If the increase income from sale of a nonrenewable resource in the current period is greater than the present value of income sale of the resource in the next period, the owner should:
A)sell all of the resource now.
B)wait to see what will happen in the future.
C)sell all of the resource in the next period.
D)sell some of the resource now and some in the next period.

Question

Quizplus · Accepted Answer

When the increase in income from the sale of a nonrenewable resource in the current period is greater than the present value of income from the sale of the resource in the next period, it means the resource is more valuable now than it will be in the future. Therefore, the owner should sell all of the resource now to maximize their profit. Waiting for the future may lead to a decrease in the value of the resource due to market fluctuations or depletion of the resource. Selling some of the resource now and some in the next period may lead to losses if the value of the resource decreases in the future. Thus, the best option is to sell all of the resource now.

If the Increase Income from Sale of a Nonrenewable Resource