A Free-Rider Problem Exists When a Good That Has the Following

question 18

Multiple Choice

A free-rider problem exists when a good that has the following characteristic?

• A) Rivalry in consumption.
• B) Elastic demand.
• C) Inelastic demand.
• D) Nonexcludable.

Understand the net method of recording purchases and its implications on accounting records.

Identify and describe the principles of internal control.

Explain the significance and computation of days' sales uncollected ratio.

Understand the purpose and application of a voucher system in controlling cash disbursements.

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Definitions:

Marginal Benefit

The extra pleasure or benefit obtained from consuming an additional unit of a product or service.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one additional unit of a product or service.

Optimal Quantity

The quantity that generates the highest possible total profit.

Economic Analysis

The systematic approach to determining the optimum use of scarce resources, involving comparison of two or more alternatives in achieving a specific objective under the given assumptions and constraints.