A Contagious Run, or Bank Panic, Differs from a Run

question 101

True/False

A contagious run, or bank panic, differs from a run on a bank in that a contagious run involves loss of faith in the entire banking system as opposed to just one bank.

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Definitions:

Profit Maximizing

The process or strategy of adjusting production and operation levels to achieve the highest possible profit.

Shutdown Condition

A criterion in economics indicating the point at which a firm's revenue is not sufficient to cover its variable costs, prompting it to cease operations.

Marginal Cost Curve

A curve that graphically represents the cost of producing one additional unit of a good, typically illustrating how marginal cost varies with the quantity produced.

Competitive Firm

A company operating in a market where it has to set its prices based on the market conditions because it has little to no influence over the market prices.