Fredo loves watching Downton Abbey on his local pu lic TV st

Fredo loves watching Downton Abbey on his local pu lic TV station, but he never sends any money to su port the station during its fund-raising drives. a. What name do economists have for people like 3. Fredo? caused by people like Fredo? solve this problem? How does the existence of b. How can the government solve the problem c. Can you think of ways the private market can cable TV alter the situation?

Solution

t The 1. We call them “free riders”.

2. Govt can control people like fredo by charging an entry fee from them for accessing the public TV. This will ensure people like him are also paying for consuming free goods.

3. Market can appropriately price the TV or charge an entry free or restrict the entry of such free riders.

The advent of cable TV has made things excludable and people who now really have the connection can only watch the tv now so, people like fredo can’t anymore free ride for such resources.