Setting a Production Quota Does Not Always Achieve the Efficient

question 55

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)none of the above

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