Economic theory indicates that the economy is better off not to produce proved reserves of a mineral "too quickly." By this, we mean that we
A) prefer some bad luck in exploration efforts, rather than too much good luck in finding the resources.
B) do not want the resource to be too abundantly available since this would reduce its price and GDP.
C) want to use other nations' resources first, even if doing so is more costly.
D) do not want to use additional resources for exploration if the present discounted value of the benefits is smaller than the cost.

Question

Quizplus · Accepted Answer

Economic theory suggests that it is not efficient to produce proved reserves too quickly if the present discounted value of the benefits is smaller than the cost. This means that it is not economically feasible to extract resources if the cost of extraction exceeds the present discounted value of the benefits. Therefore, it is better to wait until the cost of extraction becomes lower or until the benefits become higher. This ensures that resources are not wasted and that the economy is better off in the long run.

Economic Theory Indicates That the Economy Is Better Off Not