Imposing a Pigouvian tax on a good,establishing a system of tradable licences,and assigning property rights are methods to alleviate the problems associated with:
A) private goods.
B) positive externalities.
C) public goods.
D) common resources.

Question

Quizplus · Accepted Answer

Imposing a Pigouvian tax, establishing a system of tradable licenses, and assigning property rights are methods that can be used to address the problems that arise with common resources. Common resources are goods that are non-excludable but rival in consumption, which means that they can be used by anyone but their use by one person reduces the amount available for others. Examples include fisheries, water resources, and forests. These goods tend to be overused because nobody has an incentive to conserve them or use them sustainably, so a Pigouvian tax can be used to increase the price of the good to reflect its true social cost and discourage overuse. Tradable licenses and property rights can also give users incentives to conserve and manage the resource sustainably. These methods are not effective for private goods, public goods, or positive externalities.

Imposing a Pigouvian Tax on a Good,establishing a System of Tradable