Texes Social Studies Content Practice Exam

Why is a free good not considered scarce?

1. Human desires for the good exceed the amounts available at a zero money price

2. Price rations the good so that all individuals willing to pay the market price can buy the good and it is, therefore, not scarce

3. Individuals can have all they desire at zero price

4. It is an abundant natural resource

The correct answer is: It is an abundant natural resource

A free good is characterized by its availability in such abundance that individuals can consume as much of it as they desire without any cost. The answer that explains why a free good is not considered scarce is that individuals can have all they desire at zero price. When a good is available in unlimited quantities without a cost associated with it, it means that there is no competition for its consumption. This frees it from the limitations that typically define scarcity, where demand outstrips supply. In the context of economic principles, scarcity refers to the condition where available resources are insufficient to satisfy all wants and needs at a given price. Since a free good can be obtained without cost and in unlimited quantities, it does not fall under the category of scarce resources. Therefore, the essence of a free good lies in its immediate abundance, allowing individuals to consume it freely without constraints.