How Might a Government Intervene in a Market to Prevent

question 114

Multiple Choice

How might a government intervene in a market to prevent the overuse of a common-property resource,such as an ocean fishery?

• A)subsidies to the consumers of fish
• B)reducing the marginal social cost such that marginal social cost equals marginal social benefit,thereby establishing allocative efficiency
• C)subsidies to the firms catching the fish
• D)a system of licences and quotas for fishers
• E)encouraging the use of larger,more efficient trawlers to reduce the marginal private cost to fishers

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Definitions:

Information

Data that has been processed, organized, or structured in a way that it becomes meaningful or useful to the recipient.

Seasonal Inventory

Goods held in stock that are influenced by seasonal demand, requiring businesses to adjust their inventory levels according to expected sales fluctuations throughout the year.

Demand

Refers to the market's desire for a product or service, quantified by the amount people are ready to buy at various prices.

Production

The process of creating, manufacturing, or producing goods and services.