UPSC Prelims 2018 · Question 47 of 99
UPSC Prelims 2018 question on Free Goods Opportunity Cost
- ExamUPSC CSE
- Year2018
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicEconomic Growth
- DifficultyHard
- TypeDirect
If a commodity is provided free to the public by the Government, then
Show answer
Answer: C. the opportunity cost is transferred from the consumers of the product to the tax-paying public.
Analysis
Opportunity cost is the cost of choosing one alternative over another and forgoing the benefit the other would have given, the alternative given up when a decision is made. Providing a commodity free to the public does not make the resources used in it costless. Those resources are still drawn from the public exchequer, so the sacrifice of the next best use is borne by the tax paying public rather than by the consumers who receive the good.
Option (a) is the natural but wrong instinct, treating a zero price as a zero cost. Option (d) is the closest genuine distractor, and it fails because the Government is not an independent source of resources; it spends what taxpayers provide, so the cost passes through the Government to the public rather than stopping with it.
Statement by statement
Option (c) is correct, so the answer is (c).
Source
NCERT, Introductory Microeconomics, Chapter 1, page 4.
How to crack it
This one is flagged as unconventional, so treat it as an elimination exercise. Option (a) contradicts the very definition of opportunity cost and option (b) says nothing economic, since ignoring a cost does not remove it. That leaves (c) and (d), a straight choice about who ultimately bears the burden, and the principle that governments have no resources of their own settles it. Reaching a two way choice on a question like this makes attempting it worthwhile.