Which of the Following Is the Best Description of a "Free

question 70

Multiple Choice

Which of the following is the best description of a "free rider"? Someone who

• A)pays for a good but does not receive any benefit from the good.
• B)receives the benefit of a good without having to pay for it.
• C)does not produce any goods but is able to consume them.
• D)consumes a good until the marginal benefit received from the last unit is zero.
• E)consumes a good until the marginal benefit received from the last unit is equal to the marginal cost of producing the good.

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Definitions:

Regression Equation

A statistical method used to determine the relationship between a dependent variable and one or more independent variables.

Single-Index Model

A pricing model that describes the return of a security as a function of a single market index and unique factors specific to that security.

Risk-Free Rate

A theoretical return on investment with no risk of financial loss, typically represented by the returns on the most secure government securities.

Market Index

A statistical measure that tracks the performance of a specific basket of stocks or assets to represent a segment of the financial market.