Question

You work in an office and one of your co-workers has announced his retirement. You have offered to purchase the retirement gift, so you place a collection jar in the lunch room for anonymous donations to help pay for the gift. After a week you find that very few dollars are in the jar, so you end up paying for a large share of the retirement gift. You are the victim of the:
A. common resource problem.
B. private good problem.
C. overuse of a common resource problem.
D. free-rider problem.

Answer 1

Answer:

D

Explanation:

The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.

Because you have offered to buy the gift, fellow employees are not bound to make donations to buy the gift. This is because regardless of if donations are made, you would still purchase the gift