When a Production Quota Is Used to Remedy the Problem

question 381

Multiple Choice

When a production quota is used to remedy the problem of the commons, then

• A) the production quota is set so that use of the resource is where marginal private benefit equals marginal private cost.
• B) the production quota is set so that use of the resource is where marginal social benefit equals marginal private cost.
• C) the market equilibrium, but not the efficient outcome, is achieved.
• D) all users of the resource have an incentive to cheat on the quota quantity.

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