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

• A. A person benefiting from national defense without paying taxes
• B. Overfishing in a public lake leading to depletion of fish stocks
• C. A monopoly setting prices above marginal cost
• D. A firm polluting its own private land

Answer: (B)

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 incentives.
3. Option 1 (benefiting from national defense without paying taxes) is an example of a free-rider problem, not a tragedy of the commons, because national defense is a public good, not a rivalrous resource.
4. Option 2 (overfishing in a public lake) fits the tragedy of the commons perfectly because the fish stock is a common resource that can be depleted if individuals fish excessively without regulation.
5. Options 3 and 4 involve private goods or monopolistic behavior, which do not represent the tragedy of the commons since the resource is not shared or commonly owned.