When a free-rider problem exists,

a. entrepreneurs will eventually find a way to make free-riders pay their share.

b. the good will not be produced.

c. the market will devote too few resources to the production of the good.

d. the cost of the good will always be more than the benefit of the good.

Question

Business

Madelynn Allison

8 July, 23:33

When a free-rider problem exists,

a. entrepreneurs will eventually find a way to make free-riders pay their share.

b. the good will not be produced.

c. the market will devote too few resources to the production of the good.

d. the cost of the good will always be more than the benefit of the good.

+1

Answers (1)

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Andres Morton · Answer 1

C) the market will devote too few resources to the production of the good.

Explanation:

The problem with free riding is that a good or service is used by too many people and paid by only a few, because there is an oversupply of the good or service. But it is too difficult or too expensive to separate those who actually pay form those who don't. Therefore private markets tend to undersupply public goods.

For example, police officers must "serve and protect" everyone, not just the people that pay their taxes. The same applies to the use of public beaches or parks, anyone can use them even without paying for their maintenance.

When a free-rider problem exists,a. entrepreneurs will eventually find a way to make free-riders pay their share.b. the good will not be produced.c. the market will devote too few resources to the production of the good.d. the cost of the good will always be more than the benefit of the good.