Explain in a paragraph why the quantity demanded for non-renewable resources will be zero when the supply runs out.
What will be an ideal response?
The owner of the resources must decide whether to sell now or wait until later. The expected future price increases as the stock decreases; as the stock approaches zero, so must the quantity demanded, and the price adjusts upward to clear the market.
You might also like to view...
Long-run equilibrium under monopolistic competition and perfect competition is similar in that
A) price equals marginal revenue. B) price equals marginal cost. C) firms produce at the minimum point of their average cost curves. D) firms break even.
If you transfer all of your currency to your checking account, then initially, M1 will ________ and M2 will ________
A) not change; not change B) decrease; increase C) increase; not change D) not change; increase
The costs borne by an individual victim of theft can diverge from the social costs if the
A. stolen items were destroyed by the thief. B. stolen items were priceless. C. stolen items were recovered for the victim by the police. D. all of the options are correct.
Each of the following could be used to fight inflation, EXCEPT
A. decreasing government spending. B. raising taxes. C. budget surpluses. D. budget deficits.