Which of the Following Statements Is True of the Free

question 200

Multiple Choice

Which of the following statements is true of the free rider problem?

• A)People consume a pure public good without payment, even though the good may not be produced if no one chooses to pay.
• B)The marginal cost of allowing additional consumers to consume a public good is zero.
• C)High income individuals subsidise the production of goods, such as education, that make society better off.
• D)Markets fail to allocate resources efficiently when benefits outweigh costs.

Comprehend the role and effect of acceptance, offer, and communication in contract formation.

Understand the significance of the Statute of Frauds in contract enforceability.

Interpret legal issues related to the adequacy of consideration and pre-existing duties.

Understand the concept of asymmetric information and its implications in markets.

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Definitions:

Commercial Paper

Commercial paper refers to short-term, unsecured promissory notes issued by companies to finance their short-term liabilities.

Marketable Securities

Financial instruments that can be easily converted into cash, typically with high liquidity and short maturity periods.

Management of Cash

The strategies and practices employed by a firm to handle its cash flows, ensuring liquidity and operational efficiency.

Marketable Securities

Financial instruments that can easily be converted to cash without a significant loss in value.