« previous next »

Author Question: How does the government determine the quota amount that will produce an efficient use of a common ... (Read 66 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?

Every flu season is different, and even healthy people can get extremely sick from the flu, as well as spread it to others. The flu season can begin as early as October and last as late as May. Every person over six months of age should get an annual flu vaccine. The vaccine cannot cause you to get influenza, but in some seasons, may not be completely able to prevent you from acquiring influenza due to changes in causative viruses. The viruses in the flu shot are killed—there is no way they can give you the flu. Minor side effects include soreness, redness, or swelling where the shot was given. It is possible to develop a slight fever, and body aches, but these are simply signs that the body is responding to the vaccine and making itself ready to fight off the influenza virus should you come in contact with it.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

In the ancient and medieval periods, dysentery killed about ? of all babies before they reach 12 months of age. The disease was transferred through contaminated drinking water, because there was no way to adequately dispose of sewage, which contaminated the water.

Did you know?

There are actually 60 minerals, 16 vitamins, 12 essential amino acids, and three essential fatty acids that your body needs every day.

Some common functional groups of biomolecules Some common functional groups of biomolecules
Common sites of biofilm infection Common sites of biofilm infection
Common Homophones Common Homophones
Common Phobias Common Phobias
Common Abbreviations and Symbols Used by Massage Therapists Cont. Common Abbreviations and Symbols Used by Massage Therapists Cont.
Self-crossing F2 plants to produce an F3 generation shows that there are two different genotypes amo Self-crossing F2 plants to produce an F3 generation shows that there are two different genotypes amo
Video: Tuberculosis Testing

For a complete list of videos, visit our video library