The free-rider problem
A) forces the supply of a public good to exceed its demand.
B) results in common resources becoming natural monopolies.
C) explains why many local governments supply public goods.
D) results in public goods becoming private goods.

Question

Quizplus · Accepted Answer

The free-rider problem occurs when individuals can benefit from a good without paying for it, leading to under-provision of that good. Local governments often supply public goods to ensure they are provided despite the free-rider problem.

The Free-Rider Problem