Question

Sam was willing to contribute $20 this year to his local college radio station. However, after learning that the radio station had already met its goal of raising $400,000, he decides not to contribute, because he knows he can listen to it without contributing.
This is an example of which of the following?

a) A deadweight loss
b) A negative externality
c) An opportunity cost
d) The free-rider problem

Answer 1

Answer:

The correct answer is d) The free-rider problem .

Explanation:

This term refers to a problem in economics where a person who is known as a stowaway, benefits from using a service or consuming a product without paying anything for it. In this case Kevin should contribute to the radio station, since regardless of whether what was expected in a given period has been raised, just being committed is enough to have the obligation to contribute for the maintenance of the station over time.