Title: Definition of a free good - Economics Help
Headings: Definition of a free good
Definition of a free good
Examples of Free Good
When is a free good not a free good?
Is statistics a free good?
Using Statistics
Related

Content: When is a free good not a free good? One important distinction is that just because a good is given away for ‘free’ it doesn’t necessarily mean it is a free good. If a firm gave away a ‘free’ toy in a box of cornflakes, it is not actually free because it requires time to make and raw materials. This means, there is an economic cost. If the company wasn’t giving away ‘free’ toys, it could reduce the price of the cornflakes or make more profit. Also, in the case of a river in a water, there may come a critical mass, where there does start to be an opportunity cost of taking water from a river. With a low population, the water is renewable. But, a high population density city may mean more water is taken from the river than can be replenished. Therefore, at certain population densities, it loses its status as free – because there starts to be an opportunity cost. Is statistics a free good?