Free Goods Are Scarce-Free Resources

Steps:

• Define free good as a resource abundant enough to satisfy all wants without price or scarcity.
• Examine each option for absence of cost, production, or limitation.
• Identify the option involving a naturally unlimited resource.
• Confirm by excluding options with implicit economic costs or scarcity.

Why C is correct:

• Air fits the economic definition of a free good, as it is naturally abundant, requires no production, and has zero opportunity cost or price.

Why the others are wrong:

• A: River water involves scarcity and potential legal or extraction costs, making it an economic good.
• B: Charity medical facility uses scarce resources with underlying production costs, even if free to the patient.
• D: Birthday cake is a produced economic good with scarcity, merely transferred as a gift.

Final answer: C