What is the primary difference between a sole proprietorship and a partnership?
A) Proprietorships have unlimited liability while partnerships have limited liability.
B) Partnerships can issue stocks and bonds while proprietorships cannot.
C) Partnerships have more owners than do proprietorships.
D) There is no real difference between the two types of firms.
Answer: C
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The higher the federal funds rate, the ________ the opportunity cost of holding reserves, which ________ the incentive to economize on reserves
A) lower; increases B) lower; decreases C) higher; decreases D) lower; does not change E) higher; increases
As output increases, average fixed cost gets smaller and smaller
Indicate whether the statement is true or false
The market price in a perfectly competitive industry is $13 . A firm is considering increasing its output from 30 units to 40 units. The marginal revenue of each of these extra units equals
a. $13 b. $130 c. $390 d. $520 e. $130
When firms have an incentive to exit a competitive price-taker market, their exit will
a. lower market price. b. necessarily raise the costs of firms that remain in the market. c. raise profits for firms that remain in the market. d. reduce demand for the product.