Practice question · Multiple choice
A firm can be classified by size, sector, ownership and legal form at the same time. Why are these four axes rather than one scale?
Hints
- Try to predict a firm’s legal form from its sector.
- Ask what each classification is used FOR.
Show the answer
C. Because they are independent axes answering different questions
Why
Independent axes carry independent information. Collapsing them into one ranking would lose exactly what makes the classification useful, that a firm can be small and public, or huge and family-held.
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