Question

In a mixed market economy, a fire breaks out in a sneaker factory. The repair work most likely will be paid by the government group that runs the factory. the state agency that operates the factory. the city official who manages the factory. the private citizen who owns the factory.

Answer 1

Answer:the private citizen who owns the factory.

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Answer 2

The correct answer is: "the private citizen who owns the factory".

It would be more accurate to say the private citizens who own the factory, as it is likely that the capital of the corporation is divided in shares, whose owners are in turn, also owners of the corporation in the proportion evidenced by the number of shares they hold.

The losses generated by the fire will be assumed by the capital available in the firm, and due to the increase suffered in the costs, owners will suffer a decrease in their dividends which are the return they receive for their invesment. In case that the available capital is not enough, investors can decide either to invest more money or to let the corporation go bankrupt. It is possible that the local community provides some aid in terms of funding in a mixed economy, to prevent job losses for example, but it is not mandatory that they do so.

In order to afford the large and immediate payments required in case of an unpredictable disaster or accident without risking the solvency of the whole business, firms sign insurance contracts and make periodic payments so that in case of an accident the insurance company would face all costs.