One essential trade-off involving business risk in a market system is reflected in which of the following statements? A. Access to the firm's profits and gains are open only to those who take on the business risk of the firm. B. Those who receive guaranteed payments from the firm are also guaranteed a share of the firm's profits. C. Those who make bad decisions regarding risk will suffer losses; those who decide wisely will gain profits. D. Those who bear the business risk of the firm are guaranteed to always gain profits.

Question

Liberty Newman

Business

8 December, 06:47

One essential trade-off involving business risk in a market system is reflected in which of the following statements? A. Access to the firm's profits and gains are open only to those who take on the business risk of the firm. B. Those who receive guaranteed payments from the firm are also guaranteed a share of the firm's profits. C. Those who make bad decisions regarding risk will suffer losses; those who decide wisely will gain profits. D. Those who bear the business risk of the firm are guaranteed to always gain profits.

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Answers (1)

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Janelle Russell · Answer 1

A) Access to the firm's profits and gains are open only to those who take on the business risk of the firm.

Explanation:

This is essentially true for both profits and losses, only the owners of a private business will benefit or lose when the business makes a profit or loses money. In other words, if I invest, I assume the risks of my investment and the profit or loss from that investment affects me.

The same happens when you buy a car, only you can use it or decide who uses it. But if a stranger comes and takes your car it is a crime.