Asked by Brandon Underhill on May 11, 2024
Verified
A local campaign is asking for contributions of $5.00 per citizen to fund the renovation of the boardwalk in Atlantic City following Hurricane Sandy. The total cost of the renovation is estimated to be $125 million. You decide not to contribute because your contribution would be so small relative to the total that it wouldnʹt make any difference whether you contribute or not. This is an example of the
A) nonexcludable problem.
B) nonrival in consumption problem.
C) free-rider problem.
D) drop-in-the-bucket problem.
Free-rider Problem
A situation in which some individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production, benefiting from goods or services without paying for them.
Nonexcludable Problem
An issue characteristic of public goods, where it is not possible to prevent individuals who do not pay from consuming a good or service.
- Recognize and explain the drop-in-the-bucket problem.
Verified Answer
ML
Mackenzie LagroveMay 16, 2024
Final Answer :
D
Explanation :
The decision not to contribute because the individual contribution seems insignificant in the context of the total cost is an example of the drop-in-the-bucket problem. This problem occurs when individuals feel their contribution to a large project will not make a significant difference, leading them to not contribute at all.
Learning Objectives
- Recognize and explain the drop-in-the-bucket problem.