Asked by Samantha Rojas on May 04, 2024
Verified
Common property resources like fish stocks in open waters tend to be over-utilized because:
A) the marginal social cost is less than the private marginal cost.
B) the marginal social cost is always equal to the private marginal cost.
C) the marginal social cost is greater than the private marginal cost.
D) none of the above
Marginal Social Cost
The additional cost society bears for the production of one more unit of a good or service.
Common Property
Resources or assets that are jointly owned or shared among individuals or groups, often leading to issues of overuse or mismanagement.
Over-Utilized
A condition where resources, services, or facilities are used to their maximum capacity, often leading to degradation or diminished quality.
- Understand the principles of common property resources and the challenges in managing them efficiently.
Verified Answer
AI
Angelique IrakozeMay 09, 2024
Final Answer :
C
Explanation :
Common property resources, such as fish stocks in open waters, are over-utilized because the marginal social cost of using the resource is greater than the private marginal cost. This happens because individuals who use the resource do not bear the full cost of their actions since the resource is shared by everyone. Thus, they tend to use more of it than they would if they had to pay the full cost. As a result, the resource is depleted faster than it can be replenished, leading to overfishing and other forms of overuse.
Learning Objectives
- Understand the principles of common property resources and the challenges in managing them efficiently.