Question:
A “free rider” problem is most closely associated with the provision of
(1) merit goods.
(2) demerit goods.
(3) private goods.
(4) public goods.
(5) inferior goods.
Correct Answer:
(4)
Answer Explanation:
Public goods are non-excludable, meaning individuals cannot be prevented from consuming them once provided. Because of this, consumers have an incentive to consume the good without paying for it, hoping others will bear the cost. This is known as the free-rider problem.
Topic: Market Failure Year: 2019
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