Common property resources like fish stocks in open waters tend to be over-utilized because:
A) the marginal social cost is less than the private marginal cost.
B) the marginal social cost is always equal to the private marginal cost.
C) the marginal social cost is greater than the private marginal cost.
D) none of the above

Question

Quizplus · Accepted Answer

Common property resources, such as fish stocks in open waters, are over-utilized because the marginal social cost of using the resource is greater than the private marginal cost. This happens because individuals who use the resource do not bear the full cost of their actions since the resource is shared by everyone. Thus, they tend to use more of it than they would if they had to pay the full cost. As a result, the resource is depleted faster than it can be replenished, leading to overfishing and other forms of overuse.

Common Property Resources Like Fish Stocks in Open Waters Tend