Without correction, the quantity of a common resource that is exchanged will occur where:
A)the marginal social benefit of additional consumption exceeds the marginal social cost of additional production.
B)the marginal social benefit is equal to the marginal social cost.
C)the marginal social benefit of additional consumption is less than the marginal social cost of additional production.
D)the marginal social benefit is zero.

Question

Quizplus · Accepted Answer

Without correction, the quantity of a common resource that is exchanged will typically occur where the marginal social benefit of additional consumption is less than the marginal social cost of additional production. This is because individuals do not take into account the external costs their consumption imposes on others, leading to overconsumption.

Without Correction, the Quantity of a Common Resource That Is