Explain about non-renewable resources, Microeconomics

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How the above would apply to non-renewable resources such as oil.

This has general applicability to any competitive market. The issue here is that potential supply has a finite limit and that ever-lower reserves of oil mean scarcity higher price → incentive for suppliers to find additional reserves. It also means that the rationing function will kick in; higher price→ consumers will reduce quantity demanded and look for substitutes.

 


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