Which of the Following Is a Serious Drawback of Sole

question 27

Multiple Choice

Which of the following is a serious drawback of sole proprietorships?

• A) They are heavily regulated by the federal government.
• B) They expose their owners to unlimited liability for the company's debts.
• C) They are difficult and inexpensive to form.
• D) They result in double taxation of the company's earnings.

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Definitions:

MRP Schedule

A table showing the marginal revenue product (MRP) which is the additional revenue generated from using one more unit of a resource.

Perfect Competitor

A theoretical market structure where numerous small firms compete against each other and goods are perfect substitutes, leading to the inability of firms to influence prices.

Imperfect Competitor

A firm or entity that has the ability to influence the price of the goods or services it sells, due to the lack of perfect competition in the market.

Wage Rate

The fixed amount of compensation or payment given to an employee by an employer in exchange for work performed, typically expressed on an hourly, daily, or piecework basis.