Which of the Following Is Typically the Major Factor in Limiting

question 28

Multiple Choice

Which of the following is typically the major factor in limiting the growth of sole proprietorships?

• A) The organizational structure of such firms tends to become extremely complicated over time.
• B) It is extremely difficult to transfer control of such firms to a new owner if the present owner dies or wishes to sell the firm.
• C) The amount of money that can be raised by such firms is limited by the fact that the single owner must make good on all debts.
• D) Investors have a great deal of control over the day-to-day running of such firms, leading to confusion when conflicts in direction arise.

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Definitions:

Excess Demand

A situation in which the quantity demanded of a good exceeds the quantity supplied at a given price, often leading to upward pressure on prices.

Competitive Pure Exchange Economy

An economic model where agents trade existing goods without the production of new goods, guided purely by their own self-interest to find an equilibrium.

Contract Curve

In economics, a curve that shows the efficient allocations of goods or services that benefit two parties in an exchange, assuming no externalities.

Utility Function

A mathematical representation of how different combinations of goods or services produce levels of happiness or satisfaction for an individual or entity.