A Local Campaign Is Asking for Contributions of $5

question 164

Multiple Choice

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.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded in a market.

Equilibrium Quantity

At the market equilibrium price, the amount of goods or services that are supplied matches the amount that is demanded.

Equilibrium Price

The market price at which the quantity demanded of a good equals the quantity supplied, leading to a state of balance in the market.

Government Subsidy

Financial assistance provided by the government to businesses, individuals, or other governmental units in support of an activity deemed beneficial to the public.