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 rise and
A) increase exploration and encourage more effective recovery methods, resulting in additional new supplies of titanium.
B) encourage consumers and manufacturers to conserve titanium.
C) increase the incentive to find and use substitutes for titanium.
D) All of the above.

Question

Quizplus · Accepted Answer

If the market price of titanium is unregulated and the demand for it continues to rise while the proved reserves are reduced, then the price of titanium will rise. This increase in price will result in three outcomes: first, it will encourage exploration and more effective recovery methods, leading to additional new supplies of titanium. Second, it will encourage consumers and manufacturers to conserve titanium. Lastly, it will increase the incentive to find and use substitutes for titanium. Therefore, all three options will happen if the market price is unregulated.

Suppose That New Demands Greatly Reduce the Proved Reserves of Titanium