Explore BrainMass
Share

Explore BrainMass

    Impact of zero price items to the cost of the goods

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Question:
    "Occasionally, the government offers goods and services at zero price. Explain what this does to the cost of that good, as well as the cost and price of other goods."

    Explain more about what is going to happen by using the demand and supply curve. Also, the other goods can be substitute and complementary goods, so does these goods or services get affects by the zero price?

    See the attached file.

    © BrainMass Inc. brainmass.com October 10, 2019, 3:04 am ad1c9bdddf
    https://brainmass.com/economics/demand-supply/impact-price-items-cost-goods-406074

    Attachments

    Solution Preview

    Detailed solution with a diagram is attached.

    Solution:
    If the government offered goods and services at zero price, the cost of the good or service in question is likely to increase. This is the case because the demand for the product will be enormous because everybody rich or poor enjoys free things. As the ...

    Solution Summary

    This solution details the impact of zero price items to the cost of the good involved as well as other goods.

    $2.19