Suppose an exhaustible resource can be sold only this period or in the next period. The marginal cost of extraction is constant and equal to $5. The current year price of the resource is $55, respectively. The interest rate is 10%. What is the minimum next year price required to make the sale of the resource profitable next year?
A) $55
B) $60
C) $65
D) $75
B
You might also like to view...
If the price of chicken rises from $1.25 per pound to $1.75 per pound, and the quantity demanded goes from 250 pounds per day to 175 pounds per day, this illustrates
A. the law of diminishing returns. B. the law of supply. C. the law of demand. D. the law of supply and demand.
A leveraged buyout is
A) a form of short-term lending to finance companies when they buy a company. B) the acquisition of a company financed by debt. C) the sale of commercial paper to finance purchases of bundles of securitized non-traded loans. D) borrowing by finance companies to make loans.
A likely way to increase the productivity of workers engaged in research and development is to ________
A) increase the size of the labor force B) increase the number of workers engaged in research and development C) invest more in the education of scientists D) increase the national saving rate
The market demand curve in perfect competition is found by
A) horizontally summing the supply curves of the individual firms in the industry. B) horizontally summing the demand curves of the individual consumers. C) utility maximizing behavior of the "representative consumer." D) the interaction of supply and demand at the individual firm and consumer levels.