The essential cause of the tragedy of the commons is the fact that:
A. when a resource has no price, it leads to a positional externality.
B. governments may not tax activities that generate negative externalities.
C. it can be difficult to solve the free-rider problem.
D. one person's use of a commonly held resource imposes an external cost on others.
Answer: D
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A) wage rates rise B) unemployment falls C) investment increases D) consumption falls
Would the services supplied by prostitutes and brothels be included in calculating GDP in the United States?
A) Yes, because those are final services. B) Yes, but only in those states where brothels are legal. C) No, because those services are immoral. D) No, because those are not truly economic services.
Why don't governments avoid budget deficits under all circumstances?
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A. 100; 100; 1,200 B. 100; 225; 800 C. 225; 100; 1,200 D. 225; 225; 1,000