Use the figure below to answer the following questions. Figure 16.3.2
-Figure 16.3.2 shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.A quota that results in the common resource being used efficiently is set at
A)0 goats.
B)35 goats.
C)50 goats.
D)55 goats.
E)40 goats.

Question

Use the figure below to answer the following questions.  Figure 16.3.2
-Figure 16.3.2 shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.A quota that results in the common resource being used efficiently is set at
A)0 goats. 
B)35 goats. 
C)50 goats. 
D)55 goats. 
E)40 goats.

Quizplus · Accepted Answer

The efficient level of production occurs where the marginal social cost (MSC) intersects with the marginal social benefit (MSB). At this point, the external costs of raising goats on the common pasture are fully incorporated into the decision-making process. This intersection occurs at a quantity of 40 goats. Therefore, the best choice is to set the quota at 40 goats to ensure efficient use of the common resource.

Use the Figure Below to Answer the Following Questions