The Free-Rider Phenomenon

question 19

Multiple Choice

The free-rider phenomenon

• A) becomes increasingly problematic in very large groups.
• B) becomes increasingly problematic in very small groups.
• C) is not affected in any way by the size of the group in question.
• D) is not related to groups in any way because it is an individual-level problem.
• E) makes collective action considerably easier.

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Definitions:

Current Ratio

Current assets/current liabilities. Measures the ability of the firm to pay off its current liabilities by liquidating current assets.

Acid Test

A stringent test that measures the liquidity of a company by calculating its quick assets (excluding inventory) against its current liabilities.

ROA

Return on Assets represents a financial metric that measures a company's profitability in relation to its overall assets.

Capital Structure

The mix of different forms of external funds used by a firm to finance its activities, including debt and equity.