If the government of a country decides to provide certain good free of cost to its citizens, what can one say about the opportunity cost?

Government is certainly using the revenues raised from the taxpaying public to provide this good. It could have decided to deploy those funds elsewhere. Had the money not changed hands from the taxpayers to the government, the taxpayers would have decided its deployment and thus decided opportunity cost.

Those who are getting the good free of cost don't have to make any decision about opportunity cost as free provision of good does not constrain them in deploying their money elsewhere.So could it be said that the opportunity cost is transferred from the consumers of good to the government or it is transferred to the taxpayers.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.