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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Definitions:

Conservationist

An individual or a group actively involved in the protection and preservation of nature and wildlife, often advocating for sustainable practices to protect the environment.

Ethical Grounds

The moral principles or considerations that guide behavior or decision-making processes.

Whales

Large marine mammals belonging to the order Cetacea, known for their intelligence and complex behaviors.

Marine Fish Species

Aquatic species that live predominantly in oceanic and sea environments.