Most Partnerships Have Difficulty Attracting Substantial Amounts of Capital

question 390

Multiple Choice

Most partnerships have difficulty attracting substantial amounts of capital. This is generally not a problem for a slow growing business. But if a business's products or services really catch on, the difficulty in attracting capital becomes a real drawback. For these reasons, many growth companies, which begin life as a proprietorship or partnership, at some point find it necessary to convert to a corporation. Eugene F. Brigham, Financial Management: Theory and Practice

• A) Argument; conclusion: This is generally not a problem ... business.
• B) Nonargument.
• C) Argument; conclusion: But if a business's products ... becomes a real drawback.
• D) Argument; conclusion: Many growth companies ... to convert to a corporation.
• E) Argument; conclusion: Most partnerships have difficulty ... amounts of capital.

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Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, across all jobs available in the economy.

Monopsonistic Employer

A labor market condition where a single employer significantly controls the market for workers and can dictate terms of employment.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single participant can significantly influence price.

MRP of Labor

Marginal Revenue Product of Labor; the additional revenue generated by employing one more unit of labor.