PrepTest 94+, Section 2, Question 23
When a resource's price reflects its full cost to society, consumers pay directly for externalities—the unintended but harmful consequences to society of using a resource. Further, the price of a resource deters misuse of that resource only if it reflects the resource's externalities. So, since sound management of a resource requires that the price of the resource deter its misuse, it also requires that the price reflect whatever unintended harm to the environment the use of that resource causes.
When a resource's price reflects its full cost to society, consumers pay directly for externalities—the unintended but harmful consequences to society of using a resource. Further, the price of a resource deters misuse of that resource only if it reflects the resource's externalities. So, since sound management of a resource requires that the price of the resource deter its misuse, it also requires that the price reflect whatever unintended harm to the environment the use of that resource causes.
When a resource's price reflects its full cost to society, consumers pay directly for externalities—the unintended but harmful consequences to society of using a resource. Further, the price of a resource deters misuse of that resource only if it reflects the resource's externalities. So, since sound management of a resource requires that the price of the resource deter its misuse, it also requires that the price reflect whatever unintended harm to the environment the use of that resource causes.
When a resource's price reflects its full cost to society, consumers pay directly for externalities—the unintended but harmful consequences to society of using a resource. Further, the price of a resource deters misuse of that resource only if it reflects the resource's externalities. So, since sound management of a resource requires that the price of the resource deter its misuse, it also requires that the price reflect whatever unintended harm to the environment the use of that resource causes.
The conclusion follows logically if which one of the following is assumed?
Whatever constitutes unintended harm to the environment also constitutes unintended harm to society.
A resource's externalities are always taken into account in setting the price of that resource.
When setting a resource's price, it is possible to forecast completely and accurately all of the effects of using that resource.
If a resource is soundly managed, then its externalities are precisely assessed.
The price of a given resource is only one of several factors relevant to a decision about whether to use it.
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