Authors libby rittenberg 719

consumption at Q1 is less than the carrying capacity of the resource. A
larger stock of this resource will be available in subsequent periods than is
available now.
Figure 13.11 Future Generations and Renewable Resources

The efficient quantity of services to consume is determined by the
intersection S1 and the demand curve D. This intersection occurs at
point E at a quantity ofQ1. This lies below the carrying capacity Qcap.
An increase in interest rates, however, shifts the supply curve to S2. The
efficient level of current consumption rises to Q2, which now exceeds
the carrying capacity of the resource.
Now suppose interest rates increase. As with nonrenewable resources,
higher interest rates shift the supply curve to the right, as shown by S2. The
result is an increase in current consumption to Q2. Now consumption
exceeds the carrying capacity, and the stock of the resource available to
future generations will be reduced. While this solution may be efficient, the
resource will not be sustained over time at current levels.

Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org

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