The free-rider problem may arise in the case of ________.
A) public goods
B) private goods
C) club goods
D) inferior goods

Question

Quizplus · Accepted Answer

The free-rider problem is a situation where individuals can benefit from the consumption of a public good without actually having to pay for it. Since public goods are non-rival in consumption and non-excludable, there is no way to prevent someone from enjoying the benefits of a public good even if they do not contribute to its production or maintenance. This creates an incentive for individuals to "free-ride" on the contributions of others and reduces the overall level of production and provision of public goods in the economy.

The Free-Rider Problem May Arise in the Case of ________