Many people have predicted that the price of natural resources should rise consi

Question

Many people have predicted that the price of natural resources should rise consistently over time in comparison to the price of other goods because the demand curve is rising while the supply curve must be shifting inwards as natural resources are used up. However, the relative prices of most natural resources have not been increasing. Choose the graph showing the demand and supply for natural resources that can explain why prices haven't risen, even though demand has increased. O A. . S1 D2 D1 D1 01 2 Quantity of natural resource 01 Quantity of natural resouroa Quantity of natural resource

Explanation / Answer

Option C

Explanation: Option C shows a rightward shift in both the demand and supply curves to make the price remain constant. The demand for natural resources has increased and at the same time, its availability has also increased due to more advanced technology and higher exploration. So, a similar increase in demand and supply has kept the price unchanged.

The graph A shows an increase in price and graph B shows a decrease in price. So, graph A and B are not applicable here. The right answer is C.

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