There Are 10 Families in a Neighborhood That Are Affected

Multiple Choice

There are 10 families in a neighborhood that are affected by noise pollution from a local factory. The noise could be reduced if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. Since there are no legal restrictions governing the factory's noise, the negotiations fail. This outcome is an example of the

A) free-rider problem.
B) drop-in-the-bucket problem.
C) Coase theorem.
D) problem that arises when property rights are not defined.