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 Introduction to Resource
  • Renewable resource (e.g. Water): Supply is perfectly inelastic (vertical) & price is determined by demand.
     
  • Non-renewable resource (e.g. oil): Supply is perfectly elastic (horizontal), quantity supplied is determined by demand, & current price is the present value of the expected price of next period.

Sample Question

Ques:

 

The supply of a non-renewable resource is:

      Perfectly inelastic

      Perfectly elastic

      The known stock
 

Ans:

Perfectly elastic
 





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