According to my reference book, 1.) economic good is good whose quantity
available is insufficient to satisfy all human wants for it. 2.) more of it is preferred.
3.) people are willing to pay for an additional unit of it. 4.) opportunity cost is
involved in providing/producing, obtaining and using it. Vice versa for free goods.
I agree with the point 1,2 and 3 but for point 4. I have a question. Take water in
a desert as an example, it is undoubtedly an economic good but why?
Although its quantity available is insufficient to satisfy all human wants for it, more
of it is preferred and people are willing to pay for it, there is no cost in producing it,
I mean it's a gift from mother nature, what is the cost and who should pay for the
cost? Does it mean that to determine whether a good is economic or not,
it is not necessary to fulfill all the 4 criteria? Thank you for your tremendous help!:)