The Optimal Amount of Credit to Be Granted Can Be

question 73

Multiple Choice

The optimal amount of credit to be granted can be located graphically at the point where the:

• A) Opportunity costs of credit are minimized.
• B) Sum of the opportunity cost and the carrying cost is minimized.
• C) Difference between the opportunity cost and the carrying costs of credit are maximized.
• D) Sum of the opportunity cost and the carrying costs is maximized.
• E) Carrying costs of credit are equal to zero.

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Definitions:

Producer Surplus

The discrepancy between what producers are ready to take for a product or service and the real amount they get.

Tax

A required contribution or another kind of monetary levy imposed by a government body on a taxpayer to underpin government expenditure and different public spending initiatives.

Deadweight Loss

Deadweight loss refers to the loss in economic efficiency that occurs when the equilibrium for a good or service is not achieved or is unattainable.

Consumer Surplus

The gap in the total amount consumers are willing to invest in a product or service and the amount they end up paying.