When a free-rider problem exists,
A)the market will devote too few resources to the production of the good.
B)the cost of the good will always be more than the benefit of the good.
C)the good will not be produced.
D)entrepreneurs will eventually find a way to make free-riders pay their share.

Question

Quizplus · Accepted Answer

When a free-rider problem exists, individuals have an incentive to consume the good without paying for it, leading to under-provision of the good. This means that the market will devote too few resources to the production of the good, as producers will not be able to capture the full value of the good they produce.

When a Free-Rider Problem Exists