Which of the Following Statements About a Not-For-Profit Firm's Ownership

question 4

Multiple Choice

Which of the following statements about a not-for-profit firm's ownership is most correct?

• A) The residual earnings (profits) of not-for-profit firms can be distributed to the firm's top managers.
• B) Not-for-profit firms are exempt from federal taxes, but they must pay state and local taxes, including property taxes.
• C) Upon liquidation of a not-for-profit firm, the proceeds from the sale of its assets are distributed, on a pro rata basis, to the firm's employees.
• D) None of the profits are used for private inurement.
• E) Not-for-profit firms are governed by a board of trustees whose members are elected by the community at large.

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Definitions:

Marginal Utility

The increased enjoyment or value gained by a consumer from consuming an extra unit of a good or service.

Price

The amount of money required to purchase a good or service, which is determined by supply and demand.

Turkey Sandwich

A type of sandwich made by placing slices of turkey between pieces of bread, often accompanied by various condiments and additions such as lettuce, tomato, and mayonnaise.

Utility

A term in economics that refers to the total satisfaction received from consuming a good or service.