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:

Permanent Employees

Individuals employed on an ongoing basis, typically with full-time hours and benefits.

Full-Time

Employment status where individuals work the full number of hours defined as standard by their employer, typically around 35 to 40 hours a week.

Not-Invented-Here Problem

A form of bias where individuals or organizations favor internally developed products or ideas over those originating externally.

Hoarding Of Expertise

The practice of individuals or groups within an organization deliberately keeping knowledge or skills to themselves to maintain a competitive advantage.