Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) Due to limited liability,unlimited lives,and ease of ownership transfer,the vast majority of U.S.businesses (in terms of number of businesses)are organized as corporations.
• B) Most businesses (by number and total dollar sales)are organized as proprietorships or partnerships because it is easier to set up and operate one of these forms rather than as a corporation.However,if the business gets very large,it becomes advantageous to convert to a corporation,primarily because corporations have important tax advantages over proprietorships and partnerships.
• C) Due to legal considerations related to ownership transfers and limited liability,which affect the ability to attract capital,most business (measured by dollar sales)is conducted by corporations in spite of large corporations' less favorable tax treatment.
• D) Large corporations are taxed more favorably than proprietorships.
• E) Corporate stockholders are exposed to unlimited liability.

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Definitions:

Market-Determined Price

A price outcome established through the interaction of supply and demand, without external controls.

Binding Price Ceiling

A maximum legal price set below the equilibrium price, leading to shortages as demand exceeds supply.

Equilibrium Level

A situation where the balance between the market's supply and demand stabilizes prices.

Increase Efficiency

The process of improving the effectiveness of an operation, system, or process by maximizing output with the minimal amount of input or effort.