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 individual's marginal cost of producing another unit exceeds the individual's marginal benefit.

Question

Quizplus · Accepted Answer

Common resources and negative externalities both involve costs that are not borne by the individual producers or consumers involved, but rather by society as a whole. In the case of common resources, the marginal social cost of producing another unit exceeds the individual's marginal cost because the resource is being overused or depleted. In the case of negative externalities, the marginal social cost of producing another unit exceeds the individual's marginal benefit because the cost of the external harm caused by production is not accounted for by the producer or consumer.

The Problem with Common Resources Is Similar to the Problem