Question

Certain goods are demanded even when their price is zero. Does it mean that we are demanding even those goods which are not scarce?

Answer 1

Only scarce goods are demanded. Goods which are not scarce are available to us in plenty and they need not be demanded (though these may be needed, like sun and air). But, when goods are available to us at a zero price, we should not jump to the conclusion that these are not scarce.

Goods are not scarce when two conditions are satisfied:

(i) goods do not have a price, and

(ii) goods do not have an opportunity cost.

Thus, medicines available in government hospitals at zero price are demanded. And these are scarce because these do have an opportunity cost, even when these are available at zero price.