A “backstop resource” is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost. Shale oil is a backstop resource for crude oil. Which of the following statements is correct?
A. The production of shale oil is likely to increase over time even if crude oil is still available.
B. Shale oil is unlikely to be produced until all the crude oil has been depleted.
C. The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil.
D. In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.
Answer: A
You might also like to view...
Which of the following would be a macroeconomic question?
A) How has the price of gold increased over time? B) How has the number of commercial airline flights decreased over time? C) How have the retirement benefits in the auto industry changed over time? D) How has inflation increased over time?
Real GDP per person is slowly converging around the world
Indicate whether the statement is true or false