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 extraction of a nonrenewable resource increases, the supply curve shifts up because:

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 extraction of a nonrenewable resource increases, the supply curve shifts up because:

Quizplus · Accepted Answer

As extraction of a nonrenewable resource increases, the supply curve shifts up because the marginal cost of extracting any given amount increases. This is because as more of the resource is extracted, it becomes harder and more expensive to extract the remaining amount. Therefore, suppliers will require a higher price to justify the increased cost of extraction, resulting in a higher supply curve. Choices A, B, D, and E are not accurate explanations for why the supply curve shifts up in this case.

The Figure Given Below Represents an Imperfectly Competitive Resource Market