The Tragedy of the Commons Describes

question 367

Multiple Choice

The Tragedy of the Commons describes

• A)government regulation that is necessary to combat externalities.
• B)overuse of a common resource relative to its economically efficient use.
• C)the nonrivalry feature of a common resource.
• D)an effective cost-benefit analysis.

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Definitions:

Production Function

A formula that specifies the output generated by a firm from varying combinations of factor inputs.

Marginal Cost

The supplementary expense incurred by fabricating one more unit of a product or service.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Cobb-Douglas Production Function

Production function of the form q = AK^aL^b, where q is the rate of output, K is the quantity of capital, and L is the quantity of labor, and where A, a, and b are constants.