The correct answer is option 3: The opportunity cost is transferred from the consumers of the product to the tax-paying public.

Opportunity cost refers to the value of the next best alternative that must be forgone in order to pursue a certain action. Therefore, even if a commodity is provided free of cost, there is still an opportunity cost associated with its provision.

When the government provides a commodity for free, it incurs costs in terms of resources used, such as labor, raw materials, and capital. These resources could have been used to produce other goods and services that have a market demand and generate revenue. Hence, the opportunity cost of producing the free commodity is the revenue that could have been generated by using these resources for alternative production.

Furthermore, the provision of a free commodity leads to an increase in demand for it, as consumers do not have to pay for it. This increase in demand can lead to a shortage of the commodity, or an increase in its price in the case of a fixed supply. Therefore, the government may need to allocate more resources to meet this increased demand, which again incurs an opportunity cost.

Finally, when the government provides a commodity for free, it needs to fund the production and distribution costs through taxes. The taxes are paid by the public, including those who may not benefit from the free commodity. Hence, the opportunity cost of the provision of the free commodity is transferred from the consumers of the product to the tax-paying public.

In conclusion, although a commodity may be provided for free, it still incurs an opportunity cost, which is transferred from the consumers of the product to the tax-paying public.