Theory of nonrenewable resource allocation over time

Assignment Help Business Economics

Reference no: EM13898631

1. Suppose you have an offer of $200,000 to sell your house this year. The market rate of interest is 10%. You expect to be able to sell your house next year for $230,000.

How does this relate to the theory of nonrenewable resource allocation over time?

a. It does not relate because the housing market is not natural

b. To make a selling decision we take into account the discounted present value and the expected selling price

c. Because houses are set in land it is expected that they behave like a natural resource

d. Houses can be renewed so this example does not relate

2. Suppose you have an offer of $200,000 to sell your house this year. The market rate of interest is 10%. You expect to be able to sell your house next year for $230,000.

In particular, what does it tell you about how prices must behave in a market for nonrenewable resource?

a. Prices in the market for nonrenewable resources follow hotelling's rule, meaning prices should rise at the rate of interest

b. As stated in the previous question, these examples are not related

c. We should preserve natural resources at all cost

d. We should use the nonrenewable resources since we will leave more capital goods for future generations.

Reference no: EM13898631

Questions Cloud

Services are illegally sold or legally sold : Many goods and services are illegally sold or legally sold but not reported to the government. How would increased efforts to count those goods and services affect our calculation of GDP?

Price level causes decrease in real gross domestic product : The ______________ effect helps explain why an increase in the price level causes a decrease in real gross domestic product.

Real gdp will decrease when the price level falls : In the short run, real GDP will decrease when the price level falls due to:

What are the variable costs that taco bell faces : What are the variable costs that Taco Bell faces? Consider the changes that the leadership in this article is seeking to make. What do you predict will be the effects on Taco Bell’s profits relative to its competitors if they are successful ahead of ..

Theory of nonrenewable resource allocation over time : Suppose you have an offer of $200,000 to sell your house this year. The market rate of interest is 10%. You expect to be able to sell your house next year for $230,000. How does this relate to the theory of nonrenewable resource allocation over time?..

Decided to increase oil production-aggregate supply curve : Suppose OPEC members met and decided to increase their oil production (and thus lower prices) for six months. This change will cause many firms’ input prices in the U.S. to __________. This change in input prices will cause a _____________ aggregate ..

Cause higher price level in the long run : Which of the following scenarios will cause a higher price level in the long run?

Efficiency of monopolistic and perfectly competitive markets : Compare the efficiency of monopolistic and perfectly competitive markets. Discuss the economic factors that lead to the development of monopolies. Examples of monopolies include electric utilities, railroads, airlines, cable television, and sports le..

What are the characteristics of perfect competition : What are the characteristics of perfect competition? Why does this type of fast-food restaurant tend to display characteristics of perfect competition? Why might firms in perfect competition choose to be open on Monday, typically the slowest day of t..

User Account

All Pages