The government can intervene to achieve the socially optimal quantity of a common resource by using which approach(es)? I.assigning property rights
II.imposing a tax on usage
III.granting a limited number of tradable permits to use the good
A)I only
B)II only
C)I and II only
D)I,II,and III

Question

Quizplus · Accepted Answer

All three approaches are commonly used by the government to achieve the socially optimal quantity of a common resource. Assigning property rights can create an incentive for individuals to conserve the resource, while a tax on usage can reduce overconsumption by making it more expensive. Trading permits allow for the allocation of the resource among users, while ensuring the overall level of usage remains within a socially optimal level. Thus, the best choice is D, which includes all three approaches.

The Government Can Intervene to Achieve the Socially Optimal Quantity