regardless
of outcome
Express Authority - Answers Authority clearly given to an agent
Implied Authority - Answers Authority based on a person's role or position
Apparent Authority - Answers Authority that appears to exist based on the situation
Why Confirm Authority - Answers To ensure contracts are valid and avoid legal issues
S Corporation Limitations - Answers Max 100 shareholders; must be U.S. citizens/residents; one class
of stock; limited eligibility
Tenant Duties - Answers Pay rent, avoid damage, follow lease terms
Landlord Duties - Answers Provide habitable property, make repairs, comply with housing laws
BATNA - Answers Best Alternative to a Negotiated Agreement; your backup plan if no deal is reached
Reservation Price - Answers The lowest (or highest) point you are willing to accept; your walk-away
point
ZOPA - Answers Zone of Possible Agreement; overlap between both parties' acceptable ranges
Value Creation - Answers Making trade-offs so both parties benefit
Nine Steps to a Deal - Answers 1) Know goals 2) Identify value opportunities 3) Know BATNA 4)
Improve BATNA 5) Identify decision-maker 6) Study other side 7) Stay flexible 8) Use objective criteria
9) Control process
Sherman Antitrust Act - Answers Prohibits monopolies and restraint of trade
Clayton Act - Answers Prevents specific unfair business practices (price discrimination, mergers)
Per Se Violations - Answers Automatically illegal actions (e.g., price fixing)
Rule of Reason - Answers Case-by-case analysis of whether behavior is anti-competitive
Patent - Answers Protects inventions
Copyright - Answers Protects creative works
Trademark - Answers Protects brand names and logos
USPTO - Answers U.S. Patent and Trademark Office; handles patents and trademarks
Patent Requirements - Answers Must be new, useful, and non-obvious
Business Judgment Rule - Answers Courts will not second-guess business decisions made in good
faith and with reasonable care
Tenants in Common - Answers Ownership with no right of survivorship
Joint Tenancy - Answers Ownership with right of survivorship
Eminent Domain - Answers Government can take private property for public use with compensation
Kelo v. City of New London - Answers Expanded public use to include economic development
Lease - Answers Contract allowing tenant to use property owned by landlord
Tenant Interest - Answers Right to possess property
Landlord Interest - Answers Ownership of property
