When good X is produced, some people benefit. A free-rider problem arises when
A)the number of people who benefit is small and it is impossible to prevent anyone from benefiting.
B)the number of beneficiaries is small and it is possible to prevent some people from benefiting.
C)the number of beneficiaries is large and it is impossible to prevent anyone from benefiting.
D)the number of beneficiaries is large and it is possible to prevent some people from benefiting.

Question

Quizplus · Accepted Answer

The definition of a free-rider problem is when individuals benefit from a public good without contributing to its production. In this case, the number of beneficiaries is large and it is impossible to prevent anyone from benefiting, which creates a situation where many people may choose to free-ride and not contribute to the production of the good, leading to underproduction or inefficiency.

When Good X Is Produced, Some People Benefit