A "Backstop Resource" Is a Close Substitute for a Depletable

question 167

Multiple Choice

A "backstop resource" is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost.Shale oil is a backstop resource for crude oil.Which of the following statements is correct?

• A)The production of shale oil is likely to increase over time even if crude oil is still available.
• B)Shale oil is unlikely to be produced until all the crude oil has been depleted.
• C)The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil.
• D)In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.

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Definitions:

Performance Evaluation

The formal assessment process of an employee's job performance, typically conducted through reviews and meetings.

Actual Costing System

A costing method that assigns costs to products based on the actual costs of direct materials, direct labor, and overhead incurred.

Direct Material Price Variance

Direct material price variance measures the difference between the actual cost of direct materials and the expected (or standard) cost, indicating how well a company manages its material costs.

Actual Price

The real or transacted price of a good, service, or asset, usually the amount of money exchanged in the sale.