Author Question: A free good is a good whose existence requires no opportunity cost to produce. How is this different ... (Read 73 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?

Nearly all drugs pass into human breast milk. How often a drug is taken influences the amount of drug that will pass into the milk. Medications taken 30 to 60 minutes before breastfeeding are likely to be at peak blood levels when the baby is nursing.

Did you know?

If you could remove all of your skin, it would weigh up to 5 pounds.

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

Did you know?

Though “Krazy Glue” or “Super Glue” has the ability to seal small wounds, it is not recommended for this purpose since it contains many substances that should not enter the body through the skin, and may be harmful.

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

For a complete list of videos, visit our video library