The tragedy of the commons occurs for goods that are: Select one: a. Rival and e
ID: 1166305 • Letter: T
Question
The tragedy of the commons occurs for goods that are: Select one: a. Rival and excludable b. Rival and nonexcludable c. Nonrival and nonexcludable d. Nonrival and excludable
Which of the following is NOT true about subsidies? Select one: a. a subsidy is a government-provided financial incentive to encourage consumption b. the goal of a subsidy is to increase quantity to the socially optimal level c. a subsidy reduces the costs for consumers d. a subsidy is firm-provided financial incentive to encourage consumption
Explanation / Answer
1. The tragedy of the commons occurs for goods that are Nonrival and nonexcludable (Option c)
The tragedy of commons is an issue which arises when many people are consuming one good and lead to a situation which is disadvantageous for all. This happens when
1). The good can be consumed by more than one people, i.e the good is non-rival
2). When everyone is allowed to use the good without paying anything and people cannot be restricted from using the resource. i.e non-excludable.
2. Option (D) is not true about subsidies, Subsidies are provided by Government and not by firms.
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