When a resource is scarce relative to the amount that will be demanded over time

Question

When a resource is scarce relative to the amount that will be demanded over time, economic efficiency



1. requires that equal amounts of the commodity will be produced and consumed in each time period.

2. says that the marginal user cost will rise at the rate of interest over time.

3. says that the marginal user cost remains constant over time.

4. requires that less of the commodity is produced in each time period than would be produced using the static equilibrium model.

5. suggests that the price of the commodity will remain constant over time.

Explanation / Answer

In this case, when a resource is scarce relative to the amount that will be demanded over time, economic efficiency requires that less of the commodity is produced in each time period than would be produced using the static equilibrium model. Hope this helps

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