The figure given below represents an imperfectly competitive resource market. Here common land (and not land used for specific purpose) is under consideration.Figure 18.1

-What is the most likely consequence when people's preference for current consumption rises in relation to future consumption?

Question

The figure given below represents an imperfectly competitive resource market. Here common land (and not land used for specific purpose) is under consideration.Figure 18.1
 
-What is the most likely consequence when people's preference for current consumption rises in relation to future consumption?

Quizplus · Accepted Answer

When people prefer current consumption over future consumption, it indicates a higher demand for immediate goods and services. This preference leads to an increase in borrowing, which pushes interest rates up due to higher demand for loans. Additionally, the rate of extraction of exhaustible natural resources increases because there is a higher immediate demand for these resources, reflecting the preference for current consumption over saving or conserving for the future.

The Figure Given Below Represents an Imperfectly Competitive Resource Market