The Tragedy of the Commons Will Be Evident When a Growing

question 253

Multiple Choice

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

• A) allow individual shepherds to chose their own flock sizes.
• B) internalize the externality by subsidizing the production of sheep's wool.
• C) auction off a limited number of sheep-grazing permits.
• D) wait until the market corrects the problem.

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Definitions:

Trade Deficits

A situation in which a country's imports of goods and services exceed its exports, leading to more money flowing out of the country than coming in.

World's Largest Exporter

The country or entity that sells the largest amount of goods to foreign countries, measured by value.

Exports

Merchandise or services originating from one country and sold to purchasers in another country.

World Bank

A global financial organization that offers loans and grants to the governments of less wealthy nations to support their capital projects.