The Tragedy of the Commons Is the Absence of Incentives

question 26

Multiple Choice

The tragedy of the commons is the absence of incentives to

• A) correctly measure the marginal benefit.
• B) prevent under use of the common resource.
• C) prevent overuse and depletion of the common resource.
• D) discover the resource.
• E) prevent the free-rider problem.

---

Definitions:

Long-Run Equilibrium

A state in which a market's supply and demand balance out over time, with all firms earning normal profit and no incentive for new firms to enter or existing ones to exit.

Price Maker

A firm or entity that has the power to influence the price of goods or services in the market due to a lack of significant competition.

Total Revenue

The overall amount of money generated by a business from selling its goods or services before any costs are subtracted.

Elastic Than Industry

A condition or scenario where a particular firm or product has a higher sensitivity to price changes compared to the overall industry.