The invention of machinery that can double the amount of gold extracted from raw ore will likely lead mining companies to
A)raise the world price of gold to pay for the new machinery.
B)lower the world price of gold because any amount can now be produced more cheaply.
C)raise the world price of gold because miners' wages must double as their productivity doubles.
D)lower the world price of gold only if new mining companies are not allowed to enter the industry.

Question

Quizplus · Accepted Answer

With the invention of the machinery, mining companies will be able to produce more gold at a lower cost than they could previously. This increase in supply will likely lead to a decrease in the world price of gold as more gold enters the market. Additionally, there is no reason to assume that miners' wages will have to double as their productivity doubles, so choice C can be eliminated. Choices A and D do not accurately reflect the likely impact of the new machinery on the gold market.

The Invention of Machinery That Can Double the Amount of Gold