The Tragedy of the Commons Will Be Evident When a Growing

question 106

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 choose 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:

Imported Steel

Steel that is produced in one country and then brought into another country for use in manufacturing or construction.

Quantity

The amount or number of a material or immaterial good considered as a unit or an aggregate.

Price

The amount of money needed to buy a particular good, service, or resource.

Opportunity Cost

The cost of forgone alternatives; the value of the next best choice that one gives up when making a decision.