Self-study
Support 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. ████████ ███ █████ ██ █ ████████ ██████ ██████ ██ ████ ████████ ████ ██ ██ ████████ ███ ██████████ ██████████████ ███ █████ █████ ██████████ ██ █ ████████ ████████ ████ ███ █████ ██ ███ ████████ █████ ███ ███████ ██ ████ ████████ ████ ███ █████ ███████ ████████ ██████████ ████ ██ ███ ███████████ ███ ███ ██ ████ ████████ ███████
Summary
The author concludes that sound management of a resource requires that the price reflect any unintended harm to the ENVIRONMENT from use of that resource. Why? Because of the following:
Sound management of a resource requires that the price of the resource deter its misuse. This requires that the price reflect the resource’s externalities. A resource’s externalities includes the unintended harmful consequences to SOCIETY.
Missing Connection
We know from the premises that sound management of a resource requires that a price reflect the unintended harmful consequences to SOCIETY from use of that resource. But does that imply that sound management of a resources requires the price to reflect unintended harm to the ENVIRONMENT from use of the resource? Not necessarily. What if harm to the environment is simply not part of harm to society? In that case, we don’t have to take into account harm to the environment in the resource’s price.
So to make this argument valid, we want to establish that in order to reflect unintended harm to society, a price must also reflect unintended harm to the environment.
23.
The conclusion follows logically if █████ ███ ██ ███ █████████ ██ ████████
a
Whatever constitutes unintended ████ ██ ███ ███████████ ████ ███████████ ██████████ ████ ██ ████████
If unintended harm to environment is part of unintended harm to society, then if a price reflects unintended harm to society, it must also reflect unintended harm to the environment. (Think about “harm to environment” as a subset completely contained within a larger set of “harm to society.”)
b
A resource's externalities ███ ██████ █████ ████ ███████ ██ ███████ ███ █████ ██ ████ █████████
Externalities are defined as unintended but harmful consequences to society. But we don’t know whether harm to the environment is part of harm to society. So (B) doesn’t make the argument valid; we’d still have no way of knowing whether sound management requires that a price reflect harm to the environment.
c
When setting a ██████████ ██████ ██ ██ ████████ ██ ████████ ██████████ ███ ██████████ ███ ██ ███ ███████ ██ █████ ████ █████████
Whether it’s possible to accurately and completely predict the effects of using a resource when setting a price tells us nothing about whether harm to the environment is part of harm to society. Without a connection between environmental harm and societal harm, we have no way of knowing whether sound management requires that a price reflect harm to the environment.
d
If a resource ██ ███████ ████████ ████ ███ █████████████ ███ █████████ █████████
(D) establishes that sound management requires that externalities are precisely assessed. But does having a price reflect externalities imply having a price that reflects harm to the environment? We don’t know.
e
The price of █ █████ ████████ ██ ████ ███ ██ ███████ ███████ ████████ ██ █ ████████ █████ ███████ ██ ███ ███
Whether a resource should be used is separate from what’s required for sound management of a resource. In addition, (E) tells us nothing about the relationship between harm to the environment and harm to society.