In a Market Where the Tragedy of the Commons Arises

question 18

Multiple Choice

In a market where the tragedy of the commons arises, the equilibrium quantity is both individually _______ and collectively _______.

• A)inefficient; rational
• B)rational; inefficient
• C)irrational; efficient
• D)efficient; irrational

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Definitions:

Tragedy of the Commons

A situation where individuals, acting independently and rationally according to their own self-interest, deplete or spoil shared community resources through their collective action.

Property Rights

Property Rights refer to the legal entitlements that determine the ownership and use of resources, including land, buildings, intellectual property, and personal possessions.

Individual Transferable Quotas (ITQs)

A regulatory tool used in fisheries management allowing the capture of a certain amount of seafood, with the quotas being tradable among individuals or companies.

Promote Efficiency

The act of enhancing the performance and productivity of a system or process, reducing wastage of resources.