A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. How would an economist respond to this report?
A) An economist would agree with the report, and would point to rising natural resource prices as evidence.
B) An economist would agree with the report, but wouldn't think it was important because emerging markets are likely to discover additional natural resources.
C) An economist would disagree with the report, in part because it ignores the mitigating effects of technological change.
D) An economist would disagree with the report because labour and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.

Question

Quizplus · Accepted Answer

An economist would likely disagree with the report because it ignores the potential for technological advances to mitigate the effects of natural resource depletion. Technological advances can lead to more efficient use of resources or the development of alternative sources. Additionally, labor and capital are important determinants of economic growth, and there is potential for these factors to drive growth even in the face of natural resource constraints. Emerging markets may also discover new natural resources, but this is not a guaranteed solution to the problem. Rising natural resource prices may be evidence of the depletion of resources, but it is not a definitive indicator of a resource deficit leading to the end of economic growth.

A Leading Environmental Group Recently Published a Report Contending That