The Order of Difficulty and Expense, from Most to Least

question 52

Multiple Choice

The order of difficulty and expense, from most to least, when forming a business organization is as follows:

• A) corporation, sole proprietorship, partnership.
• B) corporation, partnership, sole proprietorship.
• C) partnership, corporation, sole proprietorship.
• D) partnership, sole proprietorship, partnership.
• E) sole proprietorship, partnership, corporation.

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Definitions:

Economic Profits

The surplus generated when total revenues exceed the total costs, including both explicit and implicit costs.

Efficiency

The optimal allocation and use of resources to produce goods and services in the most cost-effective and waste-free manner.

P > MC

Indicates a scenario in price (P) is greater than marginal cost (MC), suggesting that a firm could potentially increase profits by increasing production since each additional unit produced costs less than the price it would sell for.

Monopoly

A market structure in which a single seller controls the entire market for a good or service, with no close substitutes.