What is the free-rider problem?
Since public goods are nonrival and nonexcludable, some consumers will mask their true demand for a
good to avoid sharing in paying for the provision of that public good. In this way they can consume the
good without paying for it. They can free ride.
You might also like to view...
Describe the scope of economic profit in the long run for a perfectly competitive firm
What will be an ideal response?
Everything else held constant, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the future, the interest rate on corporate bonds will ________ and the interest rate on Treasury securities
will ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?
a. A decrease in the demand for strawberries. b. An increase in the demand for strawberries. c. A decrease in the supply of strawberries. d. An increase in the supply of strawberries.
Other things equal, a country's long-run aggregate supply will shift to the left when _____
a. the aggregate expenditure on education rises b. the productivity of labor rises c. the quantity of natural resources rises d. the mortality rate rises e. the amount of investment rises