Q13. In a market economy, a resource is compensated according to a. the needs of
ID: 1212372 • Letter: Q
Question
Q13. In a market economy, a resource is compensated according to
a. the needs of its owner
b. its contribution to the final product
c. social priority
d. government direction
Q14. The owner of a sole proprietorship has
a. unlimited liability: if the firm goes bankrupt, the owner is liable for all debts
b. unlimited liability: if the firm goes bankrupt, the owner is liable for the amount of the investment
c. limited liability: if the firm goes bankrupt, the owner does not have to pay
d. unlimited liability: if the firm goes bankrupt, the owner is liable for the amount of the fixed assets only
Q15. Corporations have the advantage of
a. double taxation
b. limited liability of the stockholders
c. no taxes
d. limited life
Explanation / Answer
13. b. its contribution to the final product
In a free market economy, resources are allocated through the interaction of free and self-directed market forces. This means that what to produce is determined consumers, how to produce is determined by producers, and who gets the products depends upon the purchasing power of consumers.
14. a. unlimited liability: if the firm goes bankrupt, the owner is liable for all debts
Sole proprietors are personally liable for all debts of a sole proprietorship business.
15.b. limited liability of the stockholders
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