The free rider problem occurs:
A)when externalities are unaccounted for.
B)for both exclusive and non-exclusive goods.
C)when a governmental body intervenes in the workings of a private market.
D)a consumer consumes a good that others pay for but pays nothing herself.

Question

Quizplus · Accepted Answer

The free rider problem occurs when a consumer consumes a good that others pay for but pays nothing herself. This is because the good is non-excludable, meaning that it is difficult to exclude free riders from consuming it. This leads to underproduction of the good and can result in market failure. The free rider problem occurs when a consumer consumes a good that others pay for but pays nothing herself. This is because the good is non-exclusive, meaning others cannot be excluded from using it, and there is no way to force free-riders to pay their fair share.

The Free Rider Problem Occurs