Multiple choice

Directions: Choose the correct option for the given question.

Which of the following statements is not correct?

  1. Business firms combine to avoid wasteful competition.

  2. Business combination is possible only among joint stock companies.

  3. Business firms may combine to take advantage of patent rights of individual firms.

  4. During economic depression, small firms are absorbed by financially sound large firms.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Business combinations are NOT limited only to joint stock companies - they can occur between partnerships, LLPs, sole proprietorships, and other business entities. Statement B is therefore incorrect. The other statements are valid: firms do combine to avoid wasteful competition, they may combine to leverage patent rights, and during depressions, financially strong firms often absorb smaller ones.

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