If the market supply and demand curves for a common resource include all costs, then:
A)the common resource will be underused.
B)the common resource will be overused.
C)the common resource will be used at the socially optimal level.
D)there is an external cost to society from the common resource.

Question

Quizplus · Accepted Answer

When the market supply and demand curves for a common resource include all costs, the common resource will be used at the socially optimal level. This means that the amount of the common resource used by the market will be the amount that provides the greatest overall benefit to society. This is because all costs, including any external costs to society, are taken into account in the market price. Therefore, there is no underuse or overuse of the common resource, and there is no external cost to society.

If the Market Supply and Demand Curves for a Common