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The ‘free-rider’ problem in Economics is usually associated with
Select the correct answer using the codes below.
1 and 2 only
3 only
2 and 3 only
1 only
The ‘free-rider’ problem means the Consumers will not voluntarily pay for what they can get for free and for which there is no exclusive title to the property being enjoyed. For e.g. if we consider a public park or measures to reduce air pollution, the benefits will be available to all irrespective of them paying for it or not. The consumption of such products by several individuals is not ‘rivalrous’ in the sense that a person can enjoy the benefits without reducing their availability to others, which results in this free-rider problem. In case of private goods anyone who does not pay for the good can be excluded from enjoying its benefits. If you do not buy a ticket, you are excluded from watching a film at a local theatre. However, in case of public goods, there is no feasible way of excluding anyone from enjoying the benefits of the good (they are non-excludable). Since non-paying users usually cannot be excluded, it becomes difficult or impossible to collect fees for the public good. So, clearly 1 is correct and 2 is incorrect. Statement 3 is irrelevant in this context.
By: Pradeep Kumar ProfileResourcesReport error
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