In a market where the tragedy of the commons arises, the equilibrium quantity is both individually _______ and collectively _______.
A)inefficient; rational
B)rational; inefficient
C)irrational; efficient
D)efficient; irrational

Question

Quizplus · Accepted Answer

The tragedy of the commons arises when individuals, acting independently and rationally according to each one's self-interest, behave contrary to the whole group's long-term best interests by depleting a common resource. Thus, the equilibrium quantity is individually rational (as each individual is maximizing their own benefit) but collectively inefficient because the resource gets depleted, harming the group as a whole.

In a Market Where the Tragedy of the Commons Arises