Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

A. The market price of the resource rises.
B. Weak property rights create fears that firms will not be allowed to extract in the future.
C. An increase in market interest rates.
D. New information suggests that the demand for the resource will be greater in the future.


Answer: B

Economics

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