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.
D
the opportunity cost is transferred from the consumers of the product to the Government.
Correct Answer: Option C
Explanation
1. The question explores the concept of opportunity cost when a commodity is provided free to the public by the Government.
2. Opportunity cost is the value of the next best alternative foregone when a choice is made. Even if a good is provided for free to the consumers, its production consumes scarce resources (labor, capital, materials) that could have been used to produce something else.
3. Option (A) is incorrect because resources used have alternative uses; hence, the opportunity cost is not zero.
4. Option (B) is incorrect. The opportunity cost exists and is a real economic cost, even if it's not directly paid by the consumers receiving the good.
5. Option (C) is correct. Since the Government provides the good for free, it typically finances the production through taxes collected from the tax-paying public. These taxpayers forego the opportunity to use their taxed money for other goods and services. Thus, the burden of the opportunity cost is effectively transferred from the consumers of the product to the tax-paying public.
6. Option (D) is less precise than (C). While the Government orchestrates the provision, the ultimate economic cost (in terms of foregone alternatives funded by taxes) falls on the tax-paying public, not the Government as an entity itself.