When a person is NOT paying anything for public goods, it is known as _________.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. Free Rider.
A free rider is someone who benefits from a public good without paying for it. This occurs because public goods are:
- Non-excludable – You cannot prevent anyone from using them.
- Non-rivalrous – One person's use does not reduce availability for others.
Why not the other options?
- Non-excludable – Means people cannot be prevented from accessing the good but doesn’t directly describe the act of not paying.
- Rivalrous – Describes goods where one person's use reduces availability for others (e.g., a piece of cake). Public goods are non-rivalrous.
- Private good – Goods that are excludable and rivalrous (e.g., a car or a sandwich). Free riding applies to public goods, not private ones.