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Question
Meera runs a bakery. Due to a drop in demand for cakes, she starts focusing on cookies and bread. She quickly adapts her business to market trends without needing approvals. Which merit of sole proprietorship does this demonstrate?
Options
Unlimited liability
Secrecy of operations
Flexibility of operations
Lack of continuity
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Solution
Flexibility of operations
Explanation:
Flexibility of operations is a key merit of sole proprietorship, as the sole proprietor can quickly adapt the business to market trends and make decisions independently without needing approval from others. This allows for prompt changes, such as Meera shifting from cakes to cookies and bread, responding efficiently to demand fluctuations. This freedom to rapidly change the business focus is possible because the owner has full control over operations, unlike in partnerships or companies, where consensus or approvals are required.
