Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Free Rider Problem
B
Market Equilibrium
C
Price Discrimination
D
Consumer Surplus
Understanding the Answer
Let's break down why this is correct
Answer
The situation describes the concept of the "free rider problem," which occurs when people benefit from resources or services without paying for them. In this case, the public park provides enjoyment and leisure to consumers, but some of them do not contribute to the costs of maintaining it, such as through taxes or donations. This leads to an unfair situation where those who do contribute may feel frustrated, as their efforts help support the park for everyone, including those who do not pay. For example, if a family visits the park every weekend but never donates to its upkeep, they enjoy the park's benefits while relying on others to cover the costs. This imbalance can result in underfunding or neglect of the park, showing how information asymmetry affects consumer behavior and resource management.
Detailed Explanation
The free rider problem happens when people use a service without paying for it. Other options are incorrect because Market equilibrium is about supply and demand balancing each other; Price discrimination means charging different prices to different people for the same product.
Key Concepts
Information Asymmetry
Public Goods
Consumer Behavior
Topic
Consumer Demand and Information Asymmetry
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.