If an exhaustible resource is scarce,has constant marginal cost over time,and is sold in a competitive market,then
A) its price increases over time.
B) its price will not be a function of the interest rate.
C) its price moves independently of past prices.
D) its price equals marginal cost.

Question

Quizplus · Accepted Answer

Since the exhaustible resource is scarce and has constant marginal cost over time, the supply of the resource will decrease over time, which leads to an increase in price due to its scarcity. In a competitive market, the price will be determined by the intersection of supply and demand, and as supply decreases, the price will increase.

If an Exhaustible Resource Is Scarce,has Constant Marginal Cost Over