Common resources are used too ______________ for economic efficiency because the marginal cost of using the resource is ______________ than if the resources were private goods.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aslowly; lowerbquickly; lowercslowly; higherdquickly; higher
Question
Common resources are used too ______________ for economic efficiency because the marginal cost of using the resource is ______________ than if the resources were private goods.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aslowly; lowerbquickly; lowercslowly; higherdquickly; higher
Solution
The correct answer is d) quickly; higher.
This is because common resources are non-excludable but rival in consumption. This means that one person's use of the resource reduces its availability for others, leading to overuse or depletion of the resource. This is known as the tragedy of the commons.
Since the marginal cost of using the resource (the cost of using one more unit of the resource) is not borne by the individual user but is instead spread out over all users, it is effectively lower for the individual user than if the resource were a private good. This leads to overuse of the resource, as users do not take into account the full social cost of their actions.
Therefore, common resources are used too quickly for economic efficiency because the marginal cost of using the resource is higher than if the resources were private goods.
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