When a person does NOT have to pay the full costs for using a scarce resource, then
A) the use of the resource is not affected since society pays for the resource.
B) more of the resource will be used.
C) the internal costs of using the resource are too high.
D) the social costs of the resource are less than they would be if the "correct" amount of the resource were being used.
Answer: B
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The decision about how much money to hold is an application of the:
A. principle of increasing opportunity cost. B. cost-benefit principle. C. principle of comparative advantage. D. scarcity principle.
When the market fails to promote the efficient use of resources by producing either more or less than the optimal output level, government involvement can improve outcomes when _____.
a. the market equilibrium does not result in the equal distribution of the output b. there are externalities in production and/or consumption that are not captured by the parties involved in the transaction c. firms have undue market power d. there are barriers to entry that limit competition e. asymmetric information characterizes the transaction