ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An absence of private property rights
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Free-rider problem
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Government Failure
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None of the above
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Detailed explanation-1: -Free riding prevents the production and consumption of goods and services through conventional free-market methods. To the free rider, there is little incentive to contribute to a collective resource since they can enjoy its benefits even if they don’t.
Detailed explanation-2: -The free rider problem is an economic concept of market failure that occurs when people enjoy a shared resource without having to contribute to it. Private companies usually can’t profit from providing public goods, so they’re usually supplied by the government and paid for with tax dollars.
Detailed explanation-3: -Whenever you enjoy something that seems free, such as a day at a clean beach, someone pays for its upkeep, which technically makes you a free rider. The free rider problem describes what happens when many people enjoy a seemingly free resource without paying for it.
Detailed explanation-4: -Free rider-those who want others to pay for the public good and then plan to use the good themselves.
Detailed explanation-5: -The correct option is (a) The production of public goods is subject to the free-rider problem. Public goods are non-excludable.