Which of the Following Is True of a Sole Proprietorship

question 12

Multiple Choice

Which of the following is true of a sole proprietorship business?

• A) A sole proprietor has limited flexibility in managing the business.
• B) A sole proprietor has unlimited liability and high financial risk.
• C) A sole proprietorship that is operated under the proprietor's name must be registered.
• D) A sole proprietorship is a complex business to organize.

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Definitions:

Elasticity Of Demand

An indicator of the level of change in consumer demand for a product based on fluctuations in its price.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market; it occurs when total revenues are equal to total costs, including opportunity costs.

Monopolistically Competitive Firm

A company operating in a market structure characterized by many firms selling products that are substitutes but different enough that each has a degree of market power.

Long-Run Equilibrium

A condition in which supply and demand are balanced, all inputs can be varied by firms, and there is no incentive for market entry or exit.