« previous next »

Author Question: How does the government determine the quota amount that will produce an efficient use of a common ... (Read 36 times)

notis

  • Hero Member
  • *****
  • Posts: 596
on: Jun 29, 2018
How does the government determine the quota amount that will produce an efficient use of a common resource?
 
  What will be an ideal response?

Question 2

Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?
 
  A) average cost pricing rule
  B) rate of return regulation
  C) price cap regulation
  D) None of the above encourages cost cutting.


kescobar@64

  • Sr. Member
  • ****
  • Posts: 324
Reply #1 on: Jun 29, 2018
Answer to Question 1

The government must determine the marginal social benefit and the marginal social cost of the common resource. By equating marginal social benefit to marginal social cost, the efficient use of a common resource is determined. A quota is set to this level of production. Producers are assigned a portion of this quota. As long as no one cheats on his or her quota, the efficient outcome occurs.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The calories found in one piece of cherry cheesecake could light a 60-watt light bulb for 1.5 hours.

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

The longest a person has survived after a heart transplant is 24 years.

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

The Pleiades, an open cluster of stars in the constellation of Taurus. These stars share a common mo The Pleiades, an open cluster of stars in the constellation of Taurus. These stars share a common mo
The 20 common amino acids used to build proteins The 20 common amino acids used to build proteins
In the summer of 1793, a yellow fever epidemic struck Philadelphia, killing nearly 4,000. Tens of th In the summer of 1793, a yellow fever epidemic struck Philadelphia, killing nearly 4,000. Tens of th
With a three-way catalytic converter, emission control is most efficient with an air–fuel ratio ... With a three-way catalytic converter, emission control is most efficient with an air–fuel ratio ...
Common Fluoride Products Common Fluoride Products
Saturated Fat Content of Common Dietary Fats. Saturated Fat Content of Common Dietary Fats.
Video: Effect of the environment on coat color in the Himalayan rabbit Animation

For a complete list of videos, visit our video library