The two most fundamental aspects of a corporation (as a form of business organization) that lead to not only tremendous economies of scale and scope (as a positive) but also are linked to the financing problems that we address in the course (as a negative) are:
A)the separation of ownership and control AND private ownership.
B)limited liability AND private ownership.
C)the separation of ownership and control AND limited liability.
D)private ownership AND leverage.

Question

Quizplus · Accepted Answer

The separation of ownership and control allows for professional management, which can lead to economies of scale and scope by efficiently managing resources. However, this separation can also lead to agency problems, where the interests of the managers and the owners diverge. Limited liability encourages investment by protecting investors' personal assets, contributing to economies of scale by making it easier to raise capital. However, it can also lead to moral hazard, where the promise of limited liability might encourage excessively risky projects.

The Two Most Fundamental Aspects of a Corporation (As a Form