Which One of the Following Will Generally Receive the Highest

question 64

Multiple Choice

Which one of the following will generally receive the highest priority in a bankruptcy liquidation, assuming the absolute priority rule is followed?

• A)Claims by unsecured creditors
• B)Employee wages
• C)Government tax claims
• D)Contributions to employee retirement plans
• E)Bankruptcy administrative expenses

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Definitions:

X-Inefficiency

A situation in which a firm fails to utilize its resources efficiently because of a lack of competitive pressure.

Average Total Costs

The total cost of production divided by the quantity produced, representing the per-unit cost of producing a good or service.

Economies Of Scale

Operational scale increases lead to cost efficiencies for businesses, prominently reflecting in reduced production costs per unit as the amount of output grows.

Diseconomies Of Scale

The situation when a firm’s average total cost of producing a product increases in the long run as the firm increases the size of its plant (and, hence, its output).