Provide an intuitive explanation of the free-rider problem.
What will be an ideal response?
Since a person's consumption of a public good is independent of how much he/she contributes to the public good, he/she will have the incentive to shirk on his/her contribution to the public good. Hence, that person have the incentive to "free ride" off other contributors to the public good.
You might also like to view...
For legal purposes, a corporation is treated as
A. an individual. B. a nonprofit organization. C. a partnership. D. a limited partner in a partnership.
The natural rate of unemployment exists when cyclical unemployment equals zero
a. True b. False Indicate whether the statement is true or false
Which of the following activities can create an external cost?
a. Honking continuously while driving past a hospital. b. Reducing the use of plastic carry bags while shopping. c. Burying garbage under the soil and planting trees on it. d. Using smog controls on private cars.
Improving the education level of the labor force will
A. shift the production possibilities curve inward. B. not shift the production possibilities curve since the total size of the labor force has not been changed. C. shift the production possibilities curve outward. D. cause a movement from a point inside the production possibilities curve to a point on the curve.