A Legal Entity Owned by Stockholders Whose Liability Is Limited

question 160

Multiple Choice

A legal entity owned by stockholders whose liability is limited to the value of their stock ownership is known as a(n) ______

• A) sole proprietorship.
• B) partnership.
• C) corporation.
• D) nonprofit organization.
• E) producer cooperative.

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Definitions:

Private Good

A type of good that is rivalrous and excludable, meaning its consumption by one individual prevents others from consuming it.

Common Resource

A type of good that provides users with tangible benefits, but which is available to everyone, such as air, water, and fish in the open sea, leading to potential overuse problems.

Common Resource

A natural or man-made resource where one person’s use diminishes other people’s access or enjoyment, but it is difficult to exclude anyone from using it.

Pollution Market Failure

Pollution market failure occurs when the environmental costs of pollution are not reflected in the market prices of goods or services, leading to overconsumption and excessive pollution.