IGCSE Economics Paper-1: Specimen Questions with Answers 35 - 35 of 64

Doorsteptutor material for Bank-PO is prepared by world's top subject experts: get questions, notes, tests, video lectures and more- for all subjects of Bank-PO.

Question 35

Question

MCQ▾

Choose the correct answer for the statement- “There are no markets for free goods” because-

Choices

Choice (4)

a.

Infinite demand for free good

b.

Consumer value free goods same at all level of demands

c.

Free goods are non-excludable.

d.

Supply of free goods is sufficient to satisfy the demand of consumers at zero prices.

Answer

d.

Explanation

  • A free good refers to a good that is not scarce, and is available without limit. A free good is available in unlimited quantity and is not a constraint on economic activity. Free good has zero opportunity cost to society.
  • The availability of free good is in good amount so as such there is no market for such commodities.

Examples of free goods are:

  • Air-Oxygen is something we need and we can simply breathe it in.
  • Water- In many environments water will be a free good. If you take water from a river – there is plenty available for everyone else.
  • Intellectual ideas-Development of a new invention without a patent, anybody can reuse this idea without any opportunity cost.
  • By-products- Heat generated from a recycling plant, it creates a good heat at zero opportunity cost.
  • Music- Everyone is free to sing the tune once a song is composed

Developed by: