Question

Billy is interested in lowering the speed limit on a major road near his house. A citizens’ group has formed to lobby the city council to take this step, but Billy decides not to join it because he knows he can benefit from the group’s work if it is successful without contributing to its effort. In this instance, Billy is ______.

Answer 1

Answer:

The correct answer is a. behaving like a free rider

Explanation:

The free-rider problem is an economic problem that arises when an individual (stowaway) tries to receive a benefit from using a good or service but avoids paying for it. It is also known by its name in English, problem of the free rider.

The government tries to address the problems of stowaways through fiscal rules and regulations, especially to prevent the impact on the environment and excessive use of resources. Therefore, stowaways are also known as parasitic consumers, because on many occasions they consume goods and services financed by others, of which they paid nothing.

Examples of the free-rider problem

When there are public goods, such as parks, armed forces, public lighting or police, stowaways take advantage of the fact that it is not possible to exclude them from consumption and refuse to pay for them. This creates a problem of provision since although many consumers value the services they provide, there will be those who use them but do not contribute to their financing.