We Know That People Tend to Overuse Common Resources

question 121

Multiple Choice

We know that people tend to overuse common resources. This problem can be viewed as an example of

• A)a game in which the players succeed in reaching the cooperative outcome.
• B)the prisoners' dilemma.
• C)a situation to which game theory does not apply because of a lack of strategic thinking.
• D)a situation to which game theory does not apply because of too many decision-makers.

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Definitions:

Marginal Product

The additional output that is gained by employing one more unit of a factor of production.

Average-Variable-Cost Curve

A graphical representation showing how the average variable cost of production changes as the quantity of output is altered.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total quantity of produced output.

Average Total Cost

The aggregate expense of manufacturing (comprising both fixed and variable expenditures) divided by the overall amount produced.