Question: An economist commented on the situation a bank faces when making personal loans to subprime borrowers: You have to be alert to the trade-off between

An economist commented on the situation a bank faces when making personal loans to subprime borrowers: "You have to be alert to the trade-off between serving consumers and being viewed as taking advantage of them." If banks charge subprime borrowers a higher interest on loans than they charge prime borrowers, are the banks taking advantage of the subprime borrowers? Briefly explain.

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