Recall the model of nonrenewable resources presented in the figure below. Suppos
ID: 1211760 • Letter: R
Question
Recall the model of nonrenewable resources presented in the figure below. Suppose that a technological breakthrough means that extraction costs will fall in the future (but not in the present). A reduction in future extraction costs will increase future profits, the user cost for present extraction, and current extraction. increase future profits and the user cost for present extraction and decrease current extraction. decrease future profits and the user cost for present extraction and decrease current extraction. decrease future profits, the user cost for present extraction, and current extraction. Suppose future extraction costs remain unchanged but current extraction costs fall. In this situation, it is unprofitable to extract in the present or the future. it is less profitable to extract in the future, and future extraction will decrease. it is more profitable to extract in the present, and current extraction will increase. it is more profitable not to extract in the present, and current extraction will decrease. A firm trying to maximize their stream of profits over time will extract more now if extraction is more profitable and extract more later if the profitability of future extraction improves. at a decreasing rate as the resource is depleted. at an increasing rate to take advantage of rising prices. at a continuous rate to ensure there is product to sell.Explanation / Answer
1. Increase in future profits, and the user cost for present extraction and decrese current extrcation
2. It is more profitable to extract in present and current extraction will increase
3. at an increasing rate so as to take advantage of rising prices
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