Which of the Following Is Typically the Major Factor in Limiting

question 7

Multiple Choice

Which of the following is typically the major factor in limiting the growth of a sole trader?

• A) Investors have a great deal of control over the day-to-day running of the firm, leading to confusion when conflicts in direction arise.
• B) The amount of money that can be raised by the firm is limited by the fact that the single owner must make good on all debts.
• C) The organisation of such firms tends to become extremely complicated over time.
• D) It is extremely difficult to transfer control of such a firm to a new owner if the present owner dies or wishes to sell the firm.

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Definitions:

Elastic

Describes a situation where the quantity demanded or supplied of a good responds significantly to changes in its price.

Patent

A legal right granted by a government to an inventor, giving exclusive rights to use, make, and sell an invention for a certain period of time.

Inelastic Demand

A situation in which the demand for a product does not increase or decrease significantly when the price changes.

Monopoly Power

Monopoly power denotes the extent to which a firm can set the price for its product above marginal cost due to the lack of competition in its market.