Refer to the data. Suppose that a new government regulation is going to shut down OZ's mining operation one year from now. Assuming that all gold extracted is sold in the same year (cannot be stockpiled for later sale), how will the regulation affect the user cost?
The table below shows the quantity of gold bars (Q b ) in thousands, the extraction cost for each thousand bars (in millions of dollars), and the user cost of each thousand bars (in millions of dollars) facing the OZ Mining Company this year.
A. It will have no effect on the user cost.
B. The effect on the user cost cannot be determined.
C. The user cost will rise because the rate of extraction will rise.
D. The user cost will become zero because they will not be able to extract in the future.
D. The user cost will become zero because they will not be able to extract in the future.
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