Question

Please provide a very brief example of the following terms. I have the definitions, but just want examples to make sure I understand them. Thanks.

   

Scarcity Rent - the additional charge for the use of a resource that is in fixed or limited supply.

Common Property Resources - resources that are collectively or publicly owned and allocated under a system of unrestricted (free) access, or as self-regulated by users.

Tragedy of the Commons - The tendency of a shared, limited resource to become depleted because people act from self-interest for short-term gain.

Externality - any benefit or cost borne by an individual economic unit that is a direct consequence of another’s behavior.

Answer 1

Scarcity rent: A limited edition Ferrari will be charged much or more than other Ferrari in the market because it is limited in number. The extra money paid for that limited edition Ferrari is Scarcity rent.

Common Property resources: Public Parks Zoo etc.

The tragedy of Common: Because people believe that Fish in the pond will get finished is they don't extract those fish i.e. someone will take it. They all start fishing and deplete the resource completely.

Externality: A thermal power plant releasing ashes in the air which is harmful to the Recreational park nearby.