When a market uses a resource owned in common, then in the Nash equilibrium in that market,:
A)producers will continue to have an incentive to enter, causing the equilibrium to constantly change.
B)the resource will be overused.
C)producers will have higher costs than if all resources were private.
D)less will be produced than is in the public's best interest.

Question

Quizplus · Accepted Answer

In a market where a resource is owned in common, every producer has access to that resource without any restrictions or limitations. In such a scenario, every producer will keep using the resource as long as it keeps providing them a benefit, ultimately leading to overuse of the resource. This is known as the tragedy of the commons. Therefore, in the Nash equilibrium, the resource will be overused.

When a Market Uses a Resource Owned in Common, Then