If the extent to which common resources (such as fish in the sea) should be util
ID: 1249823 • Letter: I
Question
If the extent to which common resources (such as fish in the sea) should be utilized is left to the free market:Choose one answer.
a. the marginal social cost and each individual's marginal private cost will be the same.
b. each individual will use the resource until his or her marginal benefit is equal to the marginal social cost.
c. each individual will use the resource until his or her marginal benefit is zero, and the resource will be overused.
d. resource use will be efficient and will maximize social welfare.
Explanation / Answer
C, this is an example of a negative externality.