There are 10,000 families in a neighborhood that are affected by noise pollution from a local factory. The noise could be reduced if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. Since there are so many families, they fail to come to a resolution to which they will all agree. This outcome is an example of the
A) free-rider problem.
B) drop-in-the-bucket problem.
C) Coase theorem.
D) collective action problem (that arises when there are too many parties involved).

Question

Quizplus · Accepted Answer

The situation describes a collective action problem where the large number of affected families makes it difficult to coordinate and agree on contributing to the cost of improvements.

There Are 10,000 Families in a Neighborhood That Are Affected