When a Production Quota Is Used to Remedy the Tragedy

question 31

Multiple Choice

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

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

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