Th1.3: Free Rider Problem

Question 1

What defines someone who is a free rider?

Answer 1

someone who receives the benefits of a good without paying for it

Question 2

What is the free rider problem?

Answer 2

you cannot charge an individual a price for the provision of a non-excludable good because someone else will gain the benefit from it without paying anything

Question 3

Why will private sector producers not provide public goods to people?

Answer 3

because they cannot be sure of making a profit, due to the non-excludability of public goods

Question 4

Why are public goods provided by the government instead of the market mechanism?

Answer 4

if the provision of public goods was left to the market mechanism, the market would fail