The Spread Between Price and Marginal Cost of an Exhaustible

question 72

Multiple Choice

The spread between price and marginal cost of an exhaustible resource must grow by the rate of interest so that

• A) resource owners earn a profit.
• B) resource owners are willing to sell some of the resource in the future.
• C) the price of the resource remains constant in real terms.
• D) the marginal cost of extracting the resource declines.