_________________________________ Is a Way to Price Loans Which Starts with the Costs

question 96

Short Answer

_________________________________ is a way to price loans which starts with the costs of making a loan and adds to it a risk premium for default risk and a desired profit margin.

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Definitions:

Marginal Product

The increase in output that arises from an additional unit of input, holding all other inputs constant.

Total Cost Curve

A graphic representation showing how total cost changes with changes in the level of output or production.

Output

The amount of goods or services produced by a company, industry, or economy in a given period.

Isoquant

A curve representing all the combinations of inputs that result in the production of a certain level of output, used in the study of production theory.