A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?

Group of answer choices:

a. It encourages more people to become entrepreneurs.

b. Income becomes more equally distributed.

c. Firms focus attention on prudent risk management, as it is profitable to manage risk.

d. Firms have to pay more to attract inputs, as these inputs have to share the risk.

Question

Business

Mariah Hester

2 November, 03:51

A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?

Group of answer choices:

a. It encourages more people to become entrepreneurs.

b. Income becomes more equally distributed.

c. Firms focus attention on prudent risk management, as it is profitable to manage risk.

d. Firms have to pay more to attract inputs, as these inputs have to share the risk.

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Answers (1)

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Celia · Answer 1

Answer: d) Firms have to pay more to attract inputs, as these inputs have to share the risk.

Explanation: When the market system tries to put restriction on the business risk to owner and other investors, the firms have to give more payment to attract them to market business.

The chances of risk have have to be shared by both the parties so the owners or investors are going to indulge in the business when they gain some benefit e. g.-more payment.

Other options are incorrect because entrepreneurship will not be encouraged through this process. Incomes will not be distributed equally and neither the prudent risk management will be aimed. Thus, the correct option is option (d).