Asked by Landon Busse on Jun 04, 2024
Verified
The user cost of extracting a nonrenewable resource is:
A) the sum of the dollar expenditures incurred to extract the resource.
B) the cost of not being able to extract it in the future if it is extracted and sold in the present.
C) the selling price of the resource to the companies using it to produce goods and services.
D) directly proportional to how much of the nonrenewable resource remains.
User Cost
The cost associated with the use of a product or service, including depreciation, maintenance, and opportunity cost of using the asset over time.
Extracting
The process of removing a resource from the earth, often relating to natural resources like minerals, oil, or gas.
- Define and understand the significance of user cost in natural resource economics.
Verified Answer
VG
Veronica GurrolaJun 05, 2024
Final Answer :
B
Explanation :
The user cost of extracting a nonrenewable resource is the cost of not being able to extract it in the future if it is extracted and sold in the present. This is because once the nonrenewable resource is extracted, it is no longer available for future use, which can lead to scarcity and higher prices in the future. The user cost takes this into account when determining the overall cost of extracting the resource.
Learning Objectives
- Define and understand the significance of user cost in natural resource economics.