What is 'Backstop resources theory' in Economics?

This theory states that as the demand for a resource that is in limited supply increases, it will kick in a process that results in the exploitation of other alternative resources to meet human needs. For instance, as the demand for oil increases even as its available supply decreases, this will cause the price of oil to shoot up and push businesses to look for alternative sources of energy. The theory implies that humans need not worry about running out of resources as prices will always provide an incentive to tap into alternative resources and develop technology for efficient use of these resources.

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Printable version | Jun 2, 2020 11:36:15 AM |

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