If the use of a common resource is determined in the private market, the resource:
A)will be underused, since the marginal benefit will be equal to the marginal private cost of production, which is greater than the marginal social cost.
B)will be overused, since the marginal benefit will be equal to the marginal private cost of production, which is less than the marginal social cost.
C)will be overused, since the marginal benefit will be equal to the marginal private cost of production, which is greater than the marginal social cost.
D)may not be efficiently allocated, but society will be better off than if the government intervened and tried to improve the situation, since government intervention always makes a bad situation worse.

Question

Quizplus · Accepted Answer

Common resources tend to be overused in the private market because individuals do not account for the external costs imposed on others, leading to a situation where the marginal private cost is less than the marginal social cost.

If the Use of a Common Resource Is Determined in the Private