Unit 2: Understanding Microeconomics — Test

Question 15 • Personal Finance and Economics

Which can be considered disadvantages of sole proprietorships and partnerships?

Answer

Sole proprietorships require one person to do many things, while partnerships require many people to weigh in on decisions.

Partnerships require one person to do many things, while sole proprietorships require many people to weigh in on decisions.

Partnerships require many people to write a charter, while sole proprietorships require one person to write a charter.

Sole proprietorships require one person to know complicated tax laws, while partnerships require many people to know the rules.

Explanation

A sole proprietor often handles many roles alone, which can be demanding. In a partnership, decisions may take longer because the partners need to discuss and agree on them. These are disadvantages of the two business forms described in choice A.

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