Question

In: Economics

althoug there are things that we do not pay (at least directly), it does not mean...

althoug there are things that we do not pay (at least directly), it does not mean that they are free. but why not? why can not we do everything free and open to everyone? (according to the economic aspect)
and plis send me an example.

Solutions

Expert Solution

When we use the bridge which is made by the government, we do not directly contribute to making this bridge. But we pay tax to the government which is used to make the bridge and other constructions. If all the construction cost will be paid by the government there will be budget deficit which will make the country poor.

Economic resources are scarce. If everything would be free and open to everyone, free rider problem would arise and thus economy will be suffered from market failure. As economic resources are scarce, everyone could not get everything. For an example, if people get cars at free of cost, it will not be possible to manufacture such a large amount of car at free of cost as the country would suffer from an economic deficit. And people will face congested road all the time as almost everyone use a car.

So none of the goods and services we use are free, we make payment either directly or indirectly.


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