Capital-Constrained Entrepreneurs Cannot Afford to Do Much Prior Analysis and Research

question 79

Multiple Choice

Capital-constrained entrepreneurs cannot afford to do much prior analysis and research because

• A) the affordability of properly conducted research is beyond the means at their disposal.
• B) the costs of any mistakes are lower than the risks of missing out on opportunistic actions.
• C) the limited profit potential and high uncertainty of the opportunity they pursue also make the benefits low compared to the costs.
• D) potential competitors could quickly discern the entrepreneurs' intentions and motives from their research.

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Definitions:

Limited Liability Company

An entity where owners are not personally liable for company debts, offering flexibility in management and benefits of pass-through taxation.

Exclusive Managerial Control

A business arrangement where one party has the sole authority and responsibility for managing an organization or project.

General Partner

A member of a partnership who has unlimited liability for the debts of the business and participates in its management.

Limited Partner

An investor in a partnership whose liability is limited to the amount of their investment, with no direct involvement in the management of the business.