Private Producers Have No Incentive to Provide Public Goods Because

question 175

Multiple Choice

Private producers have no incentive to provide public goods because

• A)the government subsidy granted is usually insufficient to enable private producers to make a profit.
• B)production of huge quantities of public goods entails huge fixed costs.
• C)they cannot avoid the tragedy of the commons.
• D)once produced, it will not be possible to exclude those who do not pay for the good.

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how effectively a company is collecting on its credit sales by dividing net credit sales by average accounts receivable.

Horizontal Analysis

A side-by-side comparison of two or more years’ financial statements.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (or financial statements) is represented as a proportion of the total account.

Common-Size Financial Statement

A financial analysis tool that presents all line items as a percentage of a common base figure, making it easier to compare financial statements of different-sized companies.