If the government assigns private property rights to a common resource,then the
A) resource is under-utilized.
B) marginal private cost becomes equal to the marginal social cost.
C) government needs to set a quota to achieve efficiency.
D) resource becomes subject to the free riding problem.
E) resource cannot be utilized.

Question

Quizplus · Accepted Answer

Assigning private property rights to a common resource internalizes the externalities by making the marginal private cost equal to the marginal social cost. This leads to efficiency as the resource will be utilized optimally.

If the Government Assigns Private Property Rights to a Common