Free access and unrestricted mining of iron soon led to the depletion of the once abundant iron ores in Rockland. As a result, several economic activities were adversely affected
What caused the overexploitation of these resources when their conservation could have benefited all consumers?
Common pool resources such as free-access mines are non-excludable but rival in consumption. The consumption of such goods gives rise to a negative externality. Each individual, while consuming the goods, only considers his or her own cost of using the good without realizing that his use of the good reduces the amount available to others. This leads to an overexploitation and depletion of these resources. This phenomenon is called the tragedy of the commons and explains the depletion of the iron ore deposits in Rockland.
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a. True b. False Indicate whether the statement is true or false
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If the imposition of a tariff on a commodity alters the relative international prices of the imposing country's exports to its imports, it is referred to as the
A. production effect of the tariff. B. terms-of-trade effect of the tariff. C. total price effect of the tariff. D. consumption effect of the tariff.