Which of the following is the best example of the tragedy of the commons?

• A. A monopoly setting prices above marginal cost
• B. A consumer choosing between two brands of cereal
• C. A person benefiting from national defense without paying taxes
• D. Overfishing in a public lake leading to depletion of fish stocks

Answer: (D)

Verified step by step guidance

1. Understand the concept of the tragedy of the commons: it occurs when individuals, acting independently according to their own self-interest, overuse and deplete a shared resource, leading to a loss for the entire group.
2. Analyze each option to see if it involves a shared resource being overused or depleted due to individual self-interest without adequate regulation or ownership.
3. Recognize that a monopoly setting prices above marginal cost is about market power and pricing, not about shared resource depletion.
4. Note that a consumer choosing between two brands of cereal is a private choice and does not involve a common resource being overused.
5. Identify that overfishing in a public lake is a classic example of the tragedy of the commons because the fish stock is a shared resource that can be depleted when individuals fish excessively without restrictions.