If a commodity is provided free to the public by the Government, then

This is not an easy question to answer. However please understand that, Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option. If the government is investing in the priority sector, somebody has to bear the cost, and it is usually the taxpaying public itself. So, C seems the best option.

However, it may not hold true in all instances – for example, what if a country does not collect taxes. Also, government revenues include tax-revenues and non-tax revenues. Anyway, let’s wait for the official UPSC key for this question.

Update (UPSC Official Answer Key) – C. the opportunity cost is transferred from the consumers of the product to the tax-paying public.