A Major Disadvantage of the Sole Proprietorship Is: ______

question 13

Multiple Choice

A major disadvantage of the sole proprietorship is: ______.

• A) no organizational fees.
• B) the sole proprietor obtains all of the profits.
• C) the sole proprietor is personally liable for the debts of the sole proprietorship.
• D) the sole proprietor is free to make all business decisions concerning operation of the sole proprietorship.

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Definitions:

Variable Costs

Variable costs are expenses that vary directly with the level of production or sales volume, such as materials and labor.

ATC Curve

Represents the average total cost of production, calculated by dividing the total cost by the quantity of output produced, depicted graphically.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service; it is an important concept in economics for understanding how to optimize production levels.

Long Run

A period of time during which all factors of production and costs are variable, in contrast to the short run where some costs are fixed.