If a Borrowing Firm Does Not Qualify for an Unsecured

question 35

True/False

If a borrowing firm does not qualify for an unsecured bank loan and pledges its accounts receivable as security, it eliminates the need for a credit investigation.

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Definitions:

Producer Surplus

The divergence between what producers expect to get for a good or service and the actual compensation they receive.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes.

Deadweight Loss

An economic inefficiency that occurs when the total welfare in a market is not maximized, resulting from distortions such as taxes, subsidies, or monopolies.