A Free Rider Problem Arises When

question 442

Multiple Choice

A free rider problem arises when

• A)there are very few beneficiaries and exclusion of any one of them is possible.
• B)there are many beneficiaries and exclusion of any one of them is possible.
• C)there are many beneficiaries and exclusion of any one of them is impossible.
• D)there are very few beneficiaries and they all try to use the good simultaneously.

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Definitions:

Allocation

The process of distributing resources or tasks among various projects, departments, or individuals.

Initial Allocation

The original distribution of resources, goods, or tasks among various parties or locations.

Pareto Optimal

A situation in which it is impossible to make any individual better off without making at least one individual worse off.

Pure Exchange Economy

An economic model where households or individuals purely exchange goods and services without any production.