The Free Rider Problem Is Caused by The

question 99

Multiple Choice

The free rider problem is caused by the:

• A) nonexcludability of a good leading to the undersupply of it.
• B) incentive to oversupply the good since it is nonrival in consumption.
• C) "rivalness" in consumption of a good leading to the overconsumption of that good.
• D) "rivalness" in consumption of a good leading to the undersupply of it.

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Definitions:

Supply Function

A mathematical relationship that describes the quantity of a good or service that producers are willing to sell at various prices.

Demand Function

A mathematical equation representing the relationship between the quantity demanded of a good and factors affecting its demand, such as price.

Inverse Demand

A representation of demand that expresses price as a function of quantity demanded, contrary to the typical demand function.

Inverse Supply

A concept in economics that describes a situation in which the supply of a good decreases as its price decreases, opposite to the normal supply behavior.