Which of the Following Is the Best Definition of a 'Tied

question 10

Multiple Choice

Which of the following is the best definition of a 'tied loan contract'?

• A) A credit contract in which the credit provider is the borrower's employer and the loan is tied to the borrower's continued employment.
• B) A credit contract whereby the borrower gives the credit provider rights to assets owned by the borrower to secure repayment under a credit contract.
• C) A credit contract entered into to pay for goods or services provided by a supplier who referred the borrower to the credit provider.
• D) A credit contract in which multiple advances of credit are contemplated and the amount of available credit increases as the debt is reduced.

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Definitions:

Purely Competitive Producer

A firm operating in a market where there are many sellers and buyers, the product is homogeneous, and there are no barriers to entering or exiting the market.

Shutting Down

The temporary or permanent cessation of operations, particularly referring to a firm's decision when it cannot cover its variable costs.

Economic Profits

The difference between total revenue and total cost, including both explicit and implicit costs, indicating a profit beyond normal expectations.

Purely Competitive Market

A market structure characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to efficient outcomes.