The Reason Why We Sum the Demand Curves of Individual

question 27

Multiple Choice

The reason why we sum the demand curves of individual consumers vertically rather than horizontally in a public goods market is that

• A) the willingness to pay in a public good market is smaller than that in a standard market.
• B) individual consumers are unlikely to be willing to pay enough to cover the marginal cost of production of a public good.
• C) the marginal social benefit of the X^th unit includes all consumers' marginal social benefits because the public good is non-exclusive and non-rival.
• D) the concept of quantities is meaningless in the case of public goods.

---

Definitions:

Bad Debt Expense

The operating expense incurred because of the failure to collect receivables.

Account Receivable

Account Receivable represents funds owed to a company by clients or customers who have purchased goods or services on credit.

Account Receivable

Funds that customers owe a company for products or services received but not yet compensated for.

Written Off

Written off involves removing an asset or debt from a company’s financial statements, acknowledging that the asset has lost all value or the debt cannot be collected.