When we calculate the price elasticity of demand, we use percentages of the average price and the average quantity in order to get the same value for the elasticity regardless of whether the price falls or rises.
Indicate whether the statement is true or false
Question 2
When a production quota is used to remedy the problem of the commons, then
A) the production quota is set so that use of the resource is where marginal private benefit equals marginal private cost.
B) the production quota is set so that use of the resource is where marginal social benefit equals marginal private cost.
C) the market equilibrium, but not the efficient outcome, is achieved.
D) all users of the resource have an incentive to cheat on the quota quantity.
Alan Price - Poor People
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