The free rider problem causes less than optimal production of a public good.

Assume that a health spa can earn an additional $35,000 of revenue each year from advertising every day in a local newspaper. What must the additional cost of this daily advertising be to make this advertising economically rational?

What will be an ideal response?

By purchasing shares in a mutual fund that holds a portfolio of stocks, a person can

a. benefit from fundamental analysis, since the mutual fund requires its shareholders to perform fundamental analysis on their own. b. benefit from fundamental analysis, since the mutual fund hires one or more individuals to perform fundamental analysis for the fund. c. eliminate market risk. d. reduce the standard deviation of his or her portfolio to zero.