Nonexcludability causes:
A) people to demand a higher quantity than they would if they had to pay for what they consumed.
B) people to demand a lower quantity than they would if they paid for what they consumed.
C) firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good.
D) firms to supply a higher quantity than they would if they had to pay for what they supplied.

Question

Quizplus · Accepted Answer

Nonexcludability means that individuals cannot be excluded from using a good or service, even if they do not pay for it. In such cases, people may demand a higher quantity of the good than they would if they had to pay for it, since they can consume it at no cost to themselves. This is known as the free-rider problem.

Nonexcludability Causes