A Free Rider Problem Occurs When

question 11

Multiple Choice

A free rider problem occurs when:

• A) a faction tries to capture control of government.
• B) a public good is provided by government.
• C) everyone fails to work toward a common goal.
• D) the market provides a good by making it free of charge.
• E) the government offers "bailouts" to failing corporations that come at the expense of taxpayers.

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Definitions:

Long-run Equilibrium

A state in which all factors of production are optimally allocated in the long term, resulting in the efficient operation of markets with no tendencies for change under constant conditions.

Average Total Cost

Average Total Cost is the total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs in the calculation.

Economic Profits

The financial gains that exceed the opportunity costs of a business's resources, considering both explicit and implicit costs.

Perfectly Competitive

A market structure characterized by a complete absence of rivalry among firms, where all firms sell identical products and no single firm can influence the market price.