Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will
A) rise sharply, calling forth added exploration and more effective (and more costly) recovery methods, resulting in additional new supplies of titanium.
B) rise sharply, calling forth new ways for manufacturers to conserve titanium and to find substitutes for it.
C) over time, bring the quantity supplied of titanium into balance with the quantity demanded.
D) do all of the above.

Question

Quizplus · Accepted Answer

When the proved reserves of titanium decrease, the price will rise sharply, leading to increased exploration and recovery efforts, conservation, and substitution, eventually balancing supply and demand.

Suppose That New Demands Greatly Reduce the Proved Reserves of Titanium