Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i) unexpected discoveries of new reserves; (ii) new technologies that reduce extraction costs.
A. i and ii
B. i but not ii
C. ii but not i
D. neither i nor ii
Answer: A
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The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer’s true cost of living, because it doesn’t take into account that the person can substitute between goods according to changes in their relative prices.
a. stabilize b. understate c. overstate d. reduce
Which of the following statements is true?
A) Network effects arise because of economies of scale. B) Economies of scale arise because of network effects. C) Economies of scale act as barriers to entry into a market. D) Network effects provide incentives to new sellers to enter the market.
Under a floating exchange rate system with mobile international capital, it is always true that current account
A. deficit + capital account surplus = trade deficit. B. surplus ? capital account surplus = trade deficit. C. surplus + capital account deficit = 0. D. surplus ? capital account surplus = 0.
In the ___________, total production keeps growing, but by smaller and smaller amounts.
Fill in the blank(s) with the appropriate word(s).