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Setting a Production Quota Does Not Always Achieve the Efficient

Question 77

Multiple Choice

Setting a production quota does not always achieve the efficient use of a common resource because


A) marginal cost differs for each producer and it is in everyone's self-interest to cheat and produce more than the assigned quota.
B) the marginal private benefit from a production quota is zero.
C) marginal cost differs for each producer and the marginal social benefit from a production quota is zero.
D) a production quota does not totally eliminate the problem of free-ridership of a common resource.
E) the Coase theorem is invalid in this market.

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