If Proved Reserves of a Mineral Amount to Twelve Years

question 186

Multiple Choice

If proved reserves of a mineral amount to twelve years of use at the current rate of consumption,

• A) it is likely, though not certain, that we will run out of that mineral in about twelve years.
• B) we are likely to run out of the mineral in less than twelve years if our rate of use has been increasing.
• C) if the good becomes more scarce relative to supply in the future, its price will rise and thereby encourage both conservation and exploration.
• D) if proved reserves diminish, lower prices will extend the day of exhaustion well into the future.

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Definitions:

Fixed

Typically refers to costs or assets that do not vary with the level of production or sales in the short term.