The Disadvantages of the Partnership Form of Business Organization, Compared

question 17

Multiple Choice

The disadvantages of the partnership form of business organization, compared to corporations, include

• A) the legal requirements for formation.
• B) unlimited liability for the partners.
• C) the requirement for the partnership to pay income taxes.
• D) the extent of governmental regulation.
• E) the complexity of operations.

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Definitions:

Opportunity Cost

The missed opportunity for profit from different options when a specific choice is made.

Resources

Assets, materials, and inputs used to produce goods and services, including land, labor, capital, and entrepreneurship.

Mental Accounting

A concept in behavioral economics where individuals categorize and treat money differently depending on its origin, intended use, or other subjective criteria, affecting spending and investment decisions.

Loss Aversion

A cognitive bias reflecting the tendency for people to prefer avoiding losses to acquiring equivalent gains, suggesting that losses are perceived as more severe than gains.