Sole proprietorships produce only a small fraction of annual sales in the U.S. economy because sole proprietorships
A. are the most heavily taxed businesses.
B. mainly are small businesses.
C. use the factors of production less efficiently.
D. have less flexibility in decision making.
Answer is B
Sole propietorships are small biz, since they are owned by a single individual, who is personally responsible for all losses and debts
B. mainly are small businesses.
To determine the answer, we need to analyze each option and examine the characteristics of sole proprietorships.
A. Sole proprietorships are not necessarily the most heavily taxed businesses. In fact, the tax burden can vary depending on the individual circumstances of the owner.
B. This statement is true. Sole proprietorships are typically small businesses owned and operated by a single individual. They often have fewer resources, limited capital, and a smaller customer base compared to larger businesses.
C. There is no evidence to suggest that sole proprietorships use the factors of production less efficiently. The efficiency of resource utilization can vary across businesses regardless of their legal structure.
D. Sole proprietorships actually have more flexibility in decision making compared to other business entities. Since there is only one owner, decisions can be made quickly without having to consult other shareholders or directors.
Based on this analysis, the most accurate answer is B. Sole proprietorships mainly are small businesses.