If the Default Probability Is Less Than the Profit Margin

question 81

True/False

If the default probability is less than the profit margin, you should extend credit for the sale.

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Definitions:

Efficient Allocation

The optimal distribution of resources among competing uses to maximize output or welfare.

Ppf (Production Possibility Frontier)

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology, when resources are fully and efficiently utilized.

Efficiently

Achieving maximum productivity with minimum wasted effort or expense.

Production Inefficiency

A situation where resources are not utilized in the best possible manner, resulting in wasted potential output.