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: http://www.saylor.org/books/ Saylor.org 719