Question

Distinguish between economic goods and free goods.

What is the difference between economic goods and free goods?

Answer 1

An economic good is a consumable item that is useful to people but is scarce in relation to its demand, so human effort is required to obtain it. On the contrary, free goods (such as air) are naturally available in abundance and need no conscious effort to obtain them.

Answer 2

Sr. No.	Economic goods	Free goods
1.	Economic goods are man-made.	Free goods are nature's gift.
2.	Supply is always less than their demand.	Their supply is abundant.
3.	They have a price.	They do not have a price.
4.	They have the cost of production.	They have no cost of production.
5.	Their goods have both value in use and value in exchange.	They have value in use only and have no value in exchange.
6.	Their values are included in the national income. Example: A bottle of water.	Their values are not included in the national income. Example: Sunshine, rainfall, air.