Author Question: A free good is a good whose existence requires no opportunity cost to produce. How is this different ... (Read 42 times)

xroflmao

  • Hero Member
  • *****
  • Posts: 515
A free good is a good whose existence requires no opportunity cost to produce. How is this different from a good that is offered for a price of zero?
 
  What will be an ideal response?

Question 2

What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?
 
  What will be an ideal response?



mmj22343

  • Sr. Member
  • ****
  • Posts: 297
Answer to Question 1

A good that is offered at a price of zero may not necessarily have been produced at zero opportunity cost. Often stores give away free products to get customers to try them but these products were probably not produced at zero opportunity costs. By that definition they are not free goods.

Answer to Question 2

Rent seeking is the act of obtaining special treatment by the government to create economic profit or to divert consumer surplus or producer surplus away from someone else. Often, rent seeking takes the form of lobbying to increase the economic profit of the lobbyist. Rent seeking increases the deadweight loss from monopoly. With rent seeking, not only does the monopoly create the (standard) deadweight loss, but also resources are used up in the process of rent seeking itself.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Illness; diuretics; laxative abuse; hot weather; exercise; sweating; caffeine; alcoholic beverages; starvation diets; inadequate carbohydrate consumption; and diets high in protein, salt, or fiber can cause people to become dehydrated.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

Did you know?

The strongest synthetic topical retinoid drug available, tazarotene, is used to treat sun-damaged skin, acne, and psoriasis.

Did you know?

It is important to read food labels and choose foods with low cholesterol and saturated trans fat. You should limit saturated fat to no higher than 6% of daily calories.

For a complete list of videos, visit our video library