A Collective Action Problem Is a Situation in Which

question 2

Multiple Choice

A collective action problem is a situation in which:

• A)people are reluctant to voluntarily pay for goods and services that provide benefits for everyone, including those who don't pay.
• B)people are reluctant to voluntarily pay for goods and services because they believe their individual contribution will not make a difference.
• C)a group of people stand to gain from an action that is not rational for any of the members to undertake individually.
• D)a small group of individuals gains power that sways the decisions of society to their personal gain, at the expense of the larger society.

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Definitions:

Long-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied over a period when all factors of production can vary.

Output

Refers to the quantity of goods or services produced in a given time period by a firm or economy.

Short-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied by producers in the short term, under fixed resources and technologies.

Break-Even Point

The low point on the firm’s average total cost curve. If the price is below this point, the firm will go out of business in the long run.