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

• A. A consumer choosing not to pay for a public good but still benefiting from it
• B. A government imposing a tax on luxury goods
• C. Overfishing in a public lake leading to depletion of fish stocks
• D. A company polluting its own private land

Answer: (C)

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 long-term collective loss.
2. Identify the key elements of the tragedy of the commons in each option: look for a shared resource that is being overused or depleted because it is accessible to all without exclusive ownership.
3. Evaluate the first option: a consumer benefiting from a public good without paying is an example of the free-rider problem, which is related but not the tragedy of the commons.
4. Evaluate the second option: a government imposing a tax on luxury goods is a policy action and does not illustrate overuse or depletion of a shared resource.
5. Evaluate the third and fourth options: overfishing in a public lake shows depletion of a shared natural resource due to individual overuse, which matches the tragedy of the commons, whereas polluting private land involves private property and externalities but not a common resource.