Fred Convinces Greg and Harry to Help Him Sell His

question 53

Multiple Choice

Fred convinces Greg and Harry to help him sell his homemade mango juice.Which of the following indicates that Fred has set up a pyramid scheme?

• A)Fred promises to pay them $10 each for every $100 worth of juice that they sell.
• B)Fred charges Greg and Harry $100 to join the selling scheme, and promises them $10 each for every person they convince to join the scheme as well.
• C)Fred charges Greg and Harry $100 to join the selling scheme, and promises to pay them $10 each for every $100 worth of juice that they sell.
• D)Fred promises to pay them $10 each for every new customer they find.

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Definitions:

Diversify Their Portfolios

The strategy of spreading investments among various financial instruments, industries, and other categories to minimize risk.

Credit Risk

The potential that a borrower will fail to meet their obligations in accordance with agreed terms.

Capital Resources

Economic assets used by businesses to produce goods and services, such as buildings, machinery, and equipment.

Market Economy

An economic system where supply and demand dictate the production, distribution, and pricing of goods and services, with minimal government intervention.