Economic Theory Predicted That the Price of a Depletable Resource

question 135

Multiple Choice

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

• A)Known reserves of the resource were depleted.
• B)The interest rate rose by 15 percent.
• C)Antitrust enforcement broke up a cartel among major suppliers of the resource.
• D)The government imposed an effective price floor.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning one person's consumption does not reduce availability for others and cannot exclude others from using them.

Private Consumption

Expenditure by households on goods and services, excluding purchases of dwellings, which is a key component in the calculation of a country's Gross Domestic Product (GDP).

Pareto Efficient

An economic condition wherein resources are allocated in such a way that it is impossible to make any one individual better off without making at least one individual worse off.

Public Good

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded.