Which of the Following Could Explain Why a Business Might

question 29

Multiple Choice

Which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?

• A) Corporations generally face fewer regulations.
• B) Less of a corporation's income is generally subject to federal taxes.
• C) Corporate shareholders are exposed to unlimited liability,but this factor is offset by the tax advantages of incorporation.
• D) Corporate investors are exposed to unlimited liability.
• E) Corporations generally find it easier to raise large amounts of capital.

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Definitions:

Production Function

The relationship between the quantity of inputs a firm uses and the quantity of output it produces.

Inputs

The resources, such as labor, materials, and capital, that are used in the production process to produce goods or services.

Output

The total amount of goods or services produced by a company, industry, or economy within a specified time period.

Total Cost Curve

A graphical representation showing the total cost of producing different levels of output in the short run or long run.