If a Nonrenewable Natural Resource's Price Is Expected to Increase

question 99

Multiple Choice

If a nonrenewable natural resource's price is expected to increase at a rate faster than the interest rate,then the

• A) owners will sell all that they can today.
• B) owners will sell nothing today.
• C) consumers will demand nothing today.
• D) owners will sell their entire supply.
• E) current price will probably fall.

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Definitions:

Smoothing

A technique used to remove variability or fluctuations in data or a process, often to reveal underlying trends.

Bullwhip Effect

A phenomenon in supply chain management where small variations in demand at the retail level cause increasingly larger variations in demand at the wholesale, distributor, and manufacturer levels.

Shortage Gaming

Strategic behavior by participants in a supply chain who intentionally reduce their demand forecasts when they anticipate a shortage, in order to receive more stock than they would otherwise.

Demand Information

Data regarding the amount and timing of desired goods or services by the market or specific customers, crucial for supply chain and production planning.