The Decision to Extend Credit Beyond the Normal Credit Limit

question 71

Multiple Choice

The decision to extend credit beyond the normal credit limit is an example of

• A)independent verification
• B)authorization
• C)segregation of functions
• D)supervision

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Definitions:

Private Value

The individual valuation of a good or service to a particular consumer or producer, not taking into account external effects or social welfare.

External Benefits

Positive effects of a product or service on individuals or entities who are not directly involved in the transaction or production of the product or service.

External Benefit

A positive effect or advantage that results from a product or service's use, affecting individuals or entities who are not directly involved in the transaction.

Positive Externality

A beneficial effect experienced by a third party or the society as a whole, resulting from an economic transaction.