When does a free-rider problem arise?
A) whenever the government provides goods or services
B) whenever the price of a good is very low
C) whenever goods cease to be scarce
D) whenever goods cannot be provided exclusively to those who pay for them

Question

Quizplus · Accepted Answer

A free-rider problem arises when goods cannot be provided exclusively to those who pay for them. This means that individuals can benefit from the good/service without contributing to its production or cost. For example, a person may choose not to pay for public television or radio but can still benefit from the programs that are produced. This creates a free-rider problem which causes market failure.

When Does a Free-Rider Problem Arise