There are 25,000 families in a small community that are affected by air pollution from a local factory. The air pollution could be reduced if the company spent $10,000 on upgraded ventilators. The company agrees to install the ventilators if the families in the community contribute the $10,000. 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

This scenario is an example of a collective action problem, which occurs when a large group of individuals fails to achieve a common goal due to the difficulty of coordinating and agreeing on a course of action among a large number of parties.

There Are 25,000 Families in a Small Community That Are