Use the figure below to answer the following questions.

Figure 17.3.1
-Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. A quota that results in the common resource being used efficiently is set at
A)0 kilograms a week.
B)4,000 kilograms a week.
C)3,000 kilograms a week.
D)5,000 kilograms a week.
E)1,000 kilograms a week.

Question

Use the figure below to answer the following questions.
  
Figure 17.3.1
-Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. A quota that results in the common resource being used efficiently is set at
A)0 kilograms a week. 
B)4,000 kilograms a week. 
C)3,000 kilograms a week. 
D)5,000 kilograms a week. 
E)1,000 kilograms a week.

Quizplus · Accepted Answer

The efficient level of consumption is where MSC equals MSB, which occurs at 3,000 kilograms a week. At this level, the quota will ensure that the market allocates resources efficiently. Any quantity above or below this level will result in a deadweight loss as the market fails to allocate resources efficiently. Thus, the best choice is C.

Use the Figure Below to Answer the Following Questions