Setting a Production Quota Does Not Always Achieve the Efficient

question 77

Multiple Choice

Setting a production quota does not always achieve the efficient use of a common resource because

• A)marginal cost differs for each producer and it is in everyone's self-interest to cheat and produce more than the assigned quota.
• B)the marginal private benefit from a production quota is zero.
• C)marginal cost differs for each producer and the marginal social benefit from a production quota is zero.
• D)a production quota does not totally eliminate the problem of free-ridership of a common resource.
• E)the Coase theorem is invalid in this market.

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Definitions:

Organic Compounds

Chemical compounds containing carbon atoms bonded to hydrogen atoms, often along with other elements, which are the basis of all life on Earth.

Miller and Urey

Scientists known for their experiment simulating early Earth conditions, demonstrating the possible origins of organic compounds.

Electrode

A conductor through which electricity enters or leaves an object, substance, or region, used especially in energy storage and transfer.

Endosymbiotic Relationship

A symbiosis in which one organism lives inside the other, a relationship thought to have led to the evolution of eukaryotic cells.