Question

part 1: main idea
what is one of the major disadvantages of corporations?
limited funds
limited life
loss of control
unlimited liability
12
multiple choice 4 points
part 1: main idea
what is it called when companies that produce the same product merge?
horizontal merger
vertical merger
conglomerate
multinational corporation

Explanation:

• For the first question: Corporations can raise large amounts of capital (so not limited funds), have perpetual existence (not limited life), and shareholders have limited liability (not unlimited liability). Loss of control occurs as ownership is spread among many shareholders.
• For the second question: A horizontal merger is when companies producing the same product merge. A vertical merger is along the supply chain, a conglomerate is a merger of unrelated businesses, and a multinational corporation operates in multiple countries (not about merging same - product companies).

Answer:

• First question: C. loss of control
• Second question: A. horizontal merger