Which of the following types of goods is subject to the free-rider problem?
A) A private good
B) A public good
C) A product that creates a positive externality
D) A product that creates a negative externality

Question

Quizplus · Accepted Answer

A public good is subject to the free-rider problem because individuals can enjoy its benefits without paying for it. This is because public goods are non-excludable, meaning it is difficult or impossible to exclude individuals from benefiting from them, and therefore people have little incentive to voluntarily pay for them. Private goods, on the other hand, are both excludable and rival, meaning individuals must pay for them and their consumption by one person reduces the amount available for others. Products with positive or negative externalities create spillover effects on third parties, but they do not necessarily suffer from free-rider problems.

Which of the Following Types of Goods Is Subject to the Free-Rider