A Free Rider Problem Arrises When

question 180

Multiple Choice

A free rider problem arrises 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.

---

Definitions:

Third Party

An individual or group not directly involved in a contract or legal transaction but could be affected by its outcome.

Agency Relationship

A legal and fiduciary relationship between two parties, where one (the agent) is authorized to act on behalf of the other (the principal) in business transactions.

Illegal

Activities or practices that are forbidden by law and subject to penalties if violated.

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in particular transactions.