Under Chapter 7, Creditors Are Paid in a Certain Order

question 16

Multiple Choice

Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for

• A)debts related to motor vehicles, household goods, and trade tools.
• B)domestic support.
• C)the debtor's equity in his or her residence.
• D)student loans.

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Definitions:

Resource Prices

The cost of inputs used in the production of goods or services, such as raw materials, labor, and energy.

Sunk Costs

Costs that have already been incurred as a result of past decisions. They are sometimes referred to as historical costs.

Variable Costs

Expenses that fluctuate in direct proportion to the level of output or production activity.

Stock Purchase

The action of buying shares in a company, which represents a portion of ownership in that corporation.