Index Sales Econpac Banking Prodsale Tanksale Econuse Agrprice Foryield Envuse
Ireland Rotation Buypower Moneygro Macroec Stworld Develop Intecon People

Economic use of reserves

Description:

Tanksale is a model of mining and use of a nonrenewable source, like coal, oil or cooper. Money received for the product is used to pay for necessary inputs, profits, costs, etc. The mining company uses purchased goods and services to mine, sort, store and transport the product.The reserve in the ground is is slowly renewed by geological processes.

Examples:

This model represents use of any source where use is much faster than its renewal. Other examples are natural gas, gold, iranium, phosphate for fertilizer, slow growth forests and soils where agriculture is not based in land rotation.

 Diagram

Variables:

M = money
Q = Nonrenewable source
F = Goods and services

Equations:

PR = (K4*M/P2)*Q
DQ = K1*I - K2*Q - K3*PR
DM = P1*K5*PR - K4*M

Simulation:

The graph shows the changes of M(red) and Q(blue) over a time period.
Source code: Tanksale.java

"What if" Experiments:

  • How do the money and storage react if the price you received for the yield is increased?
  • Will the operation get started if you begin with almost no capital (M = 0)? How would it be different if you had twice as much capital as the original program?
  • What would happen if the initial reserve were small and less available? Make Q = 300.