The Demand Curve for Apple ITune Music Downloads Is Unstable

question 136

Multiple Choice

The demand curve for Apple iTune music downloads is unstable because

• A)consumers of music downloads are irrational
• B)Apple's production costs are unstable
• C)it is unclear how Amazon,its primary competitor,will react to Apple's pricing strategy
• D)the market for music downloads is unpredictable
• E)consumers of music downloads have the option to download music for free

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Definitions:

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus writes off as a loss.

Direct Write-off Method

An accounting practice where uncollectable debts are written off against income at the time they are deemed non-collectable.

Allowance Method

An accounting technique that estimates uncollectible accounts receivable to record bad debts expense, reflecting more accurate accounts.

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated amount of accounts receivable which may not be collected.