Included Among the Factors That Influence the Choice of the Form

question 80

Essay

Included among the factors that influence the choice of the form of a business entity are the following:
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Capital formation.
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Limited liability.
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Estimated life of the business.
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Number of owners and their roles in the management of the business.
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Freedom of choice in transferring ownership interest.
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Organizational formality including the related cost and extent of governmental regulations.
Evaluate the validity of the statement.

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Definitions:

Resource

Raw materials, labor, capital, and other inputs used in the production of goods and services.

External Benefits

Benefits of a good or service that are not captured by the market price and are received by third parties.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are similar but differentiated.

Maximize Profit

The goal of adjusting production or service levels to achieve the highest possible returns.