Nature and types of resource, Microeconomics

Nature and Types of Resource

From the economists' point of view, natural resources are most conveniently viewed as stocks of capital, which provide potential flows of services. How to make optimal use of the stocks over time? Time is a crucial dimension that helps us distinguish between different types of resources. A renewable resource is one that can regenerate itself and hence can supply productive inputs to an economic system indefinitely. Exhaustible resources on the other hand is the one with finite stock; once used up, the stock is gone. For example, coal is exhaustible because it takes millions of years for its formation. Even for the renewable resource, depending on the rate at which it is harvested over time, the stock size changes.

Obviously, natural resources share the two special characteristics of capital stock. First one is 'durability', which implies that past decisions and present opportunities available are linked, i.e., past decision affects current stock and present consumption affects future stock. Hence, the economic agent is confronted with inter-temporal decisions.

Second one is 'sluggishness', which means that capital stock cannot be adjusted instantly without incurring some adjustment costs. Since the population of natural organism exhibits rates of increase limited by their intrinsic population biology, there are adjustment costs of reduction in stock. For instance, some stocks, which are clustered and easily harvested, may be reduced with virtually no increase in costs; but for other resources as stocks thin out, it is increasingly expensive to harvest the remaining units so that the adjustment costs of reduction in stock is increasing.

Posted Date: 12/18/2012 1:04:53 AM | Location : United States







Related Discussions:- Nature and types of resource, Assignment Help, Ask Question on Nature and types of resource, Get Answer, Expert's Help, Nature and types of resource Discussions

Write discussion on Nature and types of resource
Your posts are moderated
Related Questions
Explain what the natural rate of unemployment is. It is necessary here to include a solid explanation based on economic concepts. The natural rate of unemployment is the rate o

How are consequences of economists used? Economists generally use efficiency, information, equilibrium and incentive compatibility like focal points, and examine the consequenc

Problem 1: Any development strategy should put people first; indeed, its very effectiveness should be measured in terms of how it impacts the poor. (a) Describe the link bet

How to use Demand and Supply tools to analyze the case of the Egyptian labor market?

Selective in Exports: There are many industries where India has an advantage because of relatively lower costs of all forms of manpower whether it is professional or factory l

Modern economy: It explored the role of money in every modern economy.The chapter also revealed that it is necessary for the government to ensure consistency between the quant

Illustrates the key terms of excise tax? Terms of excise tax: a. Tax incidence • Who bears the load of the tax? b. Excess burden or Deadweight loss • Taxes inflict

The goal is to replicate a real life product development and familiarize students with the invent process of a system, component, or process to meet desired wants within realistic

Define the returns to scale in production technology. Returns to scale in production technology: Assume that we are using some vector of inputs x to generate some output y a

what is the theory of second best? prove the theorem with the help of a diagram.