Which of the Following Is Relevant in Deciding Whether an Activity

question 103

Multiple Choice

Which of the following is relevant in deciding whether an activity is profit-seeking or a hobby?

• A)The time and effort expended.
• B)The expertise of the taxpayers or their advisers.
• C)The history of income or losses from the activity.
• D)The tax benefits of the activity to the taxpayer.
• E)All of the above factors are to be considered.

Understand the characteristics and models of organizational structure, including mechanistic and organic models.

Recognize the importance of centralization versus decentralization in decision-making processes.

Comprehend the relevance of adaptation, learning, and development for organizational effectiveness and survival.

Identify the processes of delegation and their impact on manager and employee roles.

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Definitions:

Coase Theorem

The Coase Theorem postulates that if property rights are well-defined and transaction costs are low, parties will negotiate privately to correct externalities and allocate resources efficiently.

Externalities

Externalities are unintended side effects of economic activity affecting third parties not directly involved in the transaction, which can be either positive or negative.

Pollution Permits

Legal rights granted by governments to emit a specific amount of pollutants into the environment.

Corrective Tax

A tax designed to incentivize socially desirable behavior, often used to correct for the negative externalities of an action or consumption.