Which of the Following Statements Is CORRECT

question 21

Multiple Choice

Which of the following statements is CORRECT?

• A) Corporations are at a disadvantage relative to partnerships because they have to file more reports to state and federal agencies, including the Securities and Exchange Administration, even if they are not publicly owned.
• B) In a regular partnership, liability for the firm's debts is limited to the amount a particular partner has invested in the business.
• C) A fast-growth company would be more likely to set up as a partnership for its business organization than would a slow-growth company.
• D) Partnerships have difficulty attracting capital in part because of their unlimited liability, the lack of impermanence of the organization, and difficulty in transferring ownership.
• E) A major disadvantage of a partnership relative to a corporation as a form of business organization is the high cost and practical difficulty of its formation.

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Definitions:

Theory of Absolute Advantage

An economic theory proposed by Adam Smith, which suggests that countries should specialize in the production of goods for which they have an absolute advantage.

Theory of Comparative Advantage

An economic principle stating that countries or entities benefit from specializing in and exporting goods for which they have a lower opportunity cost.

Theory of Economies of Scale

An economic concept that describes how as a firm increases its production scale, the average cost per unit of output decreases, leading to increased efficiency.

International Product Life Cycle

A theory explaining how a product matures and sales change over time on an international scale, impacting production and distribution.