The problem of free-riding has interested economists for a considerable time.

The problem of free-riding has interested economists for a considerable time. Suppose you are living in a housing project that has 100 apartments. The housing project has its own garden, swimming pool, library, and community center. To be able to utilize the available amenities, residents have to contribute €50 a month towards the upkeep while also taking turns keep it clean.

a. What is meant by free riding?

b. How would you define a free-riding resident? Why is this a problem for the housing project?

“Scarcity exists because people have unlimited wants in a world of limited resources.” Explain this statement by giving a real-life example.

Identify the cause and the effect in the following phenomena in a hypothetical country:

a. A surge in the price of goods and an increase in the workers’ income.

b. A rise in GDP and an increase in the number of university graduates.


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