📚 Learning Guide
Public Goods and Free Rider Problem
easy

Which of the following is a characteristic of public goods that leads to the free rider problem?

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Learning Path
Learning Path

Question & Answer
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2
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3
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4
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Choose the Best Answer

A

Non-excludability

B

High production costs

C

Limited availability

D

Private ownership

Understanding the Answer

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Answer

Public goods are things that everyone can use without reducing their availability to others, like clean air or national defense. This means that once these goods are provided, it’s hard to stop someone from using them, even if they didn’t help pay for them. This leads to the free rider problem, where some people enjoy the benefits of the good without contributing to its cost. For example, if a community builds a park, everyone can use it, but not everyone might donate money for its upkeep, relying instead on those who do. Because of this, there may be less incentive for individuals to pay for or support public goods, which can lead to underfunding or lack of provision for important services.

Detailed Explanation

Public goods are non-excludable, meaning everyone can use them. Other options are incorrect because Some might think high production costs cause the free rider problem; Limited availability might seem like a reason for free riders.

Key Concepts

Characteristics of public goods
Topic

Public Goods and Free Rider Problem

Difficulty

easy level question

Cognitive Level

understand

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