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

-As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future, and how much to extract, an equilibrium arises when:

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
 
-As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future, and how much to extract, an equilibrium arises when:

Quizplus · Accepted Answer

In an imperfectly competitive resource market, suppliers need to calculate whether to extract now or in future and how much to extract. An equilibrium arises when the rate of return for the exhaustible resource equals the rate of interest on alternative uses of the funds, as at this point, suppliers are indifferent between investing in the resource or in alternative investments. Thus, choice B is the best answer. Choices A, C, D, and E do not accurately reflect the equilibrium condition in an imperfectly competitive resource market.

The Figure Given Below Represents an Imperfectly Competitive Resource Market