When Good X Is Produced, Some People Benefit

question 15

Multiple Choice

When good X is produced, some people benefit. A free-rider problem arises when

• A)the number of people who benefit is small and it is impossible to prevent anyone from benefiting.
• B)the number of beneficiaries is small and it is possible to prevent some people from benefiting.
• C)the number of beneficiaries is large and it is impossible to prevent anyone from benefiting.
• D)the number of beneficiaries is large and it is possible to prevent some people from benefiting.

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Definitions:

Shareholder Stake

The interest or share that an individual or entity has in the ownership of a company, often expressed as a percentage of the company's stock.

Company Owes

The financial obligations or debts that a business is legally required to repay to creditors, suppliers, or other entities.

Operating Profit

The amount left over from revenue once all costs and expenses are subtracted.

General Expenses

The overhead costs not directly tied to the production of goods or services, including rent, utilities, and office supplies.