The Commons Problem arises because
A) firms don't maximize profits.
B) social and private incentives are not aligned and property rights are missing.
C) social cost equals private cost and property rights are missing.
D) social benefit equals private benefit and property rights are missing.

Question

Quizplus · Accepted Answer

The Commons Problem refers to a situation where social and private incentives are not aligned, and property rights are missing. This creates a situation where individuals have an incentive to use a common resource for their own self-interest, leading to overuse and depletion of the resource. Firms maximizing profits or the equality of social/private costs/benefits (options A, C, and D) do not directly relate to the Commons Problem.

The Commons Problem Arises Because