When a Production Quota Is Used to Remedy the Tragedy

question 62

Multiple Choice

When a production quota is used to remedy the tragedy of the commons, then

• A) the market equilibrium, but not the efficient outcome, is achieved.
• B) users of the resource have an incentive to cheat on the quota.
• C) the quota is set so that use of the resource is where marginal private benefit equals marginal social benefit.
• D) the quota is set so that use of the resource is where marginal private benefit equals marginal private cost.
• E) previous users of the resource are given the incentive to avoid use of the resource.

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Definitions:

Fair Market Value

The cost at which a property would be exchanged in a competitive bidding environment.

Incorporation Services

Services offered by certain companies or legal entities that assist individuals or other entities in forming a corporation.

Fixtures

Items of property that are attached to a building or land in a way that makes them a legally part of that property, such as lighting systems or cabinetry.

Par Common Stock

The nominal or face value assigned to a share of common stock in the corporate charter, which may differ from the market value.