You and your roommate plan to start a business after college selling pagers. You have personal assets of $20,000 . and she has personal assets of $15,000 . You plan to invest $12,00 . in the business while she plans to invest $8,000 . If the business
goes bankrupt with assets of $20,00 . and liabilities of $50,000 . describe how much each of you stand to lose if you organize (a) as a partnership, and (b) as a corporation.
a . In a partnership, each partner is 100 percent liable for the partnership's debts. You stand to lose
$50,000 . as does your partner
b. In a corporation, shareholders' liabilities are limited to the amount they have invested in the firm. You
stand to lose $12,000 . while your partner stands to lose $8,000.
You might also like to view...
Which of the following is most likely to lead to government intervention in the form of price ceilings?
a. advertising b. war c. growth in consumer income d. technological advance in agriculture e. lower resource costs
Suppose a competitive market has a horizontal long-run supply curve and is in long-run equilibrium. If demand decreases, we can be certain that in the short-run,
a. at least some firms will shut down. b. price will fall below marginal cost for some firms. c. price will fall below average total cost for some firms. d. at least some firms will enter the industry.
Suppose an increase in interest rates causes rising unemployment and falling output. To counter this, the Federal Reserve would
a. increase government spending. b. increase the money supply. c. decrease government spending. d. decrease the money supply.
Political advocacy:
A. and political engagement are not affected by the free-rider problem. B. can suffer from the free-rider problem, but political engagement does not. C. is not affected by the free-rider problem, but political engagement is. D. and political engagement can suffer from the free-rider problem.