Free riding refers to a situation in which
A)people consume a pure public good without payment, even though the good may not be produced if no one chooses to pay.
B)the marginal cost of allowing additional consumers to consume a public good is zero.
C)high income individuals subsidize the production of goods, such as education, that make society better off.
D)markets fail to allocate resources efficiently when benefits outweigh costs.

Question

Quizplus · Accepted Answer

Free riding refers to the behavior of individuals who consume a pure public good without paying for it, even though the good may not be produced if no one chooses to pay. This happens because public goods are non-rival and non-excludable, which means that once they are provided, anyone can benefit from them, regardless of whether they contributed to their production or not. As a result, free riding can lead to under-provision of public goods, as producers have no way of recouping the costs of producing them.

Free Riding Refers to a Situation in Which