Asked by
KEVYN EDINGER
on Nov 17, 2024
Verified
When free riders are present in a market, the market generally fails to provide the efficient outcome.
Free Riders
Free riders are individuals who benefit from resources, goods, or services without paying for the cost of the benefit, often leading to inefficiencies in markets or public services.
Efficient Outcome
A state in which resources are allocated in a way that maximizes total surplus; there are no missed opportunities in production or consumption.
- Identify the challenges posed by the free-rider problem and its consequences on the efficiency of markets.
Verified Answer
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Learning Objectives
- Identify the challenges posed by the free-rider problem and its consequences on the efficiency of markets.