i can get this concept to stick… renewable and nonrenewable resources, which one is perfectly elastic and which one is perfectly inelastic… and why is oil always assumed to be a nonrenewable resource???
oil is nonrenewable cuz its gonna go out. and renewable resource is elastic, and non-renewable source is inelastic supply. for oil suppliers can charge as much as they want and demand will not change much. think of supply curve being a vertical line for oil.
renewable is perfectly elastic…as price remains same…even if quantity demanded goes up…think abt graphs… Non-renewable is inelactic …as evn though price increases deamnd wont change… You will need oil no matter what and so is concisered non renewable resource…may be after 10 years…when solar and wind enerdy will replace oil this concept may channge…
shahravi123 Wrote: ------------------------------------------------------- > renewable is perfectly elastic…as price > remains same…even if quantity demanded goes > up…think abt graphs… > > Non-renewable is inelactic …as evn though > price increases deamnd wont change… > You will need oil no matter what and so is > concisered non renewable resource…may be after > 10 years…when solar and wind enerdy will replace > oil this concept may channge… easier way to think about it – LAND. you cant make more of it, so supply is perf inealstic. so i can charge what I want for the last parcel of land on this planet. (and that is why rent ceilings) create shortages and are bad ideas from a market efficiency viewpoint
it is the other way round… non -renewable - perfectly elastic - no economic rent renewable - perf. inelastic - has economic rent
good job daj, now only if you can answer this one itll give you a confidence boost. i kept it simple for y ou. Quotas placed above the equilibrium quantity: A. increase marginal cost. B. result in overproduction. C. have no effect on output. D. result in underproduccion.
cfaiscomplex Wrote: ------------------------------------------------------- > it is the other way round… > > non -renewable - perfectly elastic - no economic > rent > renewable - perf. inelastic - has economic rent hence lebron james makes $100M and year and a professor at harvard makes $300K. marginal rev product and supply baby!
guys this is the elasticity of SUPPLY, so you both have the relationship backwards. from the case of supply the renewable resource is perfectly inelastic and non-renewable if perfectly elastic… plus i contest the idea that oil is going to run out… how? the earth just keep making more and/or we just keep finding more… examples, first the reserves Brazil just found (supposedly second on ly to Saudi Arabia, and second several moons that orbit saturn have shown to have massive levels of hydo-carbons (i.e. oil or “fossil fuels”) so obviously oil is produced by plate tectonics and other geological phenomenon and not dead T-Rex in the ground!
cfaiscomplex Wrote: ------------------------------------------------------- > it is the other way round… > > non -renewable - perfectly elastic - no economic > rent > renewable - perf. inelastic - has economic rent Are you sure? cuz i think you have got it inverted.
pepp Wrote: ------------------------------------------------------- > good job daj, > > now only if you can answer this one itll give you > a confidence boost. i kept it simple for y ou. > > Quotas placed above the equilibrium quantity: > A. increase marginal cost. > B. result in overproduction. > C. have no effect on output. > D. result in underproduccion. B)
pepp - this is from schweser To understand the difference between the supply of renewable and non-renewable resources, assume you own two wells. One well is an oil well and one is a water well. When you take a barrel of oil out of the oil well, it’s gone forever—a non-renewable resource. When you take water out of the water well at a sustainable rate, it will be replaced by nature—a renewable resource. For non-renewable natural resources, supply is elastic at the present value of the expected future price, while for renewable natural resources, supply is inelastic at the sustainable quantity of production.
cfaiscomplex Wrote: ------------------------------------------------------- > pepp - this is from schweser > > To understand the difference between the supply of > renewable and non-renewable resources, assume you > own two wells. One well is an oil well and one is > a water well. When you take a barrel of oil out of > the oil well, it’s gone forever—a non-renewable > resource. When you take water out of the water > well at a sustainable rate, it will be replaced by > nature—a renewable resource. > > For non-renewable natural resources, supply is > elastic at the present value of the expected > future price, while for renewable natural > resources, supply is inelastic at the sustainable > quantity of production. again, who says oil is not renewable… is this just a consensus idea that i need to accept for the examor what???
Quotas result in underproduction… If placed above equilibrium quantity - they reult in Overproduction??? I think its underprodcution
What? makes no sense. but sure, what page of schewser? may be i haven’t covered that chapter yet.
so elasticity of demand for renewable and non-renewable will be elastic and inelastic and elasticity of supply will be opposite??
pepp - this is from the qbank…not sure what page in the text. also Quotas placed above the equilibrium quantity: C. have no effect on output.
shahravi123 Wrote: ------------------------------------------------------- > Quotas result in underproduction… > > If placed above equilibrium quantity - they reult > in Overproduction??? I think its underprodcution like if there is a price ceiling above the equilibrium price, nothing happens?.. but for the quota i thought the gov’t sets the level, and mandates the production, so if is over the equilibrium level only x is in demand economically, yet x+100 is produced… so i thought overproduction…
so quotas over equlirium will ahve no effect…FINAL??