A profit-maximizing company should extract a nonrenewable resource in the present up to the quantity where the

Question

Quizplus · Accepted Answer

The correct choice is A because in the context of nonrenewable resource extraction, a profit-maximizing company should continue to extract the resource until the point where the selling price of the resource equals the sum of the extraction cost and the user cost. The user cost represents the opportunity cost of extracting the resource now rather than in the future, taking into account factors like potential price increases or resource depletion. This ensures that the company maximizes its profit while efficiently allocating the resource over time.

A Profit-Maximizing Company Should Extract a Nonrenewable Resource in the Present