Question

. producers have little incentive to produce a public good because a. the social benefit is less than the private benefit. b. the social benefit is less than the social cost. c. there is a free-rider problem. d. there is a tragedy of the commons.

Answer 1

A producers have little incentive to produce a public good because there is a free-rider problem. The Option C is correct.

What is the problem of free-rider?

In social sciences, a free-rider problem refers to a type of market failure that occurs when the people that benefit from resources, public goods, or services of a communal nature do not pay for them or under-pay for such things.  So, in essence, a free riders are a big problem because while not paying for the good, the people may continue to access or consume it.

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