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nlexa [21]
3 years ago
13

Rare earth metals are used to manufacture some important electronic components in popular products like cell phones. These metal

s are not really rare, but they are expensive to extract from the ground. What happens to the market for the rare earth metals if these extraction costs increase?
Business
1 answer:
Talja [164]3 years ago
8 0

Answer:

This is a situation of derived demand. The demand for electronics is derived from that of rare earth metals.

So if the price of extraction of rare earth metals increases, supply will not meet demand, prices of rare earth metals will go up.

Since demand for electronics is derived from that of rare earth metals, the price of electronics will go up to accommodate the price change of the rare earth metals.

Explanation:

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Profit-maximizing level

In economics, profit maximizing level of output means where its marginal cost (MC) just equals the product price and where marginal cost is increasing; that is, the MC curve is sloping upward.

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