Unit 9: Non Renewable Resources Ch.17

Question 1

What is Physical Supply

Answer 1

total amt available: finite but not known

Question 2

What is ECONOMIC RESERVES

Answer 2

known reserves that can be extracted profitably based on prices and technology

Question 3

What changes Economic Reserves

Answer 3

-Extraction
-New Resources Discovered
-Changing Price and Tech

Question 4

What is SUBECONOMIC RESERVES

Answer 4

cost of extraction too high to make production worthwile at current prices

Question 5

What are IDENTIFIED RESERVES

Answer 5

Quantity/ Quality already known with varying confidence

Question 6

What are the 4 Types of Identified Reserves

Answer 6

Demonstrated Reserves
Inferred Reserves
Hypothetical / Speculative Reserves

Question 7

What is the STATIC RESERVE INDEX

Answer 7

Reserves/ Current rate of use per year
-estimates resource lifetime

Question 8

Why is the Static Reserve Index unreliable

Answer 8

-Geologic/Economic Dimensions could be expanded
-could expect demand to grow

Question 9

What might influence demand

Answer 9

-Substitution
-Consumption Patterns
-Recycling

Question 10

What is the EXPONENTIAL RESERVE INDEX

Answer 10

Assumes consumption will grow over time

Question 11

What determines rate of extraction & use of nonrenewable resources

Answer 11

Scarcity Rents
Price Taker

Question 12

What influences firms production decisions

Answer 12

-future price and costs
-prevailing interest rates

Question 12

What is RESOURCE USE PROFILE

Answer 12

consumption rates for resource over time

Question 13

What is PRICE PATH

Answer 13

price of resource over time

Question 14

What is EXTRACTION PATH

Answer 14

extraction of a resource over time

Question 15

What is CHOKE PRICE

Answer 15

Quantity demanded = 0

Question 16

What are the 4 Stages off extraction

Answer 16

1) High quality/ Abundant supplies
–prices decrease/ extraction increases
2) Prices Stable
–increasing demand = increase discovery & tech
3) Demand Increases/ Supply Limitations
–price rises/ tech can’t keep up
4) Choke Price
–rising prices/ decrease demand
–substitution/ recycling

Question 17

Why have resources prices DECREASED while consumption has INCREASED

Answer 17

Continual discovery
Improved extraction tech
Substitution

Question 18

What is most likely to disrupt resource supply

Answer 18

Geopolitics
Resource Nationalism
Strikes/ Accidents

Question 19

What are 2 Environmental Impacts of Mining

Answer 19

Tailings
Smelting

Question 20

What is a BACKSTOP RESOURCE

Answer 20

Substitute resource that becomes viable alternative when initial resource reaches too high of a price

Question 21

What is the SECOND LAW OF THERMODYNAMICS

Answer 21

loss or degradation of material will always occur during process of fabrication/ use/ recycling
-recycling requires new input of energy

Question 22

How is entropy and energy related

Answer 22

Increase in Entropy = Decrease in Available Energy

Question 23

Economically optimal level of Recycling

Answer 23

When Marginal Private cost of Virgin Resource = Marginal Cost of Recycling

Question 24

What is the Socially Optimal Level of Recycling

Answer 24

Marginal costs of recycling = marginal social cost of virgin resource
-this takes externality into account

Question 25

What are policies that promote mineral recycling

Answer 25

1)altering public policies that encourage rapid resource extraction
2)impose tax on primary resources
3)market incentives for recycling
–gvt procurement
–tax incentives
–R&D
4)Manufacturer take-back responsibility
5)Social changes