Multiple Choice
Which of the following should not be included in the analysis when making a decision using positive economics?
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0. Basic Principles of Economics
Positive and Normative Analysis
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Which advantage of a sole proprietorship could also be considered a disadvantage?
A
Complete control over business decisions
B
Limited access to capital
C
Unlimited liability for debts
D
Ease of transferring ownership
Verified step by step guidance1
Step 1: Understand the characteristics of a sole proprietorship, which is a business owned and run by one individual, with no legal distinction between the owner and the business.
Step 2: Identify the advantages of a sole proprietorship, such as complete control over business decisions, ease of formation, and direct claim on profits.
Step 3: Recognize the disadvantages, including unlimited liability for debts, limited access to capital, and difficulty in transferring ownership.
Step 4: Analyze the advantage 'complete control over business decisions' and consider why this could also be a disadvantage: since the owner makes all decisions alone, there is no input or shared responsibility, which can lead to poor decisions or increased pressure.
Step 5: Conclude that 'complete control over business decisions' is unique because it can be both an advantage (quick decision-making) and a disadvantage (lack of collaboration and risk concentration).
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