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  QUESTION OF THE DAY  
Question of the day
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Question of the Day (03-Jul-18)

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The paragraph below is followed by alternative summaries. Choose the option that best captures the essence of the paragraph.

Free riding is getting the benefit of a good or service without paying for it, not necessarily illegally. This may be possible because certain types of goods and services are actually hard to charge for- a firework display, for instance. Another way to look at this may be that the good or service has a positive externality. However, there can sometimes be a free-rider problem, if the number of people willing to pay for the good or service is not enough to cover the cost of providing it. In this case, the good or service might not be produced, even though it would be beneficial for the economy as a whole to have it. For instance, public goods are often at risk of free riding; in their case, the problem can be overcome by financing the good by imposing a tax on the entire population.
OPTIONS
 
 1)Free riding is the positive externality of a good or service. If they are beneficial to the economy their costs may have to be borne by the entire population.
 2)Free riding is the benefits accruing to someone outside those who are in the economic activity producing such a good or service. The entire population may have to be taxed to finance such goods.
 3)Free riding is the positive externality of a good or service. The entire population may have to be taxed to finance such goods.
 4)Free riding is getting the benefit of a good or service without paying for it. If their costs are not covered the entire population may have to be taxed to finance them.
 5)When a good or service cannot be charged free riding happens. If they are beneficial to the economy their costs may have to be recovered from the entire population.

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