Free Riding Is Not a Problem in the Market for a Private

question 91

Multiple Choice

Free riding is not a problem in the market for a private good because

• A) people who do not pay for the good can be excluded from consumption.
• B) the good is a rival good.
• C) the market eliminates the problem of externalities.
• D) The question errs because free riding is a problem in providing private goods.

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Definitions:

Revenue-maximizing Price

The price at which a company can generate the maximum revenue from the sale of a product or service, taking into account the demand and elasticity of the product.

Football Tickets

Typically, these are passes that allow entry to watch a football game.

Demand Function

A mathematical representation showing the quantity of a good or service that consumers are willing and able to purchase at various prices.

Reservation Price

The maximum price a buyer is willing to pay for a good or the minimum price a seller is willing to accept.