What are the main advantages and disadvantages of organizing a business as a corporation?
What will be an ideal response?
The main advantages are limited liability to the stockholders and better access to lower cost capital by issuing stocks and bonds. The main disadvantage is that some of the corporate income is taxed twice. First, the corporation pays a corporate income tax. Second, the owners of the corporation pay a personal income tax on any capital gains they might earn.
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A higher nominal interest rate ________ the profit-maximizing level of MPK for firms, leading firms to a ________ capital-output ratio, thus ________ net investment
A) raises, higher, raising B) raises, lower, lowering C) lowers, higher, raising D) lowers, higher, lowering E) lowers, lower, raising
A given supply curve has a zero intercept. At the current equilibrium price the price elasticity of supply equals
A) 1. B) 0. C) 2. D) Not enough information.