Suppose an individual discovers the mouth of a previously unknown cave (expected to contain a single large diamond) on his property that extends under land owned by others.To arrive at an economically efficient outcome with low transaction cost, the law will:
A)award the diamond to the person who locates the diamond first.
B)award the diamond and cave to the person whose land it opens into.
C)award the diamond to the owner of the land above it.
D)award the diamond to each of the owners under whose land the cave passes.

Question

Quizplus · Accepted Answer

The law typically awards the rights to subsurface minerals (like diamonds) to the owner of the surface land where the entry point (in this case, the cave's mouth) is located. This approach minimizes transaction costs by avoiding the need to negotiate with multiple landowners.

Suppose an Individual Discovers the Mouth of a Previously Unknown