The price of an exhaustible resource sold in a perfectly competitive market in which technology and consumer preferences do not change over time will tend to
A)stay constant over time.
B)always equal the price of the closest substitute for that resource.
C)fall over time.
D)rise over time.

Question

Quizplus · Accepted Answer

In a perfectly competitive market for an exhaustible resource, where technology and consumer preferences remain constant, the price of the resource tends to rise over time. This is because as the resource becomes scarcer, its marginal extraction cost increases, leading to higher prices to balance supply and demand.

The Price of an Exhaustible Resource Sold in a Perfectly