The Free-Rider Problem Applies

question 127

Multiple Choice

The free-rider problem applies

• A) to rival and excludable goods.
• B) to common resources.
• C) to nonrival and nonexcludable goods.
• D) when marginal social benefit exceeds marginal private benefit.
• E) when marginal social cost equals marginal private cost.

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Definitions:

Firms

Businesses or companies that produce goods or provide services with the aim of making a profit.

Resources

Assets and inputs used to produce goods and services, such as time, labor, capital, and natural resources.

Factor Market

The marketplace for services of the factors of production (labor, land, capital) where these are bought and sold.

Circular-Flow Diagram

A visual representation emphasizing the economic interactions and monetary flow between households and firms within various markets.