A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?
A. It encourages more people to become entrepreneurs.
B. Firms have to pay more to attract inputs, as these inputs have to share the risk.
C. Firms focus attention on prudent risk management, as it is profitable to manage risk.
D. Income becomes more equally distributed.
Answer: C
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Which of the following items is not one of the key functions of prices in the market system?
A) coordination B) measuring desire C) profit D) measuring scarcity
In 2008, a former Intel engineer has been charged with stealing trade secrets worth $1 billion. Intel owns 90 percent of the worldwide market for microprocessors, AMD has the rest
Conducting R&D is very expensive so suppose that each of these firms can either steal R&D or develop their own R&D. If both firms develop their own R&D, economic profit will be $50 million each. If one company steals R&D, that firm earns $100 million in economic profit while the other firm earns $10 million. If both firms steal R&D, each firm breaks even. What is NOT true about this game? A) The outcome will not be a dominant strategy equilibrium. B) A strategy is to steal R&D. C) A firm will make more profit if it steals R&D. D) A strategy is to conduct R&D.