Bill Is in Business as a Contractor

question 38

Multiple Choice

Bill is in business as a contractor.He purchased a tractor worth $100 000 with a loan from Bank X.The full value of the loan was put towards the purchase price and the bank obtained and registered a security interest in the tractor.If Bill's business becomes bankrupt, the bank may

• A)seize the tractor, sell it, and recoup any short fall from the proceeds of the sale as a secured creditor from the business' estate.
• B)not seize the tractor and the bank has no claim against Bill's business for the debt.
• C)seize the tractor, sell it, and recoup any short fall as a general unsecured creditor.
• D)seize the tractor only if Bill agrees, but the bank has no claim for any short fall thereafter.
• E)not seize the tractor, but the bank may sue Bill personally for misrepresentation.

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Definitions:

Labor Demand Curves

Illustrates the relationship between the wage rate and the quantity of labor that employers are willing to hire, showcasing how changes in wages can affect employment levels.

Minimum Wage

The lowest legally permissible amount that workers can be paid by employers, usually set by government policy.

Principal-agent Problem

A conflict of interest that arises when one party (the agent) is expected to act in the best interest of another (the principal) but has incentives to act in their own interest.

Purely Competitive Labor Market

A resource market in which many firms compete with one another in hiring a specific kind of labor, numerous equally qualified workers supply that labor, and no one controls the market wage rate.