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

-If coal is extracted in an unsustainable manner in the current period, the price for steel is likely to increase in future.

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
 
-If coal is extracted in an unsustainable manner in the current period, the price for steel is likely to increase in future.

Quizplus · Accepted Answer

The figure shows an upward-sloping resource supply curve, which suggests that if the resource (coal) is extracted in an unsustainable manner (i.e. at a rate faster than its natural replenishment rate), then its supply will decrease over time, leading to a higher price for steel in the future (assuming the demand for steel remains constant).

The Figure Given Below Represents an Imperfectly Competitive Resource Market