Which of the Following Statements Is True of Starting a Business

question 140

Multiple Choice

Which of the following statements is true of starting a business from scratch?

• A) It is hard to get credit from both lenders and suppliers.
• B) It results in high overhead costs.
• C) The ongoing percent-of-sales royalty fee can be very high.
• D) There is no scope for creativity.

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Definitions:

Excludability

The characteristic of a private good, for which the seller can keep nonbuyers from obtaining the good.

Private Good

A good, or service that is individually consumed and that can be profitably provided by privately owned firms because they can exclude nonpayers from receiving the benefits.

Quantity Demanded

The quantity of a product or service that buyers are prepared and financially able to buy at a certain price.

Efficiency Loss

The loss of economic efficiency that can occur when equilibrium for a good or service is not achieved, leading to potential welfare or opportunity costs.