A "backstop resource" is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost.Shale oil is a backstop resource for crude oil.Which of the following statements is correct?
A)The production of shale oil is likely to increase over time even if crude oil is still available.
B)Shale oil is unlikely to be produced until all the crude oil has been depleted.
C)The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil.
D)In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.

Question

Quizplus · Accepted Answer

The statement "The production of shale oil is likely to increase over time even if crude oil is still available" is correct because as the cost of crude oil production increases, shale oil becomes a more economically viable alternative, leading to increased production.

A "Backstop Resource" Is a Close Substitute for a Depletable