Question

When a free-rider problem exists,

Answer 1

Answer:

C) the market will devote too few resources to the production of the good.

Explanation:

The problem with free riding is that a good or service is used by too many people and paid by only a few, because there is an oversupply of the good or service. But it is too difficult or too expensive to separate those who actually pay form those who don't. Therefore private markets tend to undersupply public goods.

For example, police officers must "serve and protect" everyone, not just the people that pay their taxes. The same applies to the use of public beaches or parks, anyone can use them even without paying for their maintenance.