What is the free-rider problem? Why do free riders make the private provision of a public good inefficient?
What will be an ideal response?
If a firm were to provide a public good, it would suffer from the free-rider problem, which arises when non-paying consumers consume the public good without paying, enjoying a "free ride." Public goods are, in part, characterized by inability to exclude nonpaying consumers. A private firm would not receive a sufficient level of revenue to provide the efficient level of the public good.
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In which governance form do shareholders own the company?
A) public sector B) state-owned enterprise C) corporation D) non-profit
When productive activities are organized according to the principle of the division of labor
A) scarcity is eliminated. B) we do not devote enough resources for capital investment. C) total output increases due to the advantages of specialization. D) an inefficient outcome results.