The free-rider problem with a public good leads to
A) inefficiency if the good is provided by only private markets with no government action.
B) overproduction if the good is provided by private markets.
C) underproduction if the good is provided by the government.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The free-rider problem occurs when individuals can benefit from a public good without paying for it, leading to underproduction and inefficiency if left to private markets alone, as they may not find it profitable to provide the good.

The Free-Rider Problem with a Public Good Leads to