Where a free-rider problem exists, goods tend to be:
A)underproduced.
B)overproduced.
C)high-priced and available only to the rich.
D)low priced and available only to the poor.

Question

Where a free-rider problem exists, goods tend to be:
A)​underproduced.
B)​overproduced.
C)​high-priced and available only to the rich.
D)​low priced and available only to the poor.

Quizplus · Accepted Answer

A free-rider problem exists when people can enjoy the benefits of a good or service without contributing to its cost. In this situation, the producer will have a lower incentive to produce the good or service since they will not receive enough compensation for their costs. As a result, the good tends to be underproduced.

Where a Free-Rider Problem Exists, Goods Tend to Be