Over the Long Term, the Ultimate Determinant of the Price

question 71

Multiple Choice

Over the long term, the ultimate determinant of the price of a depletable resource is the:

• A) extraction cost.
• B) user cost.
• C) demand.
• D) availability of substitutes.
• E) cost of finding new reserves.

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Definitions:

Law of Demand

The economic principle stating that as the price of a good decreases, consumer demand for that good will increase, and vice versa, holding everything else constant.

Quantity Demanded

The amount of a good consumers are willing and able to buy per period at a particular price, as reflected by a point on a demand curve.

Real Income

Income measured in terms of the goods and services it can buy; real income changes when the price changes.

Law of Demand

A principle stating that, all else being equal, as the price of a good or service decreases, consumer demand for it will increase, and vice versa.