The oil industry is an increasing cost industry because:

Question

Quizplus · Accepted Answer

As oil reserves are depleted, firms must resort to more expensive and complex methods to extract oil from less accessible locations, such as deep-sea drilling or fracking. As a result, the cost of producing oil increases over time, making the industry an increasing cost industry. However, choices B and C are not correct; the demand for oil can be influenced by price changes, and while oil may be a necessity, it's not the only product that fits that description.

The Oil Industry Is an Increasing Cost Industry Because