Q.Examine the differences between free goods and economic goods.

Free goods are nature's gifts available without limit and without any price (air, sunlight, water in a river). Economic goods are scarce relative to demand, usually require human effort, and command a price. Economics is concerned mainly with economic goods because they involve scarcity and choice. ## Meaning - Free goods are goods supplied by nature in unlimited quantity, so they have no price and do not involve any cost or effort to obtain — for example, air, sunshine, rain water. - Economic goods are goods that are scarce in relation to their demand, generally need human effort to produce, and therefore command a price — for example, food, clothes, machines. ## Differences between free goods and economic goods | Basis | Free goods | Economic goods | |---|---|---| | Supply | Unlimited, abundant | Limited, scarce | | Price | Have no price | Command a price | | Human effort | No effort needed | Produced with human effort | | Nature | Gifts of nature | Mostly man-made or limited | | Scarcity & choice | Do not involve scarcity | Involve scarcity and choice | | Economic study | Not studied in economics | Central subject of economics | | Examples | Air, sunshine, river water | Food, cloth, books, machinery | ## Important note The same good can be a free good in one place and an economic good in another. Water is a free good at a river bank but an …