Question

The free-rider problem arises because those who: A. Do not pay cannot be excluded. B. Pay...

The free-rider problem arises because those who:

A. Do not pay cannot be excluded.

B. Pay are not willing to share.

C. Demand the goods are excluded.

D. Supply the goods are greedy.

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Homework Answers

Answer #1

Correct option is A.

The free rider problem arises because of those who do not pay and cannot be excluded. It means that all the members are enjoying a shared resource but few are not paying their share of costs of that resource. Further, those are not sharing the costs cannot be excluded from enjoying the benefit of resource due to the very nature of that resource or good. An example of goods or resources causing free rider problem is the case of public goods.

Other options are incorrect because they do not fulfil both the conditions that cause a free rider problem as given in option A.

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