Asked by Brittney Buchanon on Jun 22, 2024
Verified
Common resources tend to be _____ in private markets.
A) priced too high
B) efficiently priced
C) overconsumed
D) underconsumed
Common Resources
Resources that are accessible to all members of a society but are limited in availability and can be depleted by overuse.
Private Markets
Markets where transactions occur between private entities without significant government intervention, focusing on the exchange of goods and services among individuals and businesses.
- Evaluate the impact of overuse and underuse of common resources on social welfare.
Verified Answer
HJ
Harsh JauraJun 29, 2024
Final Answer :
C
Explanation :
Common resources, also known as public goods, are non-excludable and non-rivalrous. This means that once they are provided, it is difficult or impossible to exclude anyone from enjoying the benefits, and one person's use of the resource does not diminish another person's use. In private markets, this can result in overconsumption as consumers do not bear the full cost of their use and therefore tend to use more than is socially optimal.
Learning Objectives
- Evaluate the impact of overuse and underuse of common resources on social welfare.