Question

Which option distinguishes the externality in the following scenario?

Answer 1

Answer:

tragedy of the commons

Explanation:

This is a simple case of tragedy of commons.

Tragedy of commons implies that an individual seeks to use a resource without the consideration of others. It is often an economic problem. All motorists are interested in using the Los Angeles freeway to their own benefit. They do this regardless of the consequences it might have on others. This is why the freeway is often jam-packed. Every motorist plying the route wants to be at an advantaged position while plying the route but this will eventually lead to traffic on the route.