Which of the following is a potential cost of diversification?
A. Firms become bureaucratic and more expensive to manage as they grow.
B. Shareholders find it expensive and risky to hold a diversified portfolio.
C. The cost of production increases, thereby reducing profits earned by a firm.
D. The supply of labor reduces, thereby reducing the level of production.
Answer: A
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What is the relationship between net exports, the government sector surplus or deficit, and the private sector surplus or deficit?
What will be an ideal response?
An advantage of a partnership over a proprietorship is
A. that profits are not taxed twice. B. the ability to take advantage of greater specialization. C. limited liability. D. that it is easier to dissolve.
Although all points on the production possibilities frontier are efficient, that alone does not determine which point is “best” for the society.
Answer the following statement true (T) or false (F)
Crowding out occurs when
A) investment increases as government spending falls. B) investment increases when government spending rises. C) investment decreases when government spending falls. D) investment decreases when government spending rises.