Which of the Following Statements Is Correct

question 3

Multiple Choice

Which of the following statements is correct?

• A) In a partnership, liability for other partners' misdeeds includes but is limited to the amount a particular partner has invested in the business.
• B) Partnerships must be formed according to specific rules which include the filing of a formal written agreement with state authorities where the partnership does business.
• C) A fast growth company would be more likely to set up a partnership for its business organisation than would a slow-growth company.
• D) Partnerships have difficulty attracting capital in part because of the other disadvantages of the partnership form of business, including impermanence of the organisation.
• E) A major disadvantage of a partnership as a form of business organisation is the high cost and practical difficulty of its formation.

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Definitions:

Electric Company

A utility company that generates, transmits, and distributes electricity to consumers and businesses.

Tragedy of the Commons

A situation in which individual users of a shared resource act in their own interest, depleting or degrading the common resource.

Negative Externality

A cost suffered by a third party as a consequence of an economic transaction in which they were not involved.

Common Resource

A resource like air or water, that provides users with tangible benefits but is difficult to exclude nonpaying users from consuming or depleting.