Question

Tom, Mary and Jill have apartments in the same building. A security system for their building costs $750. Tom is willing to pay $100 for the security system, Mary is willing to pay $300 and Jill is willing to pay $300. They have a meeting to vote on whether to pay $250 each for the security system. At least two of them must vote for the system to be installed before the vote is passed. The efficient outcome is to have the security system installed. After the meeting the security system will __________, which illustrates ___________.

Answer 1

be installed,

It illustrates the free rider problem

Step-by-step explanation:

The free rider problem is the strain on a shared resource that is generated by individuals that don't pay their fair proportion for it or pay nothing at all by its use or overuse.

In any group, large or small, the free rider problem can occur.

In such an urban environment, a council will discuss whether and how to pressure suburban drivers to help maintain their roads and sidewalks or defend their police and fire departments.

A public radio or television station devotes airtime to crowdfunding, aiming to attract contributions from non-contributing listeners.

Answer 2

After the meeting the security system will be installed which illustrates free rider problem.

Step-by-step explanation:

Free Rider:

A person is called a free rider who wants other people to pay for the things that are beneficial to the public but also make plans to use those things for personal gains.

Free Rider Problem:

It is such a situation in which everyone enjoys the benefit of the effort of a person. Like if a person cleans the rubbish from the street then it is good for everyone so everyone get the benefit from his effort.

• In this question, as one person is willing to pay less as compared to others, which illustrate a problem of free rider because a person wants to pay less for the public good (security camera) but wants to enjoy this facility.