The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2

-The free rider problem arises when a good is:

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2
 
-The free rider problem arises when a good is:

Quizplus · Accepted Answer

The free rider problem arises when a good is nonexcludable, meaning that it is difficult to prevent people from using it once it is provided. In this case, both Firm A and Firm B are providing a good (their respective products) and there is a risk that customers who are willing to pay more for one product will choose the cheaper product from the other firm, resulting in lower profits for both firms. This is a classic example of the free rider problem in the context of pricing strategies.

The Table Below Shows the Payoff (Profit) Matrix of Firm