Asked by Shannon Forbes on May 18, 2024
Verified
________ arises when people realize they will still receive the benefits of a good whether they pay for it or not.
A) The voting paradox
B) The free-rider problem
C) Logrolling
D) The drop-in-the-bucket problem
Free-rider Problem
A situation in which individuals consume a good without paying for it, relying on others to bear the cost, which can lead to underprovision of the good.
- Distinguish and clarify the challenge presented by free-riders when dealing with public goods.
Verified Answer
AA
Althea ArticuloMay 24, 2024
Final Answer :
B
Explanation :
The free-rider problem occurs when individuals can enjoy the benefits of a good or service without paying for it, leading to under-provision of that good or service since not everyone contributes to its cost.
Learning Objectives
- Distinguish and clarify the challenge presented by free-riders when dealing with public goods.