Since Commercial Finance Companies Offer Loans to Higher-Risk Customers Than

question 160

Multiple Choice

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.

• A) higher
• B) lower
• C) more predictable
• D) subject to lower taxes

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Definitions:

Transitive Preferences

A concept in decision theory where if a person prefers option A over B and B over C, then the person also prefers A over C.

Transitive Indifference

Transitive indifference refers to a situation in consumer preference theory where if a consumer is indifferent between goods A and B and also between goods B and C, then the consumer is equally indifferent between goods A and C.

Strict Preference

An economic term indicating a consumer's stronger liking for one option over another, with no indifference between the two.

Convex Preferences

In consumer theory, a situation where the consumer prefers an average of two goods or bundles to either one of the extremes, indicating a desire for diversified choices.