Economists are fond of saying, “You can’t get something for nothing” or “There ain’t no such thing as a free lunch.” Is this always true?

Economists are fond of saying, “You can’t get something for nothing” or “There ain’t no such thing as a free lunch.” Is this always true? Under what circumstances, if any, might it not be true? Explain.

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Expert Solution

The phrase and adage "There ain't no such thing as a free lunch" connotes the idea that "It is impossible to get something for nothing.
Even those products and services that are given free to individuals bears cost to the individual or entity who/which ultimately pays for it.

The acronyms "TANSTAAFL, TINSTAAFL, and TNSTAAFL" are also used for the above-mentioned adage .

What is "free lunch"?
The phrase "free lunch" refers to the situation (prevailing in the United States in the past) when there was a common practice in American bars of offering a "free lunch" in order to encourage/entice drinking customers.

In the years 1996, this phrase become popular when Robert Heinlein's used in his science-fiction novel "The Moon Is a Harsh Mistress"
Thereafter, it was used in economics. The Economist Milton Friedman made TANSTAAFL popular by paraphrasing it as the title of his book that was published in the year 1975 .
In economics, this phrase is used to describe opportunity cost -- you don't get something for nothing. Even when nobody bears the burden of cost, society bears the burden of cost in the form of negative externalities like pollution.

Many Investors assume no cost in investments (having low risk) that promises fairly high, fixed payments over a period of multiple years. However, there is cost in this particular case also in the form of hidden fees. Elaborating further, any investment avenue that promises a guaranteed return is also not a free lunch because there is some kind of implicit cost somewhere, including the opportunity cost of not investing elsewhere.

Exception
Although few exceptions to the adage "no free lunch" have been propunded. These are Sun and carbon dioxide. However, It is argued that in this particular case also metabolism of body releases production of vital oxygen for plants.

Rahul Sunny answered 1 year ago

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