The Optimal Extraction Level in the Present for a Nonrenewable

question 252

Multiple Choice

The optimal extraction level in the present for a nonrenewable resource is

• A) zero.
• B) where the market price of the resource equals the extraction cost of the last unit.
• C) where the market price of the resource equals the extraction cost of the last unit plus the user cost of the last unit.
• D) where the extraction cost of the last unit equals the user cost of the last unit.

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Definitions:

Units Bought

Refers to the quantity of a particular good or service purchased by consumers or businesses.

Tax Imposed

A financial charge or other levy placed upon an individual or a legal entity by a state or a functional equivalent of a state.

Consumer Surplus

The difference between the amount consumers are willing to pay for a good or service versus what they actually pay.

Tax Imposed

A financial charge or other levy placed upon an individual or a legal entity by a governmental organization.