Which of the Following Statements Is TRUE with Respect to Risk

question 11

Multiple Choice

Which of the following statements is TRUE with respect to risk management and incorporation?

• A)Incorporation is irrelevant to risk management because corporations cannot be held liable.
• B)Incorporation increases the risk of liability because a shareholder of a corporation is personally liable for all of the corporation's torts.
• C)Incorporation completely eliminates the risk of liability because the government is responsible for a corporation's debts.
• D)Incorporation reduces the risk of liability because the doctrine of limited liability usually means that a corporation's debts must be paid by the corporation and not by the people who run the corporation.
• E)Incorporation spreads the risk of liability because if one corporation becomes liable,every other corporation in the same province may be required to pay the debt.

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Definitions:

Payment to Labor

Compensation provided to employees in the form of wages, salaries, bonuses, and benefits for their work and services.

Marginal Revenue Product

Marginal Revenue Product (MRP) is the additional revenue generated from employing one more unit of a resource, such as labor or capital.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, keeping other inputs constant.

Package Store

A retail store that sells bottled or packaged alcoholic beverages for consumption off the premises, commonly found in some regions of the United States.