AP Microeconomics

Category - Microeconomics

Because there is no incentive to protect public areas, each user (such as a business) tends to act in their own self-interest. What is this called?
  1. Marginal public cost
  2. Tragedy of the commons
  3. Market failure
  4. Negative externalities
Explanation
Answer - B - Because there is no incentive to protect public areas, each user tends to act in their own self-interest. This is called the tragedy of the commons.

Key Takeaway: The tragedy of the commons arises from a situation in which multiple individuals who are sharing a resource will ultimately deplete that resource in the pursuit of their own self-interest. The dilemma was first discussed by economist Garrett Hardin in the late 1960s and is typically used in discussions of environmental protection and global warming.
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