The free-rider problem refers to: Choose one answer. a. a situation in which con

Question

The free-rider problem refers to:
Choose one answer.
a. a situation in which consumers have no incentive to pay for a nonexcludable good.
b. a variation on the phrase, “There's no such thing as a free lunch,” which is replaced by, “There's no such thing as a free ride.”
c. the situation in the Old West when land was largely unfenced and riders had unfettered access to private range land.
d. qualifications or “riders” that clients do not request, but which lawyers tend to include in contracts anyway at no extra charge.

Explanation / Answer

The free-rider problem refers to:
Choose one answer.
a. a situation in which consumers have no incentive to pay for a nonexcludable good.
Free rider problem arises in case of non excludable goods.

A good is excludable if the supplier of that good can prevent people who do not pay from consuming it.BUt in case of public good like street lights, national defence once some people (tax payers) pay for it all the others can use it.
Here all citizens know that they are getting these serviesfrom the revenue collted through taxes, and some assumes that as the good in non exclaudable, it dosent affect their safety if they do not pay tax. These people are called free riders, who uses the public good without paying for it.

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All the remaining options makes no sense regarding economics b. a variation on the phrase, “There's no such thing as a free lunch,” which is replaced by, “There's no such thing as a free ride.”
c. the situation in the Old West when land was largely unfenced and riders had unfettered access to private range land.
d. qualifications or “riders” that clients do not request, but which lawyers tend to include in contracts anyway at no extra charge.

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