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

Evolutionary model , Normal 0 false false false EN-IN ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

A mixed economic system solves basic economic problems, Why do some people ...

Why do some people believe that a mixed economic system solves basic economic problems?  Ans) It is due to  the private sector and public sector both have a say in answering the

1, Find the market-clearing price and quantity of burritos.

Find the market-clearing price and quantity of burritos.

Laws of economics, Do the laws of economics still work today? use the case ...

Do the laws of economics still work today? use the case discussed in class to answer this question or any other examples) (ii) Provide examples of three factors that can shift the

What are expansionary and contractionary effects, What are expansionary and...

What are expansionary and contractionary effects?  Expansionary effect refers to the effect of raising the equilibrium level of national income. For example, an increase in gov

Economic cycle, Economic Cycle The economic cycle is the long-standing...

Economic Cycle The economic cycle is the long-standing sample of alternating times of economic growth (expansion) and decline (recession), followed by changing economic indica

Profit maximizing quanitity, how do I determine the profit-maximizing quant...

how do I determine the profit-maximizing quantity of a firm for different market prices when only given TFC, TVC, and the market price

Microeconomics, compare the concept of MRTS with the MRS and discuss the si...

compare the concept of MRTS with the MRS and discuss the similarities and difference between them?

Distinguish between fiscal and monetary policy, Problem: (a) Distingui...

Problem: (a) Distinguish between fiscal and monetary policy, giving examples where appropriate. (b) Explain how fiscal and monetary policies might be used by a government

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