Question

The cost of natural resources includes which of the following?

1) Employee salaries during production
2) Acquisition cost for the use of land
3) Restoration costs at the end of extraction
4) Exploration costs before production begins
5) Extractive and drilling equipment

Answer 1

The cost of natural resources includes acquisition cost for the land use, restoration costs after extraction, and exploration costs before production. Employee salaries during production and extractive equipment are related to labor and capital costs respectively, rather than the natural resources themselves. Option 2 is correct answer.

Step-by-step explanation:

Cost of Natural Resources

The cost of natural resources comprises various elements that reflect the total amount of money spent in the acquisition, production, and restoration of these resources. Some of these costs include:

1. Employee salaries during production: This reflects the cost associated with labor, which is one of the main factors of production alongside land (or natural resources) and capital.
2. Acquisition cost for the use of land: This cost is directly attributed to the land factor of production, as it involves payments for using the land from which natural resources are extracted.
3. Restoration costs at the end of extraction: This refers to environmental and social responsibilities, such as returning the land to its original condition after extraction operations are completed, as required by policies such as those in Colorado.
4. Exploration costs before production begins: These are upfront costs associated with finding and assessing the potential of natural resource deposits before actual production can begin. This is part of the investment in capital that businesses make in order to utilize these resources.
5. Extractive and drilling equipment: The purchase or lease of equipment for extraction, like drills, also falls under the capital cost category since they are essential assets needed to access natural resources.

In conclusion, the cost of natural resources inherently includes not just the acquisition and operational costs but also the capital investment in equipment and the restoration costs post-extraction.

The correct options that include the cost of natural resources are: 2) Acquisition cost for the use of land, 3) Restoration costs at the end of extraction, and 4) Exploration costs before production begins.