Answer to Question #198236 in Microeconomics for Esau Gagee

Question

One current practice is to calculate the years remaining for a depletable resource by taking the prevailing estimates of current reserves and dividing it by current annual consumption. How useful is that calculation? Why?

Answer 1

This calculation is indeed useful as it gives us a brief idea of how long the reserves will last in our world according to the present consumption rate. Having this in mind, one can get an idea on how much we have to alter our savings rate of that material in order to extend the reserves for the desired period so, this calculation is necessary.