Question

some stores give free products to consumers. economists would say that those products are not free

some stores give free products to consumers. economists would say that those products are not free

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Answer #1

It is important to differentiate between the concept of free goods for the producer and consumers. Although the goods are indeed free for the consumer (apart from some opportunity cost of time that may have incurred in getting the extra goods), the economist is indeed right as well because the goods are not free from the perspective of the seller. The goods can be free to a seller only when the inputs used in the production are available without any cost which means that the inputs are not scarce. This is practically not the case as almost all inputs that go into the production process are scare and ahve a price. Since the firms have indeed paid a price to procure those inputs for production process, the final good is not free.

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