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Exhibit 17

question 98

Essay

Exhibit 17.9.A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank.The rating is based on the probability of defaulting on credit cards and is as follows.


Definitions:

Price-elasticity-of-demand Coefficient

A measure that calculates the responsiveness of the quantity demanded of a good to a change in its price.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, typically downward sloping.

Widgets

A hypothetical or generic manufactured good often used in economic models and discussions.

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