Which of the Following Characteristics of a Corporation Gives It

question 29

Multiple Choice

Which of the following characteristics of a corporation gives it a life of its own that can extend beyond that of its owners?

• A) It grants the organization certain legal rights.
• B) It is a legal entity that is chartered by the state.
• C) The cost for incorporating a corporation is very high.
• D) The corporation becomes responsible for its own liabilities.
• E) Incorporated businesses require complex documentation.

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Definitions:

Purely Competitive Firm

A business operating in a market where there are many buyers and sellers of a homogeneous product with no single entity able to influence the market price.

Normal Profits

The minimum level of profit needed for a company to remain competitive in the market, also seen as the opportunity cost of capital.

Purely Competitive Firm

A business operating in a market where there are many buyers and sellers, with none being able to influence prices significantly by their individual actions.

Costs

The value of resources consumed in the production of goods and services, including both fixed and variable expenses.