#23 - When a resource’s price reflects its full cost to society, consumers pay

[Administrator]

Complete Question Explanation

Justify the Conclusion. The correct answer choice is (A).

Answer choice (A): This is the correct answer choice.

Answer choice (B):

Answer choice (C):

Answer choice (D):

Answer choice (E):

This explanation is still in progress. Please post any questions below!

[ikim10]

I narrowed my answer choices down to (A) and (D). I diagrammed the stimulus as below:

RP = resource price
UH = unintended harm
SMR = sound management of resource

Premise: RP reflects full cost to society consumers pay UH to society
Premise: SMR RP deters misuse RP reflects UH to society

Conclusion: SMR RP reflects UH to environment

I originally had (A) because it was the only answer choice that contained the missing elements of UH to environment and UH to society, but changed my answer to (D) last minute because I thought the order of (A) was reversed.

I diagrammed (A) as:

UH to environment UH to society

But plugging this in does not allow me to draw the conclusion. I was looking for something like:

UH to society UH to environment.

That was why I chose (D). I thought "externalities are precisely assessed" = UH to society were itemized, i.e. split into types, including UH to environment.

Could you explain where I went wrong with diagramming (A)?

[Dana D]

Hey I Kim,

You did diagram this correctly - by telling us that UH to the environment = UH to society, answer choice (A) is letting us properly draw the conclusion of the argument, which as you correctly identified is SMR RP reflects UH to the environment.

Without the information provided in answer choice (A), why does sound management of a resource require us to reflect the unintended harm to the environment in our resource price? We know we have to reflect the unintended harm to society, but there's no mention of unintended harm to the environment - until we add in (A). Now we can say

SMR RP deters misuse RP reflects UH to the environment which means the RP also reflects UH to society

By equating the environment and society, answer choice (A) lets us justify the stimulus' conclusion.

Remember the Jusitfy Formula -

premise + [the correct answer choice] = Conclusion.

So in this case the premise is that sound management of a resource + answer choice (A), which is the idea that harm to the environment is also harm to society = the resource price must reflect any harm to the environment, because that is also harm to society, and resource prices must reflect any unintended harm to society in order to deter the misuse of the resource.

Hope that helps!