When the Social Costs of Using a Resource Exceed the Private

question 38

Multiple Choice

When the social costs of using a resource exceed the private costs

• A) that resource is underutilized.
• B) use of that resource becomes unprofitable.
• C) the price of that resource is bid up.
• D) an external diseconomy exists.
• E) there is a shift in the production possibilities curve.

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Definitions:

Unidentified Principal

A scenario in contract law where the identity of the principal is unknown to the third party at the time of agreement.

Actual Authority

The express or implied legal power given to an agent by a principal to undertake specific actions on the principal's behalf.

Uniform Durable Power

A legal document that grants another individual the authority to manage one’s financial and legal affairs even if the grantor becomes incapacitated.

Third Restatement

Refers to updates or revisions of fundamental legal principles in areas such as Torts, Contracts, Agency, Trusts, and Foreign Relations, established by the American Law Institute.