A Market System Tends to Restrict Business Risk to Owners

question 4

Multiple Choice

A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?

• A)It encourages more people to become entrepreneurs.
• B)Firms have to pay more to attract inputs, as these inputs have to share the risk.
• C)Firms focus attention on prudent risk management, as it is profitable to manage risk.
• D)Income becomes more equally distributed.

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Definitions:

Entrepreneurship

The process of creating and managing a business to achieve desired objectives.