Question detail
RiverRun Catering serves local families while changing supplier; the case evidence includes gross profit margin of ?7,298, sales of 688 units, and a 17% change in costs or demand. Which option best applies Explain limited liability and identify which legal structures benefit from it?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Business ownership
Question
- A. Use limited liability to judge labour productivity, owners impact, and the business objective in Benefits, drawbacks and suitability.
- B. Give only a definition of Business ownership without using the case evidence.
- C. Treat margin and markup as identical and ignore the effect on owners.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use limited liability to judge labour productivity, owners impact, and the business objective in Benefits, drawbacks and suitability.
Explanation
The option is correct because Use limited liability to judge labour productivity, owners impact, and the business objective in Benefits, drawbacks and suitability. The case evidence gives ?8,798, 688 units, and 17%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse margin and markup, miss the owners, or ignore the business objective.
Common mistake
Benefits, drawbacks and suitability common mistake 1
Giving a vague answer instead of directly addressing: Explain limited liability and identify which legal structures benefit from it..
Answer by clearly explaining how to explain limited liability and identify which legal structures benefit from it..
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