If the market supply and demand curves for a common resource include all costs and benefits to society from production and consumption,the common resource will:
A)be underused.
B)be overused.
C)be used at the socially optimal level.
D)impose an external cost on society.

Question

Quizplus · Accepted Answer

When the market supply and demand curves for a common resource include all costs and benefits to society from production and consumption, the resource will be used at the socially optimal level. This means that the benefits to society from using the resource are maximized while the costs to society from using the resource are minimized. Underuse or overuse would mean that society is not achieving the maximum overall benefit. If there are external costs, the supply and demand curves do not capture all the costs and benefits to society, and the resource will not be used at the socially optimal level.

If the Market Supply and Demand Curves for a Common