Practice Quiz

AP Microeconomics

Category - Microeconomics

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Because public goods are collectively owned, people tend to use them-even if they do not help to pay for the privilege of using them. What is this called?
  1. The free-rider program
  2. Excludable goods
  3. Tragedy of the commons
  4. Spillover costs
Explanation
Answer - A - This is called the free-rider program.

Key Takeaway: The free-rider program refers to the tendency of people to use (and abuse) public goods-even if they do not help to pay for the privilege of using them. Because of this, few businesses ever pay for truly public goods. Instead, the government typically pays for these goods with tax money from the citizens (who are the consumers).
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