Recall the Application. A town tried to prevent free riding by: A) not putting a
ID: 1207523 • Letter: R
Question
Recall the Application. A town tried to prevent free riding by: A) not putting a clock face on the tower in the direction of those the one who refused to contribute to building the clock tower. B) setting the time wrong on the face of the tower in the direction of those who refused to contribute to building the clock tower. C) making it illegal for those who did not contribute to the clock tower to use it. D) taxing those who would not contribute to the clock tower project. 2) Recall the Application. Before people generally carried their own time pieces, towns often built their own clock towers. In these situations there was a free rider problem because:A) many people at that time refused to pay taxes. B) towns paid for the clock towers with voluntary contributions. C) few people could tell time. D) only a small fraction of the population was taxed by the towns. 3) The free-rider problem arises because A) once provided, a public good is available to all regardless of whether they paid for it. B) poor people cannot afford to contribute to public goods. C) enforcement of tax laws is inadequate. D) people disagree with how the government spends it s money. 4) During pledge week your local public television station asks viewers tc contribute to the station. People who watch public television but do NOT contribute are A) free-riding. B) engaged in moral hazard. C) those who do not value public television. D) causing adverse selection. 5) Which of the following is likely to overcome the free-rider problem? A) offer people a private gift for contributingB) arrange for matching contributions C) appeal to peoples' sense of civic or moral responsibility D) all of the aboveExplanation / Answer
1.
Reference made to application
2.
(a) many people at the time refused to pay taxes
(Reason: by refusing to pay taxes and still enjoying the services of clock installed by the government, people tried to free ride)
3.
(a) once provided, a public good is available to all regardless of whether they pay for it
(Reason: once a public good is installed, say a street light, no one can be excluded from enjoying it even if they refuse to pay for it, which makes people all the more reluctant to pay for it, as they only want to enjoy the services)
4.
(a) free-riding
(Reason: these people are still enjoying the services of public television without paying for it)
5.
(d) all of the above
(Reason: all the above options would invoke feelings of responsibility towards the provision of such goods which increase public welfare, thereby helping in overcoming this problem of free riding)
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