UPSC IAS - 2018
If a commodity is provided free to the public by the Government, then
Year Asked: 2018
Correct Answer
C. the opportunity cost is transferred from the consumers of the product to the tax-paying public.
Detailed Explanation
The correct answer is C. When the government provides a good free, the resources used to make it, such as labour, land, capital and machinery, still have alternative uses. That sacrifice is real, so the opportunity cost does not disappear. It shifts from the individual consumer to the tax-paying public, who fund the government's spending.
Why the others fail:
- A: Zero opportunity cost would mean the resources are free, and they are not. The cost is paid through taxes rather than avoided.
- B: The cost is not ignored in economics. It is only hidden from the consumer at the point of use and reappears in the budget.
- D: The government is only the intermediary that collects and spends money. It does not ultimately bear the cost; taxpayers do, through taxes and the fiscal trade-offs that follow.
Core concept: opportunity cost is the value of the next-best forgone alternative, and someone always bears it regardless of who sees the price tag. This connects to public goods, merit goods and the debate on universal free schemes, a recurring Mains theme on how free provision affects resource allocation and fiscal health.
Trap: Students confuse free to the consumer with free to the society and pick A.
This question appeared in UPSC Prelims 2018 GS Paper-1.
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