Mineral Resources Scarcity: Impact on Material Good Prices Explained

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In summary, the scarcity of minerals does not significantly impact the price of material goods because investment capital is readily available and resource supplies are considered to be infinite. Additionally, the mining industry is highly competitive and poorly regulated, and raw materials make up a small portion of consumer good prices. This means that despite fluctuations in consumer demand, prices for goods using minerals remain stable. However, this does not apply to products that rely on petroleum, as its scarcity does lead to an increase in prices.
  • #1
Soaring Crane
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Scarcity of minerals does NOT raise the price of material goods much because

A. investment capital is usually abundantly available
B. all resource supplies are theoretically infinite
C. the mining industry is fiercely competitive and poorly regulated
D. raw materials typically account for only a small fraction of consumer good prices
E. none of the above

I don't quite understand A, and I think D is wrong (we need cobalt and other metals for cars and other things consumers purchase), along with B. So I'm left with C or E. Is my reasoning incorrect so far? What's the right answer?

Thanks.
 
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  • #2
Because minerals {held in futures} are judged by by a long-term demand forecast, its a fairly stable market. They know how much of the minerals are available. Knowing where they're mined and how much the mine is producing is the key to the stable market. Despite normal consumer demands prices don't change much.
answer D
 
  • #3
Obviously, that doesn't include petroleum. I would go so far as to say that all products that use it, their prices go up.
 

1. What are mineral resources?

Mineral resources are naturally occurring substances found in the earth's crust that have economic value. They can be extracted and processed to meet various human needs, such as for building materials, energy production, and manufacturing of products.

2. How are mineral resources formed?

Mineral resources are formed through various geological processes, such as cooling and solidification of molten rock, precipitation from hot fluids, and deposition of sedimentary materials. These processes can take millions of years to occur.

3. What are the different types of mineral resources?

There are three main types of mineral resources: metallic minerals, non-metallic minerals, and fossil fuels. Metallic minerals include gold, silver, copper, and iron. Non-metallic minerals include salt, phosphate, and diamonds. Fossil fuels include coal, oil, and natural gas.

4. How are mineral resources extracted?

Mineral resources can be extracted through various methods, depending on their depth, location, and type. Common methods include surface mining, where the mineral is extracted from the surface of the earth, and underground mining, where tunnels are dug to reach the mineral deposits.

5. What are the environmental impacts of mining mineral resources?

Mining mineral resources can have significant impacts on the environment, such as habitat destruction, pollution of air and water, and disturbance of ecosystems. Proper planning and implementation of mining operations can help minimize these impacts, but they must be carefully managed to protect the environment.

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