Laurie Lives in a House with Three Roommates

question 21

Multiple Choice

Laurie lives in a house with three roommates. Normally, Laurie is very conscientious about doing the housework - she keeps up with the dishes and the other household tasks. Laurie notices, however, that her roommates are not doing their share of the housework, and so she stops doing the work herself. Laurie is experiencing

• A) free riding.
• B) the sucker effect.
• C) the Ringelmann effect.
• D) social loafing.

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Definitions:

Profit

The financial benefit realized when revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the operation.

Total Output

The total amount of goods and services produced within an economy at a given overall price level in a given time period.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation and output increases.

Coordination Problems

Challenges that arise in aligning the plans and actions of multiple parties in order to achieve a common goal or optimize outcomes.