Discuss the advantages and disadvantages of proprietorships
What will be an ideal response?
Proprietorships are easy to form and to dissolve. Furthermore, all the decisions are made by the proprietor, so decisions can be made quickly. The profits are taxed only once, which is not the case for corporations. However, there are also disadvantages. The biggest disadvantage is unlimited liability: the owner is personally responsible for all the debts of the firm, and could lose assets that are not part of the firm. This often makes it difficult to raise financial capital. Finally, the firm ends with the death of the owner, creating uncertainty for employees and creditors.
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If the number of ITQs issued equals the efficient production level, what is the price of an ITQ?
What will be an ideal response?
There were initially two satellite radio providers in the U.S. market, Sirius and XM Radio. The firms merged to form one firm, and the federal government did not challenge the merger
Although the merger created a single seller in this market, the existence of a monopoly may not have much impact on U.S. consumers. Which of the following statements are plausible reasons for the limited impact of the merger? A) There are very large fixed costs in providing satellite radio, and the industry may be a natural monopoly. One seller may be able to operate at lower cost than two sellers. B) Although there will only be one seller of satellite radio, there are other forms of radio broadcasts available to U.S. consumers and demand for satellite radio may be relatively elastic. C) The merged firm will operate at higher capacity and may be able to reduce costs through economies of scale and perhaps learning-by-doing, which will benefit U.S. consumers. D) all of the above