Question

Which of the following is true of sole proprietorships in the United States?

There are no opportunity costs involved in operating such firms.

They offer the owners less personal liability than the other forms of business organization.

Such firms employ only one individual.

They are responsible for a large portion of the total production of goods and services in the U.S. economy.

They are the most important form of business organization in terms of their numbers.

Taxes collected on the basis of the benefits-received principle:

tend to redistribute income from rich to poor.

make it possible for the government to spend money on activities that markets cannot provide.

do not vary in amount among the taxpayers.

connect the revenue side of the budget with the spending side of the budget.

provide states with their main sources of revenue.

Which of the following is true of sole proprietorships in the United States?

There are no opportunity costs involved in operating such firms.

They offer the owners less personal liability than the other forms of business organization.

Such firms employ only one individual.

They are responsible for a large portion of the total production of goods and services in the U.S. economy.

They are the most important form of business organization in terms of their numbers.

Which of the following is true of a recession?​

​It is typically accompanied by inflation and investment growth.

It begins after an expansion has peaked.​

It is typically longer than periods of expansion.​

It continues as long as actual output exceeds the potential output.​

It lasts for more than two years on an average.​

Answer 1

Part 1) The statement that is true for sole proprietorship in the US is that they are the most important form of business organization in terms of their numbers, as they account for close to three-fourth of all the businesses in the US.

There is always an opportunity cost involved in terms of income foregone that an individual could have earned by working somewhere instead of running the business. Such business has unlimited personal liability as there is no legal separation between the owner and the business. Such businesses can have employees as long as they are following appropriate labor and tax laws. They are not responsible for a large portion of the total production of goods and services in the U.S. economy.

Part 2) Taxes collected on the basis of the benefits-received principle connect the revenue side of the budget with the spending side of the budget. This is because, benefit-received principle of taxation follows the same principle as the market where individuals who receive the benefit of a good or service should pay the tax necessary to supply that good or service. In this way, the spending side of the government budget gets connected with the revenue side.

Part 3) The statement that is true for sole proprietorship in the US is that they are the most important form of business organization in terms of their numbers, as they account for close to three-fourth of all the businesses in the US.

There is always an opportunity cost involved in terms of income foregone that an individual could have earned by working somewhere instead of running the business. Such business has unlimited personal liability as there is no legal separation between the owner and the business. Such businesses can have employees as long as they are following appropriate labor and tax laws. They are not responsible for a large portion of the total production of goods and services in the U.S. economy.

Part 4) Recession begins after an expansion has peaked.​ This is because, once the output expansion has reached its maximum level, there will be decline in the demand which will take the economy into the recession.

Recession results in falling prices and declining investment.