Which One of the Following Statements Concerning a Sole Proprietorship

question 234

Multiple Choice

Which one of the following statements concerning a sole proprietorship is correct?

• A) The life of the firm is limited to the life span of the owner.
• B) The owner can generally raise large sums of capital quite easily.
• C) The ownership of the firm is easy to transfer to another individual.
• D) The company must pay separate taxes from those paid by the owner.
• E) The legal costs to form a sole proprietorship are quite substantial.

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Definitions:

Long-run Equilibrium

A state in which supply equals demand and all factors of production and markets are in balance, typically considered in the context of perfect competition.

Purely Competitive

A market scenario where products are identical, leading to numerous sellers and buyers where no single entity can influence market prices.

Marginal Cost

The cost of producing one additional unit of a product or service, crucial for decision-making about production levels and pricing.

Opportunity Cost

The cost of foregone alternatives when one choice is made over another, representing the benefits that could have been gained by choosing the next best alternative.