Suppose That New Demands Greatly Reduce the Proved Reserves of Titanium

question 628

Multiple Choice

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will rise and

• A) increase exploration and encourage more effective recovery methods, resulting in additional new supplies of titanium.
• B) encourage consumers and manufacturers to conserve titanium.
• C) increase the incentive to find and use substitutes for titanium.
• D) All of the above.

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Definitions:

Marginal Cost

The change in the total expense associated with the production of an extra unit of a product, whether it be an increase or decrease.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, representing the per-unit production cost.

Marginal Cost

The monetary cost of generating one additional unit of a product or service.