The Free-Rider Problem

question 52

Multiple Choice

The free-rider problem

• A)forces the supply of a public good to exceed its demand.
• B)allows more people to pay for the public good than if it were a private good.
• C)explains why many local governments supply public goods.
• D)is reflected in the above-market price of a public good in comparison to a private good.

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Definitions:

Marginal Analysis

The comparison of marginal (“extra” or “additional”) benefits and marginal costs, usually for decision making.

Extra Benefits

Additional advantages or services provided beyond the standard or expected, often included in employment contracts, insurance policies, or membership programs.

Extra Costs

Expenses that are not anticipated, often occurring outside of normal or planned operating expenses.

Scarce Resources

Resources that are limited in supply, which can lead to competition for their use or access.