(a) Total reserves of a non-renewable resource are 250 million tonnes Annual consumption is currently 20 million tonnes per year and is expected to rise by 2% every year. After how many years will the stock be exhausted? (b) Suppose the government wanted the resource to last for 21 years and to do so decides to reduce the annual increase in extraction from its current rate of 2%. What new rate of annual increase would allow the government to achieve its target?

(a) Total reserves of a non-renewable resource are 250 million tonnes Annual consumption is currently 20 million tonnes per year and is expected to rise by 2% every year. After how many years will the stock be exhausted? (b) Suppose the government wanted the resource to last for 21 years and to do so decides to reduce the annual increase in extraction from its current rate of 2%. What new rate of annual increase would allow the government to achieve its target?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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(a) Total reserves of a non-renewable resource are 250 million tonnes. Annual consumption is currently
20 million tonnes per year and is expected to rise by 2% every year. After how many years will the
stock be exhausted?
(b) Suppose the government wanted the resource to last for 21 years and to do so decides to reduce the
annual increase in extraction from its current rate of 2%. What new rate of annual increase would allow
the government to achieve its targetr?

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