Setting a production quota does not always achieve the efficient use of a common resource because ________.
A)marginal cost differs for each producer and it is in everyone's self-interest to cheat and produce more than the assigned quota
B)the marginal private benefit from a production quota is zero
C)marginal cost differs for each producer and the marginal social benefit from a production quota is zero
D)a production quota does not totally eliminate the problem of free-ridership of a common resource
E)none of the above

Question

Quizplus · Accepted Answer

Marginal cost differs for each producer and it is in everyone's self-interest to cheat and produce more than the assigned quota. This means that producers may not necessarily use the common resource efficiently even with a production quota in place, leading to potential overuse or depletion of the resource.

Setting a Production Quota Does Not Always Achieve the Efficient