If the Use of a Common Resource Is Determined in the Private

question 216

Multiple Choice

If the use of a common resource is determined in the private market, the resource:

• A)will be underused, since the marginal benefit will be equal to the marginal private cost of production, which is greater than the marginal social cost.
• B)will be overused, since the marginal benefit will be equal to the marginal private cost of production, which is less than the marginal social cost.
• C)will be overused, since the marginal benefit will be equal to the marginal private cost of production, which is greater than the marginal social cost.
• D)may not be efficiently allocated, but society will be better off than if the government intervened and tried to improve the situation, since government intervention always makes a bad situation worse.

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