A Limited Partner Who Takes an Active Part in Managing

question 43

Multiple Choice

A limited partner who takes an active part in managing a limited partnership:

• A) will be entitled to profit distributions as if she were a general partner
• B) will be treated as a general partner with respect to parties who reasonably believed that she was a general partner
• C) will be treated as a general partner with respect to all parties with whom she dealt
• D) will be entitled to reasonable compensation for the value of the services provided
• E) will lose the right to receive profit distributions as a limited partner

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Definitions:

Competitive Price-Searcher

A firm that must actively seek out the best price for its goods or services due to the presence of many competitors and informed buyers.

Maximizing Profit

The process or strategy of increasing the difference between total revenue and total costs to achieve the highest possible financial gain.

Competitive Price-Searcher

A market condition where firms actively seek out prices that will maximize their profits in environments with some level of competition.

Positive Profit

Refers to the financial gain that occurs when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the business.