For a common resource, the marginal private cost curve slopes _______ and the marginal social cost curve slopes _______.
A) downward; upward
B) upward; downward
C) downward; downward
D) upward; upward

Question

Quizplus · Accepted Answer

For a common resource, the marginal private cost curve slopes upward because as more of the resource is used, the cost to each additional user typically increases due to scarcity. The marginal social cost curve also slopes upward, but at a steeper angle than the private cost curve, because it includes the external costs imposed on others not directly involved in the transaction.

For a Common Resource, the Marginal Private Cost Curve Slopes