Question

The parable known as the tragedy of the commons applies to goods and services such as:

A) Public goods
B) Private goods
C) Club goods
D) Natural goods

Answer 1

The 'tragedy of the commons' refers to the depletion of natural goods that are nonexcludable and rivalrous, such as forests or fisheries, due to unregulated consumption for individual benefit.

Step-by-step explanation:

The parable known as the tragedy of the commons typically applies to natural goods that are nonexcludable and rivalrous. These are goods that are accessible to all members of a society (nonexcludable) but can be depleted as they are consumed (rivalrous). The best example of this concept is natural resources like forests, fisheries, or the atmosphere. When such goods are consumed uncontrollably by individuals acting in their own self-interest without regard to the long-term degradation of the resource, the tragedy occurs. This often leads to overexploitation and eventual depletion of the resource, thus the correct answer to the student's question would be (D) Natural goods.

One clearly demonstrated example of the 'tragedy of the commons' is the case where competing companies log as many trees as possible for financial gain until no trees are left, effectively exhausting the common resource. This happens because no one has a financial interest in protecting the long-term value of the resource when it's seen as infinite and belongs to no one in particular.