If a Non-Renewable Resource Is Scarce,has Constant Marginal Cost of Production

question 19

Multiple Choice

If a non-renewable resource is scarce,has constant marginal cost of production and is sold in a competitive market,

• A) its price will increase over time.
• B) its price will exceed marginal cost.
• C) its price will increase by the rate of interest.
• D) All of the above.

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Definitions:

Settlement/Discount Rate

The interest rate used in calculating the present value of future cash flows when assessing the value of financial instruments or liabilities.

Actuarial Loss

occurs when the actual experience under a pension plan deviates from expected assumptions, resulting in higher costs than projected.

Pension Expense

The cost recognized by an employer for maintaining a defined benefit pension plan for its employees over a specific period.

Plan Assets

Assets that are held within a pension or retirement plan for the purpose of funding participant benefits.