The free rider problem is caused by the:
A) nonexcludability of a good leading to the undersupply of it.
B) incentive to oversupply the good since it is nonrival in consumption.
C) "rivalness" in consumption of a good leading to the overconsumption of that good.
D) "rivalness" in consumption of a good leading to the undersupply of it.

Question

Quizplus · Accepted Answer

The free rider problem arises when individuals can enjoy the benefits of a public good without contributing to its production. Since public goods are nonexcludable, it is difficult or impossible to prevent non-payers from consuming the good. This can lead to undersupply of the public good because individuals have no financial incentive to contribute to its production.

The Free Rider Problem Is Caused by The