Early Settlers in the Town of Dry Gulch Drilled Wells

Multiple Choice

Early settlers in the town of Dry Gulch drilled wells to pump as much water as they wanted from the single aquifer beneath the town. (An aquifer is an underground body of water.) As more people settled in Dry Gulch, the aquifer level fell and new wells had to be drilled deeper at higher cost. The residents of Dry Gulch will overuse water relative to the social optimum because ________.

A) each resident will fail to adequately consider the external cost of his or her own water use
B) water is a scarce resource
C) each resident will fail to adequately consider the external benefit of his or her own water use
D) the marginal cost of water is increasing