Final answer:
Members of a cooperative democratically control the business by electing a board of directors. Unlike privately held or publicly traded companies, cooperatives operate on democratic principles with limited liability for the members.
Step-by-step explanation:
In a cooperative, members, also known as customers or employee-owners, play a significant role in the governance of the business. The correct answer to the student's question is:
a. Democratically control their businesses by electing a board of directors.
Unlike private companies run on a sole proprietorship or partnership basis, or public companies owned by shareholders, a cooperative is an organization owned and run by the people it serves. Each member typically has one vote, and they use this vote to elect a board that manages the company according to the democratic principles upon which cooperatives are built. This democratic control contrasts with other business structures where control could be proportional to the amount of capital invested or where limited partners have no say in the management of the company. Moreover, in cooperatives, liability is generally limited to the amount invested in the cooperative, not unlimited as it would be in a general partnership.