Question

Analysis of non renewable resources

Answer 1

Non-renewable resources are those which are available in fixed quantities. Examples include metal ores, oil and coal. In some texts such resources are referred to as exhaustible resources. However, this is misleading when there is resource exploration and the marginal cost of finding additional reserves and extracting known reserves increases as the resource is depleted. The key issues in the economics of non-renewable natural resources are, first, the rate at which a rational firm exploits the resource, second, the price path of the resource and how it changes through time; and third, the life-cycle of the resource, that is, how quickly it is economically exhausted. It is the fact of inevitable economic exhaustion which sets the economics of non-renewable resources apart from conventional capital theory.

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