Question

Because risk is associated with the potential for higher profits, business persons are motivated to choose organizational forms that limit their liability while allowing them to take risks that may lead to greater profits. True ot false?

Answer 1

Answer:

True

Explanation:

The reason why every business exists is to make a profit. Hopefully businesses will be able to make a profit by selling products or services that satisfy the needs of their customers. The problem with higher profits is that they are always associated with higher risks, and business owners and investors are risk averse.

Business owners and managers will continually search for ways to increase their profits while keeping the risks as low as possible. This includes choosing organizational layouts and forms that might help them increase their profits while reducing risks or at least keeping them under a certain level.