chap18 - Price of a nonrenewable resource over time Price...

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    Chapter 18 – The Land Market  and Natural Resources
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    Fixed supply of land (to all uses) The supply  of land to  all uses is  fixed Owners  receive  economic  rent
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    Land supply to a given use The supply of land to a given use is  upward sloping Land is shifted to its most valuable use  (subject to restrictions in zoning laws,  etc.)
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    Renewable and nonrenewable  resources nonrenewable resources (also known  as exhaustible resources) have a finite  supply that is depleted as the resource  is consumed renewable resources – can be  replenished by producers
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    Equilibrium price of a  nonrenewable resource
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Unformatted text preview: Price of a nonrenewable resource over time Price changes over time for nonrenewable resource Owner may sell a unit today or sell it later at a higher price Owner supplies more today if the expected rate of price increase is less than the interest rate leads to lower price today and higher price later Owner supplies less today if the expected rate of price increase exceeds the interest rate leads to higher price today and lower price later In equilibrium – rate of price change = interest rate Renewable resources...
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