1 Answer | Add Yours
When a buyer buys one thing and gets another free, the second item cannot truly be free. The reason for this is that someone has to absorb the cost of the "free" item.
It may be that other buyers will make up the price. They will buy the item later (when it is no longer on sale) and the price they pay will help to make up for the money lost when the items were offered for "free." It may be that the firm has to "eat" the cost of the "free" items. If this happens, the firm's shareholders lose out on some amount of profit that they would otherwise have made.
The "free" item still cost something to make and its costs must be absorbed by someone. You can argue that this means that its cost is borne by society.
We’ve answered 318,909 questions. We can answer yours, too.Ask a question