UPSC 2018EconomyModerate

If a commodity is provided free to the public by the Government, then

A
the opportunity cost is zero.
B
the opportunity cost is ignored.
C
the opportunity cost is transferred from the consumers of the product to the tax-paying public.
Correct Answer
D
the opportunity cost is transferred from the consumers of the product to the Government.

Explanation

This question tests the core economic concept of **opportunity cost**, which is the value of the next best alternative foregone when a choice is made. While a commodity may be "free" for the consumer, the resources used to produce it (like labor and capital) are scarce and have alternative uses; therefore, the cost is not eliminated but transferred to the tax-paying public who fund the government's expenditure. Option (a) is incorrect because opportunity cost is only zero for non-scarce "free goods" like air, and option (d) is less precise than (c) because the government acts as an intermediary while the actual economic burden is borne by the taxpayers.

MicroeconomicsOpportunity CostCommodityfree to publicGovernmentopportunity costconsumerstax-paying publicpublic goods

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