Madeline was willing to contribute $40 this year to his local college radio station. However, after learning that the radio station already had met its goal of raising $500,000, he decided not to contribute, because he knew he could listen to it without contributing. This is an example of:

A. A deadweight loss

B. A negative externality

C. An opportunity cost

D. The free-rider problem

Question

Business

Waylon Vega

17 December, 11:42

Madeline was willing to contribute $40 this year to his local college radio station. However, after learning that the radio station already had met its goal of raising $500,000, he decided not to contribute, because he knew he could listen to it without contributing. This is an example of:

A. A deadweight loss

B. A negative externality

C. An opportunity cost

D. The free-rider problem

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Answers (1)

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Raymond · Answer 1

D. The free-rider problem

Explanation:

The free-rider problem is when a person who benefits from a service, public good or project doesn't pay for the service or doesn't pay the fair value.

The free-rider problem is an example of market failure.

Madeline listens to the radio station but she didn't contribute.

Opportunity cost is the cost of opportunity forgone.

Negative externality is when the cost of production or consumption activities exceeds its benefits to a third party.

Deadweight loss occurs when market equilibrium isn't achieved.