The Free-Rider Problem Arises Because

question 282

Multiple Choice

The free-rider problem arises because

• A) once provided, a public good is available to all regardless of whether they paid for it.
• B) poor people cannot afford to contribute to public goods.
• C) enforcement of tax laws is inadequate.
• D) people disagree with how the government spends it s money.

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Definitions:

Required Return

A rephrasing of Required Rate of Return; it's the expected return that investors demand for an investment in a particular asset, based on its risk.

Cash Break-even

The point at which a business generates enough cash flow to cover its operating expenses and capital costs.

Variable Costs

Expenses that vary directly with the level of business activity.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.