Nature and types of resource, Microeconomics

Assignment Help:

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.


Related Discussions:- Nature and types of resource

Explain variations in geographic immobility, Wage Differentials: Market str...

Wage Differentials: Market structure alone does not account for all of the differences in wages and employment. Market wage differentials arise from various other sources, includin

Exchange rate system, EXCHANGE RATE SYSTEM: It is interesting to look ...

EXCHANGE RATE SYSTEM: It is interesting to look at a case study of a country like India for several reasons: first it is a small country in terms of imports and exports as a p

How might country achieve living standards growth, Once countries already h...

Once countries already have a high level of production, how might they achieve living standards growth?  Once countries achieve a high level of production, they might be achiev

Need Econ Help, Two firms produce a pollutant called Q. The total costs of...

Two firms produce a pollutant called Q. The total costs of reducing emissions of Q are as follows for Firm 1 and Firm 2, respectively: TC1=10+100Q12 TC2=20 + 50Q22. This means tha

Estimate classical linear regression model, The following model shows the c...

The following model shows the consumption function given: Ct = AD t β 2 Where A and β 2 are unknown constants and D is disposable income. (a) Show how by taking logari

Banks, Banks: A company which accepts deposits and issues new loans. It mak...

Banks: A company which accepts deposits and issues new loans. It makes profit by charging more interest for loans than it pays on deposits, and through several service charges. By

Solve, 1. Suppose that Mr. John has the following Cobb-Douglas utility func...

1. Suppose that Mr. John has the following Cobb-Douglas utility function U = 6X^2/3y^1/3 the market price of X and Y commodity are $1 and $2, respe

What is mixed economy, Mixed Economy: This type of economic system combines...

Mixed Economy: This type of economic system combines the features of both the capitalist and socialist economic systems. The private sector is allowed to function on the principles

Consumer surplus, what is the application of consumer surplus

what is the application of consumer surplus

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd