The problem with common resources is similar to the problem with negative externalities because:
A)both issues deal with natural resources.
B)the marginal social benefit of producing another unit exceeds the individual's marginal benefit.
C)the marginal social cost of producing another unit exceeds the individual's marginal cost.
D)the marginal cost of producing another unit exceeds the individual's marginal benefit.

Question

Quizplus · Accepted Answer

Both common resources and negative externalities result in a situation where the production or consumption of a good or service has an impact on society as a whole. In the case of common resources, the marginal social cost of producing another unit exceeds the individual's marginal cost, leading to overuse and depletion of the resource. In the case of negative externalities, the marginal social cost of producing another unit exceeds the marginal private cost, leading to an overproduction of goods that generate harmful external effects on society. Therefore, the answer is C, as both scenarios involve a divergence between individual and social costs.

The Problem with Common Resources Is Similar to the Problem