Several Companies,some of Them Operating Through the Internet,offer "Paycheck Advances

question 58

Multiple Choice

Several companies,some of them operating through the Internet,offer "paycheck advances." Consumers are encouraged to take out a loan against a paycheck they expect to receive in the near future.These short-term loans with high-interest rates,and high penalties for late payments,are often marketed to consumers who do not have traditional bank accounts.These companies could most easily be criticized for which of the following?

• A)shoddy products
• B)poorly serving disadvantaged consumers
• C)high-pressure selling
• D)high advertising and promotion costs
• E)predatory pricing

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity.

Economic Efficiency

A situation where resources are allocated in the most effective way, maximizing total benefits while minimizing waste and costs.

Competitive Markets

Markets characterized by a large number of buyers and sellers, where no single entity can influence prices significantly.

Government Intervention

Actions taken by the government to influence or directly regulate economic activity, markets, or distribution of resources.