A Corporation Possesses All but One of the Following Characteristics

question 1

Multiple Choice

A corporation possesses all but one of the following characteristics. Which of the following is NOT a characteristic of a corporation?

• A)A corporation is owned by shareholders or stockholders.
• B)Corporation ownership is divided into shares.
• C)If a corporation cannot pay its debts, lenders can take the owners' personal assets to satisfy the obligations.
• D)A corporation is a distinct entity in the eyes of the law.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Corporate Bureaucracy

The administrative system governing any large institution or organization, characterized by a hierarchy of authority, rigid division of labor, and strict regulations and procedures.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, showing the cost of each product unit excluding variable costs.

Average Variable Cost

The cost a company incurs for each unit of output, which changes with the level of production, excluding fixed costs.