Economy
2018
Basic Economic Terms
Government Schemes
If a commodity is provided free to the public by the Government, then
D.The opportunity cost is transferred from the consumers of the product to the Government.
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: Option C
Opportunity cost is the value of the next best alternative when a choice is made. It represents the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.
When the government provides a commodity for free, it is not truly free. The resources used to provide that commodity could have been used for something else. This 'cost' is ultimately borne by the tax-paying public who fund government expenditures.
Therefore, the opportunity cost is transferred from the consumers of the product to the tax-paying public.
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