In economic theory, the fundamental distinction between a 'free good' and an 'economic (scarce) good' is determined by whether its consumption or production involves an opportunity cost.
Which of the following scenarios describes a resource transitioning from a free good to an economic good?
A coastal resort begins bottling and selling local seawater to tourists, even though anyone can still freely collect unlimited seawater directly from the shore.
Due to severe localized pollution, residents of an industrial city must now purchase air purification units to obtain breathable clean air, sacrificing spending on other goods.
A municipal council decides to remove the entry fee for a local nature reserve, funding its maintenance entirely through local property taxes.
A technological breakthrough in solar energy generation reduces the marginal cost of producing an extra kilowatt-hour of electricity to zero.
123 exam-style questions on AQA A Level Economics 1.1 Economic methodology and the economic problem, covering 1.1.1 Economic methodology, 1.1.2 The nature and purpose of economic activity, 1.1.3 Economic resources, 1.1.4 Scarcity, choice and the allocation of resources, and 1.1.5 Production possibility diagrams. Each one has a worked solution and a mark scheme showing where the marks go.