The Hotelling Principle states that

Question

Quizplus · Accepted Answer

The Hotelling Principle, also known as the "Hotelling's rule," is an economic principle that applies to the use of non-renewable resources, stating that in a competitive market, the price of a scarce resource will increase over time at a rate equal to the interest rate, thus ensuring that extraction and depletion of the resource will occur at an optimal rate. Option B correctly describes this principle. Option A is incorrect as it is not related to the Hotelling Principle. Option C is partially true as the resource will be depleted, however, it is not the explanation of the Hotelling Principle. Option D and E are not related to the Hotelling Principle.

The Hotelling Principle States That