What Is a Disadvantage to Many Small Businesses in Listing

question 34

Multiple Choice

What is a disadvantage to many small businesses in listing on the stock exchange?

• A) Pressure to take on short term investments to yield shareholders immediate profits.
• B) Increased income taxes and capital gains tax rates on earnings.
• C) Increased public scrutiny of its business and financial processes.
• D) Increased regulations around product quality, consistency and distribution.
• E) Decreased flexibility in financing future projects through informal sources of capital.

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Definitions:

Competitive Industry

A competitive industry is characterized by many firms competing against each other to sell similar or identical products, with few barriers to entry for new firms.

Marginal Revenue Product

The extra income produced by employing an additional unit of a production input.

Marginal Product

The additional output that results from the use of one more unit of a variable input, while other inputs are kept constant.

Labor Schedule

A plan outlining the allocation and timing of employees' work hours.