Discuss the benefits of restricting business risk to owners and investors
Please provide the best answer for the statement.
If business risk is assumed only by the firm’s owners and investors it is easier to attract employees and suppliers. Many individuals prefer to avoid risk and like the certainty that a regular paycheck offers. Limiting the risk these individuals bear attracts them to the market.
Another benefit of restricting who bears business risk is that it focuses responsibility and rewards for enduring the risk onto the owners and investors of a firm. The focus of business risk on a relatively small number of people ensures that they are making prudent decisions about the allocation of resources. In a command system, there are many individuals involved in managing risk. This makes it difficult for a sole individual or small group of individuals to assume responsibility for a bad outcome.
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Suppose 60% of U.S. trade is with England and the rest is with Japan. If the dollar rises by 20% against the pound but falls by 20% against the yen, what is the percentage change in the effective exchange rate of the United States?
a. -12% b. -4% c. ±0% d. -8%
The short-run Phillips curve shows the combinations of
a. unemployment and inflation that arise in the short run as aggregate demand shifts the economy along the short-run aggregate supply curve. b. unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. c. real GDP and the price level that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve. d. None of the above is correct.