Self- interested commuters may choose a suboptimal equilibrium because:
A)when MC is increasing, the marginal commuter pays only AC.
B)some commuters stay home.
C)total costs are minimized.
D)when MC is constant, MC is greater than AC.

Question

Quizplus · Accepted Answer

In situations where the marginal cost (MC) is increasing, the decision of a self-interested commuter is often based on the average cost (AC) they incur, rather than the additional cost their decision imposes on the system. This discrepancy can lead to a suboptimal equilibrium because the individual does not bear the full cost of their action, leading to overuse or congestion in the context of commuting.

Self- Interested Commuters May Choose a Suboptimal Equilibrium Because