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In 2011, National Public Radio ran a story about the market for gold. It reported: The price of gold in the international market is steadily rising: more than fivefold in the past decade alone. It's currently selling for about $1,500 an ounce, paving the way for a new gold rush. Ten old mines have reopened in remote mountain and desert areas of the American West over the past decade.
a. The new gold rush is not just in the United States. It is also in Australia, Africa, Asia, and elsewhere. If old gold mines still have gold in them, why weren't they being operated before the increase in the price of gold?
b. Assuming the increased demand for gold continues, in the long run, what will the entry of new firms into gold mining do to the price of gold and the economic profits from gold mining?
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