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A free rider is a person who: A
A free rider is a person who:
A. enjoys something without paying for it.
B. acts irrationally.
C. does not maximize utility.
Expert Solution
The correct answer is A. enjoys something without paying for it.
The free-rider problem is an economic term used for situations in which a person obtains benefits from something without contributing anything to obtain those benefits. In other words, a person gains without any cost. The free-rider problem is a market failure that is very often encountered in public goods. A public good is available for everyone, however, not everyone pays taxes that provided the government with funds to create that public good. The free-rider concept is not associated with irrationality or utility maximization.
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