Economists call things that are scarce economic goods. Things that are not scarce are called free...

Economists call things that are scarce economic goods. Things that are not scarce are called free goods. Once source of confusion is that some things that people don't pay for are actually scarce. Sort the following examples of water as a economic good or a free good:

A homeowner pays hundreds of dollars to fill a swimming pool

A homeowner pays $100 to sprinkle the lawn and garden during a dry summer

People have died from dyhydration in deserts

in many developed countries, water in rivers, streams, and ponds are contaminated

no one pays for a drink of water from a water fountain on campus

bottled water is more expensive per gallon than gasoline

there is a huge market for bottled water

many homeowners pay for water by the gallon

Expert Solution

The Good's which have some utility, value or have some degree of scarcity is called as an economic good whereas a good is called a free good when it has a zero opportunity cost, or it does not have value in terms of money, neither it has any impact on demand.

1. A homeowner pays hundreds of dollars to fill a swimming pool, here water has money value of hundreds of dollars, so it is an economic good.

2. A homeowner pays $100 to sprinkle the lawn and garden during a dry summer, here watering has an money value based on certain utility that is gardening, so it is an economic good.

3. People have died from dyhydration in deserts, this eg shows scarcity of the good i.e water, so it is an economic good.

4. in many developed countries, water in rivers, streams, and ponds are contaminated, in this eg water is polluted intentionally by the people, which shows it has a very less importance, there it is an free good.

5. no one pays for a drink of water from a water fountain on campus, clearly an eg of free good.

6. bottled water is more expensive per gallon than gasoline, more of economic value than gasoline, therefore an economic good.

7. there is a huge market for bottled water, it shows there is a demand for water, therefore it is an economic good.

8. many homeowners pay for water by the gallon, signifies money value, therefore its an economic good.

Rahul Sunny answered 2 years ago

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