Q.Which of the following is an example of a free good?

The free-good vs economic-good classification depends on whether a good is scarce relative to want, not on whether it is useful. …

A free good is one available in a supply large enough, relative to the want for it, that no price needs to be paid for it — air, sunlight and (in most places) rainwater are the standard examples. Option (a), a litre of milk, requires resources (a cow, labour, transport) to produce and is scarce relative to demand, so it is an economic good with a market price. Option (c), a bicycle, is a manufactured capital/consumer good requiring materials and labour, and clearly has a price. Option (d), a bank deposit, is a form of wealth (a financial asset), not a free good at all — it represents money already earned and saved. Only sunlight (option b) is freely …

Students sometimes think 'free' means 'available at zero price due to a subsidy or gift' (like a free sample), rather than the econo …