Free access and unrestricted mining of iron soon led to the ...

[a0266361136]

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?

Question 2

The winner of a second-price sealed-bid auction pays an amount equal to ________.
 
  A) half of his bid
  B) the lowest bid
  C) the second-highest bid
  D) his valuation of the good

[LVPMS]

Answer to Question 1

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.

Answer to Question 2

C

[a0266361136]

Excellent

[ryhom]

TYSM