If Business Owners in a Partnership Wish to Limit Liability

question 14

Multiple Choice

If business owners in a partnership wish to limit liability, they have the option to ______.

• A) pledge funds
• B) divide into sole proprietorships
• C) set up a limited partnership
• D) withhold funds

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Definitions:

Shut-down Point

The level of operation at which a firm's total revenue is equal to its total variable costs, below which it is more beneficial for a firm to cease production.

Average Variable Cost

The variable cost (cost that changes with production volume) divided by the quantity of output produced.

Profit-maximizing

Refers to the process by which a company determines the price and output level that returns the greatest profit.

MR = MC

An economic principle stating that optimal production level is reached when marginal revenue equals marginal cost.