An advantage of a proprietorship is that a. it is difficult and expensive to set

Question

An advantage of a proprietorship is that a. it is difficult and expensive to set up b. the owner has complete control over the business c. the business can issue stocks and bonds d. the owner has unlimited liability 1. 2. Equity financing alternatives include a. issuing bonds b. issuing stocks c. borrowing from a bank d. all of the above 3. Economists normally assume that the goal of a firm is to (i)make profit as large as possible even if it means reducing output (ii) (iii) make profit as large as possible even if it means incurring a higher total cost. make revenue as large as possible a. (i) and (ii) b. (i) and (iii) c. (ii) and (iii) d. None of the above are correct.

Explanation / Answer

1. The right option is option b. the owner has complete control over the business.

Explanation: In a sole proprietorship, the owner is not answerable to anyone and he/she can independently make all decisions regarding the business. It is the main advantage of a sole proprietorship. SO, option b is valid.

A sole proprietorship is easy to set up and it is least expensive. So, option a is invalid.

It cannot issue stocks or bonds. So, option c is also invalid.

Option d is a disadvantage and not an advantage. So, option d is also invalid.

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